Larry and Marc Round 2 or Is It Round 3? #OOW11
Ahh, what a difference a good night’s sleep makes. The Greeks are still threatening default on their bonds, the economy is still in the loo, the major stock indices are teetering on a bear market precipice and Marc Benioff is still going to speak at Oracle OpenWorld or at least next door. But there is some clarifying news.
First, the guys at Oracle can claim that they didn’t cancel Marc, they simply moved his talk to Thursday. Unfortunately, Marc is getting on a plane this afternoon to go on sales calls back east (The man still visits customers and asks for the order. Not making any comparisons, just sayn).
The trip was planned for weeks according to my sources at Salesforce so there was no way to reschedule. I am sure that was communicated when Oracle offered the choice 8 am slot on Thursday morning instead. It’s sort of like saying, no, your vacation was not really cancelled, it’s just been rerouted to Siberia.
There’s been some good analysis by Larry Dignon suggesting that the audience is being played and I think there might be some truth in it.
Last year, if you recall, there was a minor contretemps in the press between Ellison and Benioff over cloud computing. Larry had introduced his compute server, Exalogic, and Marc was deriding it as a cloud in a box. “Beware of the false cloud,” he said. We all laughed and reported all of it. Larry got coverage, Marc got coverage and it was all good for business.
I am sure this was not collusion, just two guys who know each other’s moves and how to play a certain game. This resembles improvisational comedy quite a bit or maybe it is real life imitating improv. Here’s how it works — two funny people can riff on an idea for a long time without ever having a script by knowing a simple rule or two.
The first is be funny and the second is always say yes. In other words, regardless of what the other comedian says, accept it as valid and build on it, just never say no, I don’t think so, and the sketch can go on for a long time.
Don’t you think?
Like many human activities improv resembles an arms race with each iteration ratcheting up the stakes. Start with an insult, end with a war. Perhaps. There are some grains of truth in all this but as with improv, it is hard to determine how much.
For certain, Larry’s talk on Sunday was a train wreck panned by even the mainstream press. Was there concern that Marc would upstage Larry in his own venue? I believe Larry speaks this morning also. Marc will certainly talk about cloud computing and software and deride Oracle’s hardware despite the obvious fact that at the end of every cloud rainbow there is not a pot of gold but a server farm.
On the other hand, Oracle is late to the game with its Fusion products that would give them a whole cloud story. I sat in a briefing yesterday with nine IT executives and CTOs of companies that were in the Fusion beta program. We couldn’t report names of companies, but they exist and appear to be happy. That’s the state of Oracle’s newest cloud software though certainly products like CRM On-Demand have been around almost as long as Salesforce. Not to worry though, I think Oracle has made excellent progress, as I relate here, in the two years since Larry first derided cloud computing at the Churchill Club.
At any rate, the Larry and Marc show will go on today. It will be great theater and, like great improv, there will be a grain of truth in everything said by the participants.
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.
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.
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.