Oracle, rival at odds in services battle

Oracle is going head-to-head with Salesforce.com, an online service started by a former Oracle executive and partly funded by Oracle CEO Larry Ellison.

3 min read
Salesforce.com, an online service started by a former Oracle executive and partly funded by Oracle chief executive Larry Ellison, has asked Ellison to resign from its board after Oracle started a rival service.

Larry Ellison The database software giant this week quietly unveiled OracleSalesOnline.com, raising the competitive bar against pioneers Salesforce.com and Sales.com, a venture spun off by front-office software leader Siebel Systems.

Similar to services already being offered by both companies, OracleSalesOnline.com gives a company's sales force immediate access to sales productivity tools and critical customer information over the Web, based on a pay-per-use model.

Salesforce.com, which launched in early February, was founded by ex-Oracle executive Marc Benioff. The San Francisco-based start-up is backed by some big names in the technology industry, including Ellison and KLA-Tencor founder Bob Anderson, who both sit on the company's board. Halsey Minor, chairman of CNET Networks, which publishes News.com, is an investor in Salesforce.com.

Now that Oracle has launched a product to rival Salesforce.com's offering, the start-up's board has asked Ellison to step down, according to Benioff. An Oracle representative declined to go into further detail except to say that Oracle has not made any announcement relating to OracleSalesOnline.com.

Benioff, who learned of Oracle's new offering earlier this week, said he doesn't blame Ellison's decision to make a similar play and views his friend's move as "healthy competition."

"Software is dead," Benioff said in a phone interview. "Larry knows that and I know that...We knew software was dead, but we didn't realize software will be dead in the year 2000. Every (software maker), and that includes Oracle, needs to be in this market."

Since its conception, Salesforce.com's mantra has been, "The end of software." Customers aren't required to install software or additional hardware when they use Salesforce.com applications. Instead, they pay about $50 a month for the first five users and $50 a month per additional user for the service by accessing it through a Web browser.

Oracle, which also offers its business applications via an application-hosting model in its Oracle Business Online hosting unit, said its new service also can be fully accessed through a browser. On the new site, the company said OracleSalesOnline.com is the first in a series of online service offerings.

Marc Benioff "I can't fault Larry (for starting a competitor to Salesforce.com)," Benioff said. "I would have done the same thing."

Aberdeen Group analyst Denis Pombriant said Oracle's latest move is a smart one, especially at a time when the market for sales-force software begins to garner attention from the investor community.

"(Oracle) sees an opportunity in this space," Pombriant said. "The number of companies entering this market and the amount of interest from the (venture capital) community and others is a clear indication that many people who understand the market think that this is something with legs."

Proponents of the application service provider (ASP) model--in which companies rent software instead of buying it--say the model offers companies an alternative to using expensive and, at times, complicated business software. Companies typically pay a monthly fee or sign a subscription-based contract for use of the software.

"Historically, (companies) may have had to buy software and implement it, and then you would have a nice client-server system that wouldn't do any good for your road warriors," Pombriant said. "This technology really gives the laptop-toting road warrior greater access to corporate resources."

Salesforce.com aims its online service at small and midsized businesses, helping salespeople track leads and customer account information via a secure Web site. The company has roughly 10,000 clients to date, including sales teams at German industrial giant Siemens and Linux leader Red Hat Software.

Earlier this month, Salesforce.com inked its first major distribution deal with computing giant IBM. The two companies will provide Salesforce.com's online applications coupled with IBM hardware, computer support and software to small businesses that want to move their operations to the Internet.