Oracle Speaks – and the Whiners Should Listen

Larry Ellison is by all accounts as charismatic and visionary as any other technology CEO. But he’s kept a much lower profile of late than his counterparts.

All of that changed abruptly Friday morning, when Ellison threw a giant monkey wrench into the works of the business software industry. Oracle’s unsolicited and, it seems, unwelcome bid to buy PeopleSoft has been called a lot of things since then, from disruptive to atrocious and just about everything in between.

But the one thing it is above all is refreshing. Oracle’s move is a cold-water-to-the-face reminder that business is hardball and that the best defense is a good offense.

David and David

This isn’t about picking sides. PeopleSoft, J.D. Edwards and Oracle all have carved out niches in the technology landscape and deserve credit for doing so, even in tough times. It’s hard to root against any of them. However, in any fight there needs to be an underdog (or two) and a big bad bully, in this case played by Oracle.

Of course, Oracle is no Goliath anymore. Sure, it dwarfs the others in size — Oracle’s market cap is around US$68 billion, while PeopleSoft’s is just $5.6 billion — but if it is such a big, scary ogre, why is it so worried about two companies that together are worth, at least on paper, only a tenth of its value?

The answer is, mostly, because these are not normal times. Oracle needs any growth it can get in the applications market, and it saw a threat to the market share it was hoping to win by quietly and efficiently being the big brand name users could trust.

That opportunity would have been thwarted by the PeopleSoft/J.D. Edwards deal, and Oracle knew it.

Alternatives Analysis

Those who criticize Ellison and Oracle should ask themselves this question: What should the company have done instead? Sit back and relax? Go on vacation, maybe? Drop prices? Buy some smaller company no one ever heard of? Just wait for the merged company to come around and eat its lunch?

All of those answers would have gotten Oracle’s head handed to it by its shareholders. So Ellison did what he thought was necessary and, in a flash, turned one of the most staid and dull sectors of the tech economy into a battleground, complete with verbal artillery fire and a strategic ground war to be fought with stock and tender offers.

It’s been months since a technology story has had as many legs as this one does. Even AOL and Microsoft smooching and making up and swapping a few hundred million bucks to settle some silly Netscape disagreement seems puny by comparison. And all the other news that comes close of late has been of the WorldCom crash-and-burn variety.

But Ellison and Oracle have created a business drama that won’t just fade from the headlines. It will take time to play out, and it will take cunning, courage and a bit of luck for the winner to emerge victorious. Shareholders and even casual observers have a reason to do more than just scan the headlines again.

Not Quiet on the Western Front

What makes it most interesting is that none of these companies is fighting a one-front war. In addition to the drama of the offers, they have to worry about SAP, which has announced it will launch a marketing campaign to target J.D. Edwards and PeopleSoft customers, no doubt poking Oracle in the eye once or twice along the way. They also have to battle the common enemy of meager IT budgets and weary CIOs.

It should be fun to watch. Yes, Oracle has reminded the world that business is not about making nice and shaking hands and making friends with your rivals. It’s about doing what you must to get on top and stay there. The businesses that are whining about Oracle’s motives and methods should put a cork in it and write Larry a letter saying, “Thanks for the reminder.”