Oracle Buries the Lead
At his second and final keynote address to the 2011 Oracle OpenWorld user meeting, Larry Ellison finally gave the rabid software oriented audience something to savor.
Throughout the week the Oracle CEO and his minions had spent large amounts of time telling us about hardware or some other aspect of the business leaving me and my software analyst and blogger friends champing at the bit. That changed in Ellison’s second keynote when he announced the Oracle Cloud, the Oracle Social Network for business and the arrival of Fusion applications. There may have been other introductions but honestly I was scheduled to be on a panel at 5 PM and for all I know Larry is still talking.
Ellison’s keynote did not come without drama. A long-running argument between Ellison and former Oracle vice president Marc Benioff, CEO of Salesforce.com, nearly blew a fuse when Oracle cancelled Benioff’s keynote forcing him to scramble to find other accommodations to address Oracle Nation. It was great political theater when Salesforce hired the St. Regis hotel and set up campaign style picketers with signs and slogans — “The cloud must go on” — out on the street.
Much of the drama could have been avoided if only Oracle had introduced its software trove earlier in the week. The idea of both Benioff and Ellison speaking about opposing views of cloud computing at the same conference and on the same day proved too much even for San Francisco. Instead, earlier in the week, Ellison laboriously discussed his company’s line of high performance computer gear aimed at the high end of the market, which many of us in the analyst community greeted with a so-what attitude.
The question of why Oracle held its fire for so long is curious and will be the subject of many post mortems. When I try to puzzle through this turn of events I have to conclude that if they had announced the cloud and social network earlier in the week, they would have been forced to answer questions and provide demonstrations. As it is, we all go home armed with knowledge of these products only through a demo that Larry did on stage but none of the reassurance that they are real. It would not be the first time that Oracle announced something early.
I am therefore forced to conclude that at least the cloud and social network that were announced are not really ready for prime time. I am sure the products exist in some form but I am not sure what state they are in. I will believe it all when I can play with it and report to you.
With the assumption that the software products are real we need to ask what impact they will have on the industry. The short answer is that these products will be enough to freeze many decision processes until Oracle can get around to delivering a true 1.0 version for general availability.
In conception, the Oracle Cloud and Social Network sound good and they will appeal to a big audience of Oracle customers. But they are not fundamentally different — and one needs to question if they are better — than what’s already on the market.
For example, nearly every vendor except Salesforce, offers customers the choice of where to operate its software — in the data center, in a third party hosting environment or in an Oracle sponsored facility. Also, these customers have the choice of running in a single tenant or multi-tenant configuration. So all the bases are in theory covered.
But this only adds fuel to an already smoldering argument of whether it is better to simply move applications from an old paradigm to a new hosting environment or if it might be necessary to take a fresh look at these applications in the context of mobile and social demands and changing business requirements. Failing to do all that might result in well functioning applications that have diminishing relation to reality.
As Benioff has made clear for the last decade and did again at his press conference, most of those choices fit an old paradigm at a time when the paradigm is changing and the multi-tenant solution is the way of the future. Interestingly, Ellison derided multi-tenancy as something that is 13 or so years old but ignored the idea that the conventional IT that his solutions provide for are much older still. Moving your data center off site, which is a function of the Oracle Cloud, is not exactly state of the art.
Ellison was careful to point out the places where his cloud, for instance, was superior to Salesforce. Oracle Cloud offers users the ability to use applications on premise or on-demand and to move applications from one to another without losses. Oracle also works hard to assure the market that its solutions are standards based using standard middleware and programming languages. In fact Ellison was happy to discuss the whole application stack in that context.
Big IT shops will be comforted by this knowledge but increasingly, they are seeking ways to streamline their operations and reduce the amount of labor they invest in their applications. A discussion of how to avoid middleware all together might have been more welcome.
The new IT paradigm promoted by Salesforce and a growing army of followers is social, mobile, cloud and multi-tenant. The new Oracle products embrace all of this but still leave it to the customer to determine when to adopt these ideas. That is a good approach for a company like Oracle. Ellison has a huge installed base of some 380,000 customers and they will not be converted in a short time. So hybrids and halfway measures are the strategy and in this Oracle has played its hand well. But it is not alone — Microsoft, SAP and many other software houses that were the leaders in the last decade have the same tricky path to traverse and the same basic approach.
