Commentary
11/10/2009
08:01 PM
Bob Evans
Bob Evans
Commentary

Global CIO: Why Oracle's Larry Ellison Will Tell The EU To Pound Sand

Larry Ellison wants to compete head-on against IBM. He needs Sun to do that. The EU stands in his way. The popinjays better be sure to buckle up their chinstraps.



It's partly because of the European Union's deadly combination of ignorance and arrogance, and partly because Ellison's already invested so much time and money, and partly because he wants Sun before it must shed several thousand more jobs due to the EU's dithering. But the real reason—in Ellison's own words—is that he's dying to go head to head with IBM, and he needs Sun to do that, and the EU is in his way.

Sure, Oracle has publicly claimed that the hyper-protective bureaucrats of the EU's Commission have demonstrated "profound misunderstanding of both database competition and open source dynamics," and they are dead-center perfect on that call. That's got to be incredibly galling to Ellison, particularly when the ruffled EC bureaucrats shot back by calling Oracle's remarks "facile and superficial" in what could well be the most blatant instance of psychological projection in recorded history.

Yes, Sun's been hemorrhaging not only people but also $100 million a month, and in these challenging economic times that too must be especially bitter for Ellison to swallow, particularly as the combination of Sun's lame-duck status plus aggressive and fully appropriate customer-conversion efforts from HP and IBM and Dell are drawing off hundreds of former Sun accounts. But Ellison is arguably not only one of the world's most-competitive people but also one of its most successful, so he can cope with all that.

(And for a list of related analyses and perspectives, be sure to check out the "Recommended Reading" list at the end of this column.)

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But while those two are going down about as smoothly as a double shot of hemlock, I think Ellison's going to battle the EC to the death on this one because he has vowed quite publicly to take on IBM head-to-head in the systems business—and without Sun and its wide range of technologies that Ellison has praised lavishly, that showdown with IBM's not really going to happen.

This isn't conjecture—let's look at this in Ellison's own words across four essential subjects:

1) Sun's broad technologies;

2) MySQL, a fine intermediate-sized database that the EC sophisticates are absurdly conflating with giant commercial systems;

3) IBM and the one-time reverence Ellison felt for it, which have morphed in his view into the Great White Whale he must conquer; and

4) Ellison's views on competition, and the role that most animating of forces has played in his life.

For all these great insights into this intensely driven and profoundly high-achieving man, we turn to remarks Ellison made about six weeks ago in an on-stage interview at a dinner event at The Churchill Club in the Bay Area during an interview with former Sun CEO Ed Zander.

On Sun's Broad Technologies

"We're keeping everything: we're keeping tape, we're keeping storage, we're keeping x86 technology and Sparc technology and we're gonna increase the investment in it. Sun—if you look around at technology companies, and if for $1 we could buy IBM, HP, Sun, or any of these companies—I'm not sure we wouldn't pick Sun, if they were all the same price—and Sun was selling at a helluva discount. So Sun has fantastic technology—we think it's got great microprocessor technology—it needs a little more investment but we think Sparc can be extremely competitive; [Sun's] got the leading tape archival storage systems—we think Open Storage, their new system, is absolutely fantastic; Java speaks for itself; [and] Solaris is overwhelmingly the best open-systems operating system on the planet. Sun has been a national treasure for the last couple of decades and we think with that combination of Sun technology and Oracle technology, we think we can succeed and compete and beat IBM. And that's our goal."

Catch that last comment? "And that's our goal." And here are Ellison's related comments on MySQL:

On MySQL's Position And Value

"We're a big fan of open source—in fact, we've had the major transaction engine to MySQL—it's something Oracle bought years ago and has invested in it to a higher level than it was invested in before. We believe in open source, we're a huge supporter of Linux. MySQL and Oracle do not compete—at all . . . . There's a long list of database machines and database software we compete against—we never compete against MySQL. They're both called databases, they address very different markets—furthermore, it's open source."

Zander asks, "If they ask you to spin it off, will you?"

Ellison: "No."

Rapid-fire, Zander asks, "If they told you to spin it off, would you?"

Ellison: "No. We're not gonna spin it off. The U.S. government cleared this, we think the Europeans are gonna clear this, and we are not going to spin anything off."

Sounds to me like the classic example from physics of an irresistible force. But I have a hard time conjuring up an image of the EC grandees as immovable objects. Detached and distorted, yes; profoundly poorly informed, sure thing; politically motivated and duplicitous, absolutely. And while they may perceive themselves as immovable in their own hermetically sealed little world, we'll see if they can stand up to this irresistible force.

Ellison's IBM Fixation

"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.

"Let me tell you about the great systems companies: 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. . . .

"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."

Recall from his earlier remarks: " . . . we think we can succeed and compete and beat IBM. And that's our goal."

On The Meaning Of Competition

"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."

And that's why I think Larry Ellison is going to tell the EU's paper-pushers to pound sand: because he's not going to let these lightweights deter him from his appointed showdown with IBM. Ellison is more than 60 years old but remains a phenomenally engaged and competitive person in spite of (because of?) also being one of the wealthiest people in the world. He doesn't need to do this to make his bones in the business world, and he can always go off and devote all his time to being the most successful sailboat-racer on the planet, and to funding and advising great young entrepreneurs.

No, Larry Ellison doesn't need to do this for anyone else—but his own words tell us he needs to do it for himself. With no quarter asked and none given, he wants to compete across the board very directly against IBM—it's that simple. And if in order to achieve that he needs to swat aside some nattering gnats from the EU, then fine—tell them to get in line.

Because the anti-competitive crew at the EC is about to find out what competition is really all about.

Recommended Reading:

Global CIO: Oracle Trapped By EU Politics As Sun Employees Suffer

Global CIO: Can Oracle's Larry Ellison Keep MySQL From EU Whiners?

Global CIO: An Open Letter To Oracle CEO Larry Ellison

Global CIO: Oracle Nailed By EU Protectionism As HP And IBM Raid Sun

Global CIO: In Oracle Vs. SAP, IBM Could Tip Balance

Oracle's Ellison Calls Out IBM: Why You Gotta Love The Guy

Global CIO: Why Are Microsoft, Oracle, And HP Bashing IBM?

Global CIO: How 22% Fees For Your Equal 51% Operating Margins For Oracle

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 [email protected].

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