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January 26, 2010
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"Cisco's a great systems company. They ship a hardware/software combination that allows them to be instrumental in the acceleration of the internet. And we think by combining our software with hardware, that we can deliver systems that can be the backbone of most enterprises in America and around the world. So it's really the combination of the two: we have no interest in competing with Dell, and the plain old running Windows on x86's, or HP with running Windows on x86's. We're very interested in running airline-reservation systems, and we're very interested in running banking systems, and telecommunications systems, and that requires both hardware and software."
4) The Exadata Experience. Ellison has frequently said that the Oracle Exadata Database Machine is the most successful product introduction the company has made in its 30-year history—at least month's earnings call with analysts, he said Exadata will itself become a billion-dollar business. But we must remember that when Ellison began talking so optimistically about Exadata more than a year ago, it was a joint effort between Oracle on the software side and HP on the hardware side. And I think that when Ellison saw the type of breakthrough performance and speed that the optimized Exadata could deliver, he was hooked on the idea of finding a way to marry more intimately Oracle's software with its ideal hardware match. That's why, in spite of the great early success he had with HP as the hardware partner for Exadata, Ellison dropped HP like a bad habit after Oracle formally announced its plan to buy Sun. Here's Ellison on Exadata from our column last month, Global CIO: Oracle CEO Larry Ellison On The Future Of IT:
"We think the Exadata business is going to be huge—by huge, billions of dollars a year in new systems sales, not including the maintenance on those businesses. Now how long it takes us to get there remains to be seen but our overall view of the computer industry is we have been selling components to large customers and the customers have been hiring systems integrators to glue those components into complete systems." And here's his "overall strategy going forward": "Our overall strategy right now going forward is not to sell those individual industry-standard components on their own but rather group them together into machines like Exadata, where we have processors, networking, storage, storage software, database software, our Oracle Enterprise Linux operating system—all as a complete database machine for both transaction processing and data warehousing."
3) Ellison's stealth endorsement of the—sshhhhh!!—"cloud computing" business. Yes, in the past Ellison has derisively goofed on the term cloud computing, but listen to what he said just five weeks ago in his last public comments about the opportunities that would arise from the Oracle/Sun combination—and look at how comfortably he not only endorses the cloud concept but also speaks the name itself:
"Since we're getting closer to closing the Sun deal, I'm going to talk a little bit about our strategy with Sun going forward: what we're not gonna do and what we are gonna do. One thing we recognize is that Sun does not really now and is never likely to have the volume to compete in the high-volume, low-margin business selling an Intel server with Windows on it or Linux on it one at a time. We think that high-volume, low-margin business is a good business, so long as you have high volume, and that's something Dell and HP are very good at and we're gonna avoid that business. "Instead, we are pursuing the high-value, high-performance market: very large SMP machines like the Sparc Solaris M9000 which we will continue to enhance. . . . We'll not only be focused on SMP machines, which have been around for some time though we think Sun's SMP machines are best in class, but we're also gonna be building clusters of industry-standard machines and Sparc machines. And those clusters are now called private clouds—that's the more-fashionable term for clusters—and we're using our software, our operating system—both Solaris and Oracle Linux—and our virtualization—the ability to dynamically allocate and reallocate resources, which is essential for cloud computing—as well as integrated networking and integrated storage to deliver a complete private cloud to our customers. "So customers will be able to buy high-end SMP machines that are high-performance and high-value, or a high-end private cloud, with all of the pieces including processing, storage, and networking integrated together with Oracle-slash-Sun software. We think that will heavily differentiate our offerings from the offerings of IBM, HP and Dell, and we think we're gonna be able to compete very effectively there and that will deliver high margins and allow us to deliver that $1.5 billion additional profit in our first full year of owning Sun."
2) Ellison's passionate obsession with IBM. I'm not pretending to be a psychologist here; Ellison's own words deliver that diagnosis, from Global CIO: Why Oracle's Larry Ellison Will Tell The EU To Pound Sand:
"We want to be TJ Watson Jr.'s IBM. Not Lou Gerstner's IBM, not Palmisano's IBM—we wanna be T.J. Watson Jr.'s IBM. And that's when IBM really was the dominant software company—uh, 'dominates' is a bad word (audience laughter)—they're not allowed to use that word—well, but they were the dominant software company in the world and they translated that position in software to become the dominant systems company in the world. We are not going into the hardware business. We have no interest (shrugs) in the hardware business. We have a deep interest in the systems business. . . . "T.J. Watson Jr.'s IBM was the greatest company in the history of the enterprise on Earth because they had that combination of hardware and software running ost of the enterprises on the planet. That company was the dominant company in computing when I came into this industry: it was pre-Intel, there was no Intel, there was no PC, there certainly was no Mac or any of this stuff. It was IBM, IBM, IBM. And I was told that IBM was not a company against which you competed; IBM was the environment in which you competed. We've already beaten IBM in software—on modern systems. And now, if everyone will let us, we'd like to see if we can beat IBM in hardware, or systems."
1) It's an expression of Ellison's deepest nature: an intense competitor seeking his limits. Again, I have far too much respect for you readers to insult you with a lame attempt at pseudo-psychiatry. Rather, here's Ellison again in his own words from the column mentioned above, and bear in mind that his world-class sailboat racing is far from a weekend hobby:
"Oracle's a very competitive company, and a lot of very competitive people are at Oracle, and I enjoy competition—I think life is a series of acts of discovery. We're all interested in our limits, what we can accomplish in life, and in discovering our own limits—we might find that in sport, we might find that in business. I think we're always looking to discover new things about each other and about ourselves."
So that completes my Top 10 reasons for why Larry Ellison wanted to buy Sun—please let me know what you think at [email protected].
RECOMMENDED READING: Global CIO: Oracle CEO Larry Ellison On The Future Of IT Global CIO: Oracle-Sun A Bad Deal? Only A Fool Would Say That Oracle Sees Unconditional EU Approval For Sun Global CIO: Why Oracle's Larry Ellison Will Tell The EU To Pound Sand IBM CEO Sam Palmisano Talks With Global CIO Global CIO: An Open Letter To Oracle CEO Larry Ellison Global CIO: Where Do Oracle's Profits Come From? Global CIO: Oracle Dumps HP After Co-Creating 'Most Successful Introduction Ever' Global CIO: Sam Palmisano's Grand Strategy For IBM Global CIO: In Oracle Vs. SAP, IBM Could Tip Balance Global CIO: Upheaval In The IT Industry: The End Of The World As We Knew It Global CIO: IBM's Game-Changing Plunge Into Predictive Analytics Global CIO: An Open Letter To Hewlett-Packard CEO Mark Hurd Global CIO: Hewlett-Packard CEO Hurd's Strategy: The Infrastructure Company 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 [email protected].
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