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10/4/2010
07:45 PM
Bob Evans
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Global CIO: Larry Ellison And HP CEO: Courtroom Showdown Looming

The damages phase of the Oracle-SAP lawsuit, prominently featuring new HP CEO Apotheker, begins in a few weeks—and the sparks will be flying.

Ellison said HP's board was acting in "utter disregard" for their joint customers. Are the differences with Apotheker so great that they could make it impossible for Oracle and HP to continue to work together and thereby severely inconvenience those 100,000 customers?

3) How chummy can SAP and HP become, even if Oracle and HP patch things up? SAP co-CEO Bill McDermott lauded HP's hiring of his old SAP colleague Apotheker and said it heralded the beginning of "a deeper relationship" between the two companies and that Apotheker's knowledge of SAP (he worked there for 20 years) would be extremely valuable in fostering an even more-strategic working arrangement between the two companies. SAP's website says the companies work together for more than 22,000 customers, and while that's only about one-fifth as many as HP and SAP, it's an indication of how much opportunity SAP could try to seize if Oracle and HP end up having a falling-out.

4) Can you imagine HP calling up IBM and saying that because we need your database and your middleware, it's time for us to work together and share all kinds of deep dark secrets and product plans and customer identities and profiles? I realize that desperate times can call for desperate measures, but that one strains the limits of imagination. With that as a leading alternative, I can see HP going to extreme lengths to keep the Oracle partnership alive.

5) Can Microsoft fill the void that an HP split with Oracle would create? No indeed—Microsoft and SAP could combine to deliver a lot but not everything. And how many really effective three-way alliances are in place in this business? I'm not saying they're impossible—but I am saying if they were such a great idea, we could all easily point to a lot more of them. On top of that, there is the matter of focus: HP values Oracle for helping it penetrate global accounts because Oracle is 100% dedicated to the enterprise, as is IBM. Microsoft, conversely, is deeply into the consumer-technology world and simply does not have the technical depth or market expertise that Oracle and (theoretically, at least) IBM could deliver to HP.

6) So what is it about Apotheker that inflames Ellison and has caused him to intensify his public lashings of not only the HP CEO but also the HP board? It's not just that they used to be competitors—hell's bells, Ellison's got competitors everywhere he turns and he doesn't call them failures and worse. No, in this case, the problem is that Ellison and Oracle are just a few weeks away from starting the damages phase of their ongoing litigation with SAP in a case where SAP has admitted responsibility for the actions of a now-closed subsidiary called TomorrowNow that created bots that copied Oracle's software. SAP clearly says in statement that while it is taking responsibility and is willing to pay damages, it disagrees with Oracle on what those damages should be: "SAP is committed to compensating Oracle for the harm the limited operations of TomorrowNow actually caused. Oracle's unreasonable damages claims are an unproductive distraction as we work to find a fair resolution in this case."

7) So, then, how much is reasonable? That's what the court case is all about, and Oracle will no doubt try to demonstrate that Apotheker knew that TomorrowNow was using bots to steal Oracle's software. If the court finds in Oracle's favor, it will then be not only a matter of how much money Oracle is entitled to ($5 million? $10 million? $100 million?), but also a matter of how much Apotheker did or did not know about what TomorrowNow was doing.

8) And if the court decides Apotheker did indeed know about the theft of Oracle's IP being done by his company, then can you really see Larry Ellison allowing Oracle's special and deep relationship with HP to continue? In an email exchange with the Financial Times over the weekend, Ellison said that Apotheker was a top executive of SAP when it committed "industrial espionage and intellectual property theft" against Oracle—and Oracle believes court documents will show that those acts were carried out with Apotheker's knowledge.

9) Should Ellison, for the sake of those 100,000 Oracle-HP customers, let bygones be bygones and ease up on Apotheker, whether or not he knew of the theft at the time it was occurring? I think that's a nice playground theory but it doesn't work so well in the world of global business where IP is a company's lifeblood. The intent of SAP/TomorrowNow in scraping that code was not altruistic, and it wasn't academic—it was clearly an intention to damage Oracle in the marketplace and for that SAP will have to pay, which it's prepared to do. The court will determine whether Apotheker knew and whether, in the eyes of Ellison, their two current companies can do business together.

10) The HP board ousted Mark Hurd over what is said to have been improprieties with an expense report, and in so doing the board huffed and puffed a bit about zero tolerance and all that. If the court finds that Leo Apotheker had knowledge of TomorrowNow's actions against Oracle while he was a top SAP executive, then what will the HP board do? Will it take the position that it's utterly intolerable to play on the margins with an expense report, but that it's fine and dandy for top executives to be aware of the theft of competitors' intellectual property?

So I've got questions—have you got answers?

RECOMMENDED READING:

Global CIO: Larry Ellison's Heightened Attacks On HP Doom Alliance

Global CIO: An Open Letter To HP CEO Leo Apotheker

Global CIO: Larry Ellison Puts HP In Crosshairs Via Slap At New CEO

Global CIO: HP CEO Apotheker Has Deep Expertise But Checkered History

Global CIO: HP's $130-Billion Gamble

Global CIO: An Open Letter To SAP Chairman Hasso Plattner

Global CIO: SAP's Last Chance: It's The Customers, Stupid!

Global CIO: An Open Letter To SAP CEO Leo Apotheker

Global CIO: Hewlett-Packard's New CEO: The Top 10 Challenges

Global CIO: IBM Turns Guns On Cisco With Acquisition Of Blade Network

Global CIO: Burying Mark Hurd: Hewlett-Packard And Its Future

Global CIO: Will Larry Ellison Launch Bidding War With IBM For Netezza?

Global CIO: Oracle Launches 'Cloud In A Box' And New Cloud Business

Global CIO: At Oracle Open World, Oracle Commits To Cloud Computing

Global CIO: Larry Ellison's Top 10 Priorities At Oracle Open World

Global CIO: Oracle's Larry Ellison Declares War On IBM And SAP

Global CIO: Larry Ellison's Acquisition List: Who's #1?

Global CIO: In Hurd's Wake, An Ugly Ending For Oracle's Charles Phillips

Global CIO: Resurrecting Mark Hurd: Larry Ellison's War With IBM

Global CIO: Larry Ellison And Mark Hurd: The Job Interview

GlobalCIO Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

To find out more about Bob Evans, please visit his page.

For more Global CIO perspectives, check out Global CIO,
or write to Bob at bevans@techweb.com.

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