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Ellison: No other big buys in mind

Oracle CEO tells customers that engineering, not large deals, is top priority in an increasingly competitive applications market.

Larry Ellison said engineering rather than deal-making will be Oracle's top priority over the next two years as the company prepares for an increasingly competitive business applications market.

Speaking to customers at the Oracle OpenWorld conference in San Francisco, company CEO Ellison said Oracle does not "have any other large acquisitions in mind" after the company's planned takeover of Siebel.

"We don't know" what acquisitions will be next, Ellison said in response to a question, adding that Oracle is focused on incorporating acquired companies.

Instead of more megamergers, he said, the company is investing in beefed-up middleware products and expanded hosted services in the next two years.

Oracle is investing in making its Fusion middleware support industry standards and work with other products, notably open-source software and IBM's WebSphere Java-based middleware. Ellison said business intelligence tools, grid database automation and security are the other top development investments over the next two years.

Oracle also intends to further expand its hosted-application service offerings. One of the benefits of acquiring Siebel will be to gain current customers that are using Siebel's OnDemand offering, he said.

"You'll see us redoubling efforts in on-demand," Ellison said. "We think we can offer you software that you run entirely on your own or run on our computers with our labor--and every flavor in between."

Ellison sought to calm customer concerns that Oracle will force customers of PeopleSoft or J.D. Edwards to change their databases and middleware to Oracle's products. A flexible software foundation will help Oracle better compete against SAP and other rivals, he indicated.

"The application space is going to be diverse and complex five years from now, and it's not going to simply be Oracle versus SAP," he said.

Ellison ticked off a number of companies that he thinks will become "serious players," including Microsoft, on-demand software providers such as and NetSuite, and large system integrators such as Infosys and ADP.

"We do have to worry about all of them, because we're competing for the same application dollar," he said.

Continuing an ongoing dispute, Ellison said SAP's NetWeaver software is far behind Oracle's comparable middleware products in market share.

"I don't know why SAP picked a middleware battle with Oracle," he said. NetWeaver "is a rather incomplete suite, and it seems an odd place to focus. We're thrilled they picked that fight."

Ellison also reiterated the company's desire to shift its pricing structure to one based on a company's size or other metrics, rather than by charging per processor.

"As an industry it makes no sense for us long term to price the way we do, and I'm all for other ways, whether it's employees, revenue--something auditable," he said. "I think that licensing model works better for most people than what we currently have."