What happens next will be interesting. With these announcements Oracle has come close to parity with its competition but it is last in the race and its solutions mimic the competition without breaking much new ground, if any. What the company does next will be vital. Will it continue to follow the pack as a not to fast follower or will it innovate around all of the ideas bubbling up today including mobile, social and, of course, cloud?
There is enough in the announced products to enable customers to get going with cloud computing and in applying social concepts to business and there is plenty to support those who break out in a rash whenever they hear words like Salesforce.com, cloud or social. That is right where Oracle needs to be at the moment assuming the products they announced, but curiously did not let us see or try out, really exist.
Benioff Speaks
When his part was over Marc Benioff could look back on a keynote that was fresh and interesting for OpenWorld but without a great deal of the controversy that had been expected. There are definite differences between Benioff and Larry Ellison and their respective companies. Benioff preaches openness, cloud, social, mobile and other modern technologies that will constitute the infrastructure of the future. “We’re not here to sell another mainframe,” he said at his impromptu keynote.
Ellison on the other hand, has a huge legacy installed base to convert and his options may be more limited than Benioff. IT doesn’t help that Salesforce has been executing on its vision for several years while Oracle is in some ways just getting out of the starting gate. Ellison will speak today at 2:45 PM PDT and will no doubt have some answers to Benioff’s speech. Stay tuned.
#OOW11 WTF! Larry Cancels Marc, Oy…
WTF! I’ve been writing, talking and meeting all day. I thought I had the night off when this bombshell went off (it comes directly form Twitter):
“RT @Benioff: Larry just cancelled my keynote tomorrow! Sorry #oow11! Join me @ St. Regis AME Restaurant at 10:30AM! The show must go on! Sorry Larry!”
There are so many things to say on so many levels, this could take all night.
Of all the bush league things that could be done, this is a topper. If you thought the days of animosity and dirty tricks was over in Silicon Valley because we had somehow grown up — or at least aged out of it — tonight is a sobering reminder that they play by bare knuckles rules out here. Let’s try to pull this apart and analyze some of the levels of meaning. ALL OF WHAT FOLLOWS IS AT BEST A HYPOTHESIS, MY HYPOTHESIS.
First off, you don’t cancel a keynote on the speaker less than 24 hours in advance regardless of the reasons short of moral turpitude or an ax murder. We don’t have motives as I write this so it is my assumption that the Benioff keynote scheduled for tomorrow morning had no justifiable reason for termination.
Even if you are Larry and it’s your show, if you made the agreement, most likely a year ago, you keep your word. If you don’t like the idea, you cancel next year’s keynote a year in advance, not the night before. One immediately has to wonder why this ever got started in the first place.
So, what’s going on here?
Marc Benioff knows how to get under your skin if he wants to and that should be no surprise to anyone. For all we know, Cole Porter was imagining Benioff when he wrote the lyrics to “I’ve got you under my skin”. Tom Siebel got a big dose of Benioff when they were competing. I remember one of Benioff’s first attacks on Siebel featured a third grade kid named Dave who had to write one hundred times on the blackboard, “I will not let Siebel take my lunch money.” Ouch! That was effective.
People loved the Dr. Dave campaign in part because it pitted a real David against a goliath and it worked brilliantly. Benioff hounded Siebel relentlessly until time and circumstance made Siebel decide to throw in the towel and allow itself to be bought by Oracle where it remains today.
Today’s dust up can be seen as a reaction by Oracle to several years of Benioff sniping about cloud computing and Oracle’s lack thereof. Let’s review. Benioff started giving a keynote during OpenWorld a few years ago. As one of Oracle’s biggest customers it was a privilege but also something that the vendor — Oracle — could not easily refuse given the circumstances. At that point, Oracle had CRM OnDemand but Benioff had the momentum in cloud computing, CRM and social media.
