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Oracle customers eye new acquisitions warily

Will Oracle take its eye off the ball? Customers attending OracleWorld this week are wondering.

SAN FRANCISCO--Oracle's breathtaking buying spree is making some of its customers nervous.

The pace of the acquisitions--10 in nine months--is what's most worrisome, a handful of customers interviewed here this week at the company's OracleWorld convention said. At that rate, they fear that the company risks losing its focus on customers and technology, they said.

Shopping spree
Acquisitions are a key part of Oracle's battle plan for taking on rival SAP. Some recent buys:

Company: PeopleSoft
Date: December 2004
Price: About $10 billion

Company: Retek
Date: March 2005
Price: About $650 million

Company: Oblix
Date: March 2005
Price: Not announced

Company: TimesTen
Date: June 2005
Price: Not announced

Company: Context Media
Date: August 2005
Price: Not announced

Company: Siebel Systems
Date: September 2005
Price: $5.8 billion

Company: G-Log
Date: September 2005
Price: Not announced

Source: Company reports

"I know what it's like buying companies and integrating them," said Phil Walton, director of information services at Spirent Communications. "It's a nightmare. It's the hardest thing to do in business. It's a big risk."

Oracle began its acquisition streak in January with the $10.3 billion buyout of business applications rival PeopleSoft. It followed that up last week with a $5.8 billion purchase of Siebel Systems, another applications competitor. In between, it has gobbled up a bunch of smaller firms, including Retek, Oblix, and, this week, G-log.

Integrating the new businesses is a major undertaking, made more complicated by Oracle's long-term product plan. Under an ambitious project dubbed Fusion, the company plans to rewrite its entire applications suite in an attempt to merge the best features of the numerous incompatible and overlapping programs it now owns.

"That is certainly a mammoth task that no one has undertaken," said Jim Shepherd, an analyst at AMR Research. "Oracle has certainly never done it. No one really knows what's required."

The plan has customers wondering if Oracle has bitten off more than it can chew.

"It would be foolish if they weren't concerned about that," Jay Schaudies, global vice president of e-commerce at Manpower, said during a discussion panel at this week's conference.

Yet analysts say there's no reason to panic, judging by feedback from former PeopleSoft clients. "PeopleSoft customers are happier than they expected to be," Shepherd said. "Support, in some cases, is better."

Even concerned customers are finding reasons to be optimistic. One of them is Mike Prince, chief information officer of Burlington Coat Factory, who'd rather see Oracle eat than be eaten.

"Consolidation is happening in the software industry," Prince said. "I would much rather see Oracle expanding in that arena, rather than contracting."

Although concerned that Oracle management could "take their eye off the ball," Prince said he has a certain confidence in the company, after 12 years as a customer.

"The Oracle organization has shown a resiliency," Prince said. "I've seen them move into new application areas and into middleware. All the things they've done over the years, they've pulled off pretty well."