Thank heavens for Larry Ellison. Without the smack-talking Oracle (ORCL) co-founder and chief executive officer, the $1 trillion-a-year enterprise computing market would merely be huge, crucial—and boring. Oracle and fellow tech titans like IBM (IBM), Hewlett-Packard (HPQ), and Cisco Systems (CSCO) make the technology that runs major corporations around the world. But the intricacies of their products can put regular folks to sleep faster than a Senate hearing on Net neutrality.
After what seemed like an uneventful interregnum in which Ellison kept his swipes largely to himself, the rabble-rouser of Redwood Shores, Calif., is acting out once more. In the past two months alone, Ellison compared the HP board to "idiots" for firing Mark Hurd, hired Hurd, then again ridiculed HP's directors when they brought in a new CEO. In an e-mail to The Wall Street Journal, Ellison called the selection of former SAP (SAP) chief Léo Apotheker "madness" and said HP's whole board should resign. He even made fun of SAP co-founder Hasso Plattner's "wild Einstein hair." (Although, to be fair, Plattner did moon Ellison years ago during a sailboat race.) The Oracle chief "basically says to all players, 'I am your enemy,' " says Marc Benioff, CEO of Salesforce.com (CRM) and a former Oracle executive, who himself has been the target of several Ellisonian barbs over the past few weeks.
Tech Giants Collide
Ellison's oratory is more than just entertaining Silicon Valley street theater—it also speaks to increased competitive tensions in the enterprise computing business. The IT arena these days is a little like a game of bumper cars, with big companies in once-adjacent sectors of the industry now relentlessly colliding. Hardware makers such as Dell (DELL) and HP are getting into software, and software companies like Oracle are getting into hardware. The goal is to be able to sell software in tandem with computer hardware and help corporate customers tackle complex tasks like managing global shipments of components or gleaning new insights from data.
"We had 15 years of relative peace where everyone had their own patches and you had all these wonderful camps and coalitions," says James Alexander, senior vice-president of Info-Tech Research Group. "Now these guys need to keep driving top-line revenues and market share, and the only way to do that is through acquisitions and getting into somebody else's business."
Ellison, the world's sixth-richest man, wears his corporate strategy on the sleeves of his tailored Italian suits. Think of his colorful outbursts as a map of Oracle's ambitions. Next year, Oracle plans to deliver a suite of business applications called Fusion to replace an aging collection of software it owns from acquisitions of PeopleSoft, Siebel Systems, and other companies. That will put Oracle into closer competition with Salesforce.com, whose online software helps companies manage customer relationships over the Web. Thus, the Benioff-bashing. During his keynote at the annual OpenWorld conference for customers last month, Ellison slapped up a slide that digitally altered the title of Benioff's 2009 book, Behind the Cloud, to read Way Behind the Cloud. Benioff says he has some admiration for his former boss's tactics. "One of the things he's done with Oracle, which is a relatively boring database company, is focusing on the most exciting things," Benioff says. "It's a tremendous skill that he has." Oracle spokeswoman Deborah Hellinger declined to comment.
HP as Threat
If the volume of Ellison's attacks is any indication, he views HP as a far greater threat. Both companies want to create the integrated hardware and software systems that can satisfy a corporate customer's every IT need. With that goal in mind, Oracle paid $7.4 billion for Sun Microsystems in 2009, outbidding IBM. Ellison told analysts last month that he would consider buying a chip company, which helped lift the stocks of semiconductor makers.
Rob Enderle, a longtime tech industry consultant, believes Ellison had once hoped that HP would sell Oracle some of the necessary pieces to combat his greatest foe, IBM. "HP is the only property out there that would allow him to take on IBM in what remains of his working lifetime," Enderle says. "The only thing that makes sense is that he is now trying to drive the value of HP down or force HP's board into a more collaborative position."
HP, like Oracle, has also been expanding its business, shoring up its presence in software and mobile computing. It bought Palm for $1.2 billion in April and beat Dell last month in a bidding war over 3Par (PAR), paying $2.4 billion for the data storage vendor. HP hired Apotheker as CEO primarily for his background in software and his experience running a large global business, says a person close to the hiring process. Ray Lane, the venture capitalist who was Oracle's president in the '90s, will become chairman of HP and is an avowed Ellison rival.
"I don't think they'll hesitate to hit back against Oracle," says Bill McDermott, co-CEO of SAP, who joined the company in 2002 and was mentored by Apotheker. "Both of them are very capable of doing that."
Analysts believe HP's new hires could help it work more closely with SAP to create a mega rival to Oracle. "HP and SAP are relatively good partners anyway, but there is always potential for them to get closer," says IDC analyst Al Hilwa. That may be Ellison's worst nightmare, but it would be great for customers and Silicon Valley's armchair observers. It would mean more intense competition, more price-cutting, and almost certainly more entertainment courtesy of Larry Ellison.
The bottom line: Larry Ellison's public attacks on rivals aren't just theater—they're a barometer of heightened competition in enterprise computing.
Ellison on the dismissal of Hurd: "The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago."
On HP's new CEO: "They pick a guy who was recently fired because he did such a bad job of running SAP. … The HP board needs to resign en masse."
On competing with SAP: "Just like we beat them badly in middleware, they have even less of a chance to beat us in databases."
On Bill Gates: "Referring to Gates as the smartest man in America isn't right. … Wealth isn't the same thing as intelligence."