Ellison Meets The Press - InformationWeek

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Ellison Meets The Press

In a Q&A, the Oracle CEO talks about scale, security, other possible acquisitions, and his company's relationship with IBM.

On Wednesday Oracle CEO Larry Ellison gave his keynote before nearly 35,000 attendees of Oracle OpenWorld. Two hours later, he delivered his comments before a small group of international, business and technology journalists, including CRN West Coast Bureau Chief Rochelle Garner and Industry Editor Barbara Darrow. This is an excerpt of that wide ranging question and answer session.

Q: Your company seems to have changed directions with all of these acquisitions.

ELLISON: Scale is very important. We will triple our investment in CRM, with the acquisition of Siebel. You have to scale up. You have to have a larger installed base to justify investment in the next generation of products. PeopleSoft built their own HRMS system, and we built our own, neither of which would be as good as the combined one we build at Oracle. Siebel is the category leader in CRM. And we benefit from their experience and their success. We get their engineering team, and It means our Fusion products will be much better, with less risk.

Q: Will there an acquisition in the security space?

ELLISON: Sure, it’s possible. But there are a lot of different aspects of security. We are not looking to get into the antivirus business. Our focus will be on encryption and making sure all of our backups are encrypted. Veritas is the king of backups. We think Oracle can compete effectively with our backup offerings.

Q: Siebel has spent the last 18 months working on Project Nexus, to convert to a services-oriented architecture. How much of that code can you make direct use of in Fusion?

ELLISON: We are not trying to preserve code bases. We are trying to preserve features. All of Fusion is written in java. That’s not true of Nexus. However, the experience of building Nexus is enormously valuable to us. But not the code itself. The code is actually greatly overrated. We can reproduce code quickly. It’s knowing what code to write, the flows. That’s why I’m saying the Siebel acquisition reduces our risk.

Q: Are you still thinking about acquiring BEA?

ELLISON: At one time BEA was very high on our list. Now it’s less so. We believe we’ve passed them up in terms of new license sales. We know we have more than twice as many users. They are less interesting to us. They are also not interested in being bought, and have made it quite clear that they will fight to the death. We have no interest in getting in a fight over BEA.

Q: You’ve said you want to reach $30 billion. Does that mean you’ll continue to grow by acquisition?

ELLISON: We are about $15 billion this year. I’m rounding up. Clearly, if we go to $30 billion in a few years there would have to be a combination of acquisitions. I don’t think $30 billion is an unreasonable target. The key is to preserve our 40-plus percent operating margins. Doing that with some larger acquisitions would be tricky. We have no large acquisitions in mind. Until the Siebel deal goes through and we prove to our shareholders we had done a good job, we would not buy another large company. We will be out of the major acquisition business for at least a year.

Q: You have said you wanted to be a big stack provider. Given your new relationship with IBM, what is your view of them?

ELLISON: We will cooperate with IBM as much as we can. They are the largest IT services organization in the world, in a number of industries that are important to us. We will work with them where it makes sense to. They have middleware and databases, and we are happy to be open to their middleware and their database. We will compete on price, performance and security, and we think we can beat them. Customers like having a choice, and if it means we will lose some, we will gain more than we lose.

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