Is M&A stifling Oracle's creativity?

Oracle has bought its way into a dominant market position, but is this stifling its ability to write great code and then support it?

Vinnie Mirchandani writes provocatively on his Deal Architect blog that Oracle's penchant for acquisitions may be hampering its ability to innovate in-house and write code:

In existing Oracle internally developed and acquired products in the last five years, Oracle's enhancements have been anemic.

Oracle, in my opinion, has forgotten how to develop code. Its top executives are deal makers, not technology visionaries. Worse, when it comes to their acquisitions, they cannot retain or easily replace the entrepreneurial talent...The rapid pace of acquisitions has also had a significant impact on Oracle support.

Customers report frequent and confusing changes to Oracle's support policies, as so many products go in and out of stages of "lifetime support." Little has been done to rationalize support across products--other than, of course, raise maintenance to 22 percent .

Arguably, it simply does not matter: even through acquisitions, Oracle has managed to deliver increased value to its customers.

Even so, a big question is looming as to whether Oracle, which spends just 10 to 15 percent of its budget on research and development, can keep up with competitors and, in particular, open source.

"Open source?!" you say, "that's just a big commodifier of others' innovations." Not so. In fact, if you look at the budgets of most emerging open-source companies, we spend significantly more on development than Oracle and, importantly, more of that R&D budget goes toward real innovation, not reinventing the wheel. Indeed, that's the whole premise behind open-source development: efficient reuse of code.

That's not the whole story, however. As Mirchandani points out in a follow-on post, Oracle customers are troubled by its support morass. Such customers are likely to be enticed by open-source offerings, which make support, not license fees, the centerpiece of their offerings.

Oracle has made a lot of noise about its Unbreakable Linux and has suggested that the impetus behind its Red Hat knock-off is that its customers couldn't find Oracle-class support at Red Hat.

Well, Oracle is probably right, but not in the way it intended: Red Hat's support and value proposition is apparently much better than Oracle's, given that Red Hat continues to leave Unbreakable Linux in the dust .

Oracle is a great company that continues to make smart moves. However, it is becoming more and more like Microsoft: less about innovation and more about distribution. That's not a bad thing. Not at all. But Mirchandani's comments point to a few areas, like support, where Oracle still needs to get its execution right for the strategy to pay off in the long term.

Follow me on Twitter at mjasay.

Tech Culture
About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.


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