Ellison predicts shrinking software market
Oracle's chief executive says the economy won't improve until year's end at the earliest--and he predicts the potential demise of Commerce One and Ariba.
"We have such a conspicuous slowdown, it almost feels like, especially for my industry, we've been in a recession for a long time," Ellison said during a press conference at company headquarters here. "When will we resume normal growth is anybody's guess. I think by the end of the calendar year or the end of the first quarter next year."
Ellison declined to comment on the company's current financial quarter, but added that Oracle is in a better position than others to weather the cooling U.S. economy. When the economy improves, Oracle has many customers that will spend considerable amounts on software, he said.
"The companies that weren't uplifted by the false Internet phenomenon should do better," Ellison said. "Cisco has a huge problem (because the) bulk of their business is telcos and enterprises connecting to the Net. We're much more diversified. We had dot-com customers and ASPs (application service providers that rent software over the Web). But that was only 15 percent of our business."
Besides talking about the economy, Ellison trumpeted Oracle's e-business software, the Oracle 11i e-business suite, as a one-size-fits-all package for managing a company's marketing, sales force, manufacturing, financial and Internet-based activities.
Ellison, who has long argued for simplicity in computing, said businesses now want an all-in-one package because it's simpler and cheaper. Companies don't want to have to piece together different software products from different companies and attempt to glue them together, he added.
Giving Microsoft a rare compliment, Ellison said Microsoft was smart in bundling word processing, spreadsheet and presentation graphics software into Microsoft Office.
"Microsoft got it right," he said. "If you look at the history of the PC software industry, there are no spreadsheet vendors. There are no word processing vendors. There's an Office suite vendor."
Because of that reasoning, Ellison believes Commerce One and Ariba may not survive as standalone players in the e-business software market. Ellison said companies that offer a full range of business software, such as rival SAP, will survive, but that smaller companies, such as Commerce One and Ariba, will not because they don't offer a suite of products.
Commerce One and Ariba develop software that helps link companies with their suppliers, customers and partners through online marketplaces and trading exchanges. They may be bought out by larger companies, or potentially become bit players, Ellison said.
"Since they're doing a tiny fragment of the job, I don't think there will be many small component suppliers that will survive this shakeout," he said. "People like to get all the pieces that fit together. SAP will certainly be a survivor. But tiny components suppliers will not be--Ariba, Commerce One."
Ariba and Commerce One representatives could not be reached for immediate comment.
Ellison said the company on Tuesday will announce a new software and service package that promises Oracle will install its Customer Resource Planning (CRM) software in 90 days. And if Oracle misses the deadline, the company will pay for all consulting costs after the 90 days, he said.
Taking into consideration the new 90-day guarantee, Oracle will be able to install software much faster than rivals Siebel and PeopleSoft, Ellison said.
He added that the company will offer a similar 30-day guarantee for its e-business software that automates the buying of products from suppliers and partners. Ellison also said Oracle will release on May 15 its next-generation 9i database, the company's flagship software that stores and collects corporate and Web data.