Oracle's eye on the future

Larry Ellison
CEO, Oracle

The event was preceded by the company's announcement earlier Wednesday that it expects to exceed analysts' expectations for earnings for fiscal 2006--a move that at least one analyst said demonstrates strength from Oracle's recent $10.3 billion acquisition of former rival PeopleSoft.

"We bought PeopleSoft to cement our position in several areas. We are now the No. 1 applications provider in North America," Larry Ellison, Oracle's chief executive, said during the analysts' conference. "Applications companies have different strengths in different industries and geographies. We would never dream of competing against SAP in the energy or automobile industries...we're not going to bang our heads competing with them in Germany."

Ellison noted that instead, Oracle will focus its efforts on capturing the top position in markets where it is now the second leading player and will invest resources in areas where it is already the market leader.

One example he cited was the applications server market, where IBM is currently the market leader and where BEA Systems and Oracle are battling for the No. 2 position.

"We were nowhere in the application server market two years ago. Now we're either tied for second with BEA or close to it," Ellison said. "I'm quite convinced we'll be No. 1."

Oracle has previously entertained the notion of acquiring BEA, according to court documents the database giant filed last year as part of a federal antitrust trial related to its PeopleSoft bid. That document, created in spring 2003, included a list of companies for Oracle's board to consider as potential acquisition candidates.

During the analysts' day event, Ellison, while not specifically naming BEA as the next buyout target, said Oracle would be interested in a strategic acquisition to help push its way into the No. 1 slot in the applications server market.

"One way we can scale our business is through acquisitions," Ellison said.

Oracle's CEO also reiterated the company's plans for integrating PeopleSoft into its operations. Ellison will be focused on Project Fusion, the first business applications software product that will feature the combined efforts of development teams from PeopleSoft, J.D. Edwards and Oracle. J.D. Edwards is a company PeopleSoft bought shortly before Oracle set its sights on PeopleSoft.

Oracle is also planning to enter the market for collaboration software this year. The company is looking to offer content management, Web conferencing, voice over Internet Protocol technology, calendar scheduling and other features to its relational database.

Ellison described the industry as a multibillion-dollar market, and one in which Oracle can be a viable competitor, particularly in the content management arena. Microsoft is currently the largest player in the market.

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During his speech, Ellison said that although people may feel that the database market is slow-growing and saturated, he feels there is still a significant amount of growth potential left, and that the industry is actually undergoing a rebirth with grid computing--a technology that provides the illusion of a mainframe database computer via clustered computers. In fact, he said, Oracle is expecting to get a "new beginning" from its grid computing strategy.

"We are in the beginning days of database grids," Ellison said.