Check out my grip.

Larry Ellison Needs to Let Go

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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Larry Ellison is a decade too late with his decision to give up the role of chief executive officer at Oracle Corp. His long-time arch-rival Bill Gates, who made the same move back in 2000, liberated Microsoft Corp. to become one of the leaders in cloud computing, an area in which Oracle is a laggard.

Even now, 37 years after starting Oracle with a $1,200 investment, Ellison is having a hard time letting go. Consider his explanation of why he split the CEO job between Safra Catz and Mark Hurd:

"I'm going to continue doing what I've been doing over the last several years. They're going to continue what they've been doing over the last several years. So they deserve the recognition, they deserve the CEO title, and I'm happy that our management team continues forward as a team."

When Gates stepped down in favor of Steve Ballmer almost 15 years ago, he didn't cling to power. "I might be threatening to write code," he remarked mildly about his chosen role as Microsoft's chief software architect. He and Ballmer both let younger executives develop the company into business areas they didn't necessarily understand as well. When both of them left Microsoft this year, they put it in the hands of one of those young executives: Satya Nadella, who had run the cloud division. In large part thanks to Nadella, Microsoft is now one of the leadersin the cloud.

Oracle had $477 million in cloud revenue in its latest quarter -- less than half that of Microsoft, which is also gaining market share. This matters, because the cloud is crucial territory for companies selling enterprise software. Customers can forget about building their own costly data centers and systems. Instead, they can outsource the task to technology companies for a subscription fee -- a potentially lucrative new source of revenue for companies such as Oracle and Microsoft.

Ellison didn't completely miss the revolution -- he is a major investor in Salesforce.com, one of the big players in cloud computing. Still, Oracle has been forced to make a dealallowing its software to run on the cloud platform built by Microsoft, a rival Ellison once hated so much that he hired private detectives to rifle through trash cans for evidence to further an antitrust investigation.

Oracle, of course, is far from doomed. Completely changing enterprise software is a difficult and expensive move for companies to make, so many of Oracle's existing customers will be switching to its cloud services. Ellison, however, could have made life easier for his company by handing over the reins earlier.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor on this story:
Mark Whitehouse at mwhitehouse1@bloomberg.net