Tech Industry

Oracle software takes on Microsoft

New "collaboration" software is less expensive than rival applications, says Oracle CEO Larry Ellison, but can the database giant stave off competition from the likes of Microsoft?

REDWOOD SHORES, Calif.--Oracle entered a new software market Wednesday by announcing new e-mail, calendar and messaging software--diving into waters dominated by Microsoft.

The new "collaboration" software will allow businesses to manage e-mail, voice mail and schedules, as well as hold Web-based meetings, and will allow employees to sync their information to wireless handheld devices. It is a combination of new and previously released Oracle technology and runs on top of Oracle's flagship 9i database software.

"We take all (customers') data and manage their data assets in one place," Oracle Chief Executive Larry Ellison said Wednesday at a financial analysts meeting at the company's headquarters here.

The collaboration software, available later this year, is the latest piece in Oracle's growing software lineup. Besides its database software, Oracle sells application-server software; technology that runs e-business and Web site operations; and its 11i eBusiness Suite, software that automates a company's financial, human resources, customer service and manufacturing operations.

Analysts say Oracle's entry into collaboration is a smart move as the company tries to stave off increased database competition from Microsoft and IBM. But they're guarded about Oracle's prospects in collaboration. With the move, Oracle takes on Microsoft's Exchange e-mail server software, as well as IBM's Lotus family of collaboration software.

Ellison said he believes the company's main competitor in collaboration is Microsoft, not IBM.

"We think Lotus is a dying animal. Our focus is really Microsoft," he said.

Oracle's push into e-mail and collaboration is not entirely new, but this is the first time the company has sold a separate product for collaboration. At Comdex last November, Oracle offered its 9i database and application-server software as a more reliable and secure alternative to Microsoft Exchange to house e-mail.

Also part of the collaboration software is Oracle's Internet File System (IFS), 2-year-old technology built into the database. The company's goal for IFS was to make the Windows operating system unnecessary, positioning the technology as a replacement to the Windows File System built into Microsoft's operating system. IFS stores and manages different kinds of content, including audio, video and e-mail and Microsoft Word and Excel documents. It moves data storage from a PC's hard drive to back-end servers on networks.

Oracle has pitched its own products as potential replacements for Microsoft software a couple of times before with very little success, a fact that Ellison acknowledges. But Ellison said he believes Oracle can be competitive this time with its new Collaboration Suite, which he says is less expensive than his rivals' options.

"It took us a long time to get the pieces together, so we think we've gone down the road to solve all these problems. It was not easy," he said.

Ellison said Oracle got one crucial piece of its collaboration software through its recent acquisition of a small, 15-year-old company named Steltor, which builds software that allows employees to manage their calendars.

Illuminata analyst James Governor said the overall collaboration market is still emerging and that Oracle could find some success because Microsoft recently upset some of its customers with a new software pricing scheme that could force customers to pay more for Microsoft software, including Exchange.

Pitching it again
"Oracle makes a desktop productivity play once a year like clockwork. This is classic Oracle--if at first you don't succeed, then pitch it again next year," Governor said. "This time around, however, users are far more open to non-Microsoft alternatives, which does favor Oracle."

Last year, Redmond, Wash.-based Microsoft announced a radical change in the way that businesses buy its software: Rather than simply being able to upgrade their software when they wanted to--and when their budgets allowed--companies would need to commit to buying operating-system and application upgrades ahead of time through an annual fee. Microsoft customers can decline the plan, but they will lose out on discounts.

Many Microsoft customers have howled in protest, citing estimates that their costs could more than double at a time when the sputtering economy was cutting into their own revenue. Microsoft customers have until the end of this month to join its new licensing program.

"Microsoft is charging a fortune for massive Exchange upgrades. It is much cheaper to go to Oracle," Ellison said.

Analyst David Hilal, of Friedman Billings Ramsey, predicts Oracle's new collaboration software can add some new revenue, but it won't be a huge revenue generator. Hilal said Oracle could sell the product to many of its current customers who want to buy its products from one company.

"This is a good incremental sell to midsized companies," Hilal said. "It's not significant, but it can serve as an add-on (sale) for their customer