Things only got better or worse depending on which horse you rode. Salesforce continued to grow and gain market share by offering more products like Chatter and socialized CRM. Oracle made incremental improvements to its core systems and continued to offer several flavors of CRM including CRM On-Demand and Siebel. Oracle is a tough competitor in CRM, not doubt about it.
When Oracle bought Sun and began bringing to market its Exa- series of hardware including storage (Exadata) and compute servers (Exalogic), Marc ridiculed them as cloud in a box and not real cloud computing. This year in the wake of a very successful Dreamforce, Benioff was ready to come out talking about collaboration, the social enterprise and the social customer. I think the dominant concern might have been letting this cannon loose in the OOW chicken coop.
Perhaps Oracle had justifiable concerns. If you went through the OpenWorld show floor today and visited the Salesforce booth (Yes, they have a booth!) you would have seen something very strange for a trade show. People from the Salesforce Foundation staffed the Salesforce booth and they were in the middle of preparing aid packages for charity work. There was nothing in the booth relevant to selling Salesforce’s SaaS service.
The foundation was simply recruiting people from the show to do the packing labor as they walked by. It was as if Benioff was saying to Ellison, “See, we don’t need your X-boxes you can do all this to make money and we have a higher calling.
Maybe that was the last straw, I don’t know. Earlier in the day, I had heard that there was a chance the keynote would be moved to the following day but not much later it all came to an abrupt end. Benioff has found alternate space for the speech and it will be held as planned. But meanwhile, Ellison and company look either like a bunch of fools who got played or the school yard bullies. Either way they’ve been pushed into an action they will regret. If this was football, I’d have to say that Salesforce caused its opponents to fumble or to throw an interception.
What precipitated the action is unclear and likely to remain a personal issue between two people who were once mentor and protégée. Why it happened says much about Oracle. They should have been able to behave better or at least in a more mature way but I guess that isn’t the way things always work out here.
Pay the Man, He’s Worth It
Musings on Oracle OpenWorld October 2 to 6
Oracle OpenWorld won’t start until a reception on Sunday night but that won’t stop many of us from writing something about Oracle or the event before a word is spoken. And there are so many things to say.
There will be the usual product centric talks and breakouts plus a lot of education, but that’s to be expected. There will also be the usual distractions such as Marc Benioff’s now annual address (which I find illuminating) on the, what? , state of the cloud? That’s Wednesday.
Speaking of Marc, it’s inevitable that there will be the now usual comparisons between the protégé and the master; of how one invented the database industry and the other invented cloud computing. But where Marc shows ambitions to change the world through philanthropy, Larry likes to win. So look for more America’s Cup coverage.
Larry and winning go together and that forms the basis of this short piece of analysis. Ellison made Oracle the winner in a very crowded field during the database wars and today Oracle is one of the biggest technology companies because of his leadership.
How important is that leadership to Oracle’s success? Well, at this level you don’t get to perform a double blind longitudinal study of the market. This isn’t fantasy business so you can only ask what the result might have been if Ellison, say, ran Microsoft. Nonetheless, asking is fun so let’s.
Figure 1 is a stock chart of the last five years (it didn’t all come out but there’s five years of data behind my hypothesis) showing the progress (or lack thereof) of some major indices and some large technology companies including Oracle, SAP and Microsoft. Now, it’s tempting to look at the pretty colors and conclude that Oracle wipes the floor with the other guys but you need to refine your analysis some.
Oracle: rewarded for prudent risk taking?
For example Oracle’s relative size as measured by market capitalization (market cap) is between SAP and Microsoft. Roughly that means number of shares outstanding times the price per share, which gives you an idea of the value the marketplace, puts on each company.
It’s probably good here to duck into the SAFE HARBOR for a moment. That is to say that I am not giving financial advice or in anyway behaving like someone who works on Wall Street. No, sir, I have ethics. Let us be clear, I am simply explaining a hypothesis.
Ok. Here are the market caps (in billions of dollars): SAP $62.72, Oracle $152.72, Microsoft $213.90. So, Larry has not built the biggest software company in captivity; by virtue of the fact that Microsoft has software running on just about every computing device on the planet, they take that honor.
Nevertheless when you look at the stock charts you see a very interesting story. Both SAP, which is smaller than Oracle, and Microsoft which is significantly larger, are treated by the market as companies that are part of the broad middle of a bell curve. I say this because their performances are nothing special over the time frame, they mirror the averages to a great extent.
Now a lot of a stock’s price movement has to do with the market and not individual performance. As you can see if you look at the chart, every stock and index listed suffered from the market implosion of the late summer this year. Notwithstanding all that, Oracle is doing quite well over the five years covered here. After more than three decades Oracle still behaves like a growth company and the other guys? Not so much.
What drives this?
To a great extent I suggest it is Larry Ellison. He hasn’t always been right but he’s also never been afraid to take a chance on an idea and often that has meant buying other companies. We can’t list them all but even just the more recent acquisitions and inventions are interesting. He bought Sun Microsystems in a move some questioned but he apparently believes that cloud computing eventually comes down to a processor somewhere going something that gets reflected back into space, or at least the cloud. Hence the importance of good, fast, cheap processing and the stack that goes with it.
Then there’s the database machine that Oracle more or less invented first with HP and then redeveloped with Sun. It’s called Exadata and it consists of many disks and a great deal of memory to reduce latency in very huge databases. Again this looks to be rather important as we move all computing to the cloud and utility computing providers become the new IT.
We can go on to consider the acquisitions of many of the front office software companies in the middle of the last decade. Many of us, myself included, said that would be the end of something (I forget if it was the world or just civilization) but that hasn’t happened. Oracle is a bit tardy with Fusion, the technology that was promised to glue it all together but I expect we’ll hear a lot about it next week.
So what to expect next week. Here are a couple ideas.
Oracle platform in the cloud?
All the pieces are apparently available including, most formidably, the hardware in Exadata and Exalogic. With the gear and Fusion in place there is a reasonable expectation that Oracle could announce it will annex the Internet (remember Larry likes to win and there’s no reason to buy something you can just take).
Two years ago Ellison was the guy to made fun of clouds and cloud computing but he’s one of the better strategists in Silicon Valley so watch this space. Oracle is in competition with many different companies but the tools and database spaces are some of the biggest ones around. It might be interesting to spar with Salesforce over CRM but an Oracle platform could really take it to Microsoft, a company with a lot more marketshare.
A social announcement?
I have no idea what might be announced by Oracle on the social side but it won’t be ignored — it’s too big and too ripe with potential. Oracle is not a leader in social by most measures — they aren’t Facebook or Twitter or Salesforce (Chatter) or Yammer or anyone else. Nonetheless, the company has been making excellent progress off the radar in business social solutions. There is a raft of social and analytics focused on the front end of the B2B funnel and some cool things aimed at social, mobile and retail. Oracle will have something to say.
Mobile
On the Mobile CRM side of the equation look for announcements supporting more platforms. And while we’re at it to maintain a lead in B2B enterprise selling they need to ensure their customers have great analytics support on the mobile platform so there’s that too. Finally, the power of mobile is about how many applications and processes you can mash up on the hand-held device and I think video is the most important so I would look for something with video in it.
That’s it. I don’t know exactly what Oracle is going to do, I haven’t been briefed as I write this. But it’s my job to speculate and I love my job. The company has a history of coming up big when it needs to and today is no exception. That’s what makes Oracle a growth company still after all this time.
Shark Jumping at Dreamforce
Microsoft's gambit didn't pay off
Microsoft’s gambit backfires
It didn’t have to be this way. Microsoft and Oracle and others used the Dreamforce week as marketing opportunities with questionable success showing that it’s better to do nothing than to try to get cute. Each company’s attempts were either half hearted or backfired and only served as statements of “We’re number two!”
I was in San Diego and Cannes several years ago when Salesforce got cute around the edges of the competition’s user soiree and it worked and now it seems like everyone wants to be cute. San Diego and Cannes were Siebel events. In San Diego, Salesforce set up tables outside the convention center and gave out Krispy Kreme donuts and coffee to Siebel users. It was a lark, a joke that was so innocuous even Tom Siebel played along and was seen on tape quaffing some coffee. In Cannes a little French panel truck circled the Palais de Congress with the famous, or infamous depending on your world view, Salesforce no software logo.
These were simple pranks that have a long history in politics and were pioneered by the late Dick Tuck, a Democratic operative who once famously hired a group of obviously pregnant black women to picket a Nixon rally with Nixon’s own campaign signs which read, “Nixon’s the one!” Yes. After Nixon won the election one Donald Segretti was appointed to be the GOP’s answer to Tuck. He was implicated in the Watergate fiasco and went to jail as I recall.
Twain said, “History doesn’t repeat itself, but it rhymes” and this week we saw it rhyme in San Francisco. Oracle hung a sign on the side of one of the Moscone buildings that proclaimed “Oracle #1 in CRM” they did nothing else to bolster their claim and by the end of Dreamforce I am sure Hemingway would have said that it hung a “flag of permanent defeat”.
In contrast Benioff has crashed the Oracle party in the last two years to deliver a mature and positive message. He can afford to. As one of Oracle’s largest customers he can have it both ways but while taking advantage of the situation he remains above board (for the most part) and starts his speeches with the words, “We come in peace”. It’s funny when David tweaks Goliath but it doesn’t work backwards.
Oracle's only effort
The contrast with Microsoft’s overreach in San Francisco could not be more glaring. Microsoft borrowed from the book of Segretti with a campaign that attempted to pun on the word force. People on Segway two wheelers scooted around in front of the Moscone with posters of a supposed user and a headline reading “I didn’t get forced”.
The picture was supposed to be of a real customer who decamped Salesforce for Microsoft but we never found out who he was or what company he worked for. The campaign was supported by a full-page ad in The Wall Street Journal on Monday and for a few hours things looked a little dim for Dreamforce. Not to worry though. On Wednesday morning, the “user” showed up right on stage at Dreamforce fresh from SFO and parts unknown.
Here I think Larry Ellison’s tutelage and ancient Chinese warrior philosophy took over. Benioff did what we would hope any CEO worth his perks would do. He asked what was wrong and promised to do better then he publicly asked the entire Dreamforce audience to invite the prodigal customer to return to the fold. Of course he agreed.
In all likelihood the customer was an actor or a model who stood for a Microsoft photo shoot. What’s remarkable is that he wasn’t under contract with Microsoft for a longer term, which would have prevented him from being present at Dreamforce. Instead the Benioff marketing machine simply rolled up Microsoft’s campaign and stuffed it back from where it came.
I hate to be hard on Microsoft because they are nice, hard working people and they have good products and a clear vision. But I am simply relating the facts that were everywhere to be seen.
Even after ten years of watching Salesforce play chess while they played checkers, few people in the industry understand that Salesforce is thinking several steps ahead of them. For instance, just as the whole cloud computing discussion looked like it was leveling off and achieving a kind of parity between the multi-tenant and single tenant camps, Salesforce came along and upped the ante again by introducing database.com, the Heroku acquisition and Chatter.
If this was poker I’d say that for ten years the rest of the industry has been calling while Salesforce just keeps raising the stakes. If you’re going to win at this game you’ve got to leapfrog but the establishment never leapfrogs because it would upset their hegemony in the legacy base so you get the situation you have.
Much as I enjoy these confrontations I hope they stop. The clear lesson from this week is that you can over do it. And when the spotlight is on Salesforce, Oracle, Microsoft or whoever, that company has the public relations advantage. They have millions of dollars staked on a successful outcome and some skunk works prank by a competitor is not likely to achieve anything positive for the simple reason that it’s ad hoc and the principal vendor has been planning the event for a year.
The real winner in the vendor effort to leverage Dreamforce this week was SAP. They didn’t pay much attention to Dreamforce but they did try to leverage the fact that a high percentage of the analyst industry’s best and brightest were in San Francisco. When my work in San Francisco was done I went down to Santa Clara for a day-long briefing. SAP simply wanted to share with us what they were doing in the product area to take advantage of cloud computing, social and other technologies. They’ve got some good things in the works and while they’re just as competitive as any other vendor, they simply decided to let their products and services speak this week rather than their marketing department. It was such an adult thing to do.
