What Microsoft can learn from Oracle: greed and market share

The consolidating world of enterprise software, Microsoft has much to learn. Oracle's Larry Ellison understands that proprietary software is a slow-growth business going forward, and positions his buying spree accordingly:

Mr. Ellison has explained his deals in language a third-grader could understand. At an investors' conference in 2006, he declared: "We want to be No. 1 in all the segments. This isn't vanity. The No. 1 software company in every segment makes all the money....We never buy anything where it doesn't put us in the No. 1 position or get us in such a strong No. 2 position that we think we can get to No. 1 very quickly....It's No. 1 or it's over."

Microsoft's Steve Ballmer? Perhaps embarrassed to have ambition anymore after too many bouts with the antitrust authorities, Ballmer explains Yahoo! and other acquisitions in terms of cost-cutting synergies and what-not. Namby pamby "we love customers" stuff. Since he announced his not-so-hostile takeover of Yahoo!, Microsoft's stock has been hit 11 percent.

For the biggest vendors, it's just a market share question, and Oracle has been rewarded for aggressively seeking market share for market share's sake. Its stock is up 67 percent in the last five years, while Microsoft's is up 24 percent.

So while Microsoft attempts to persuade the world that it just wants to befriend everyone, Oracle buys, fires thousands of people, and makes a lot of money in the process. Oracle's method isn't pretty and it's certainly not the only way (nor is it the way that I'd personally choose), but it has been effective.

For Microsoft to compete it may have to start owning up to its ambition. It wants market share. It wants dominance. It wants to remove customer choice. Just like Oracle.

It might as well tell it like it is.

Author: Matt Asay @ blogs.cnet.com

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ORACLE Magazine 2008

Traditional relational content, unstructured content, XML, 3-D spatial data—your enterprise is home to all kinds of information. Read how customers are using Oracle Database 11g to store all their data, simplify management, and improve systems performance.

ORACLE Magazine 2008
84 pages | Jan-Feb 2008 | PDF | 6 Mb

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How to Deal with Oracle Licenses

Oracle customers got some advice on how to get the best deal and protect themselves while licensing software from the enterprise software giant.

Oracle's licensing practices have been maligned as overly confusing and unfair. But Eliot Arlo Colon, president of Miro Consulting, an independent firm in Fords, New Jersey, didn't get into specifics about particular policies, instead organizing a webinar around four categories: compliance, discounts, ongoing annual support costs and terms and conditions.

"When I look at e-mail subject lines, these are the things we get hit with," Colon said.

"Compliance is the foundation. Without it, nothing else matters," he said, adding that it is "not a gray area. Either you're compliant or you're not. ... If you consider areas [of use] gray, or your vendor considers areas gray, you should be concerned."

Companies should self-audit their licenses twice a year, and it should be a "thorough review," not a couple of mass e-mails, he said: "It's definitely more of a bear than most people would anticipate."

A third party should review the audit, and the company must possess a "stated and defendable" position on gray areas, he added. It is also wise to get assumptions confirmed in writing: "If it's not stated in your agreement that you have that right, chances are you do not have that right," he said.

Oracle vigorously defends its intellectual property, according to Colon. "You always have to assume an audit is only 30 days away," he said. "We've worked with companies that say 'We're a strategic partner, we're in the Oracle top 50,' and then they're audited."

Colon offered a range of advice concerning license cost. While Oracle and other vendors tend to offer better deals at certain times of the year, customers shouldn't be easily tempted by a low price, he said: "Waiting until a vendor's end-of-year, end-of-quarter may not be in your best interest if it's changing your business process. ... Everyone wants to get a good deal, but discount isn't the whole game. It's total cost of ownership."

To that end, organizations should take a close look at their existing annual support costs, he said: "You may find that your support is a lot better than you thought, or you might find products that you're supporting and not using. ... or that Oracle has acquired half the software you've got and now it can be supported under one envelope."

In fact, enterprises should review their annual support spending at least twice per year, Colon argued.

IT shops should also seek to rework any complex and ambiguous language in license contracts; determine how globalization and consolidation has altered their company's licensing needs; mull the ramifications of licensing among mobile workers; and ensure they have collected all proofs of purchases for storage in an asset management repository, Colon said. His company advises enterprise-software customers of companies including Oracle and Microsoft.

When renewal time comes, companies should weigh whether it makes more sense to renew the existing pact or formulate a new one, according to Colon. "Businesses are very dynamic. If you have an agreement signed four years ago, chances are it doesn't work for you today," he said.

Firms must also ensure they and Oracle are working from the same set of terms and conditions, Colon warned: "You want to make sure you're protected -- believe me, Oracle is going to make sure they're protected."

Author: Chris Kanaracus @ www.pcworld.com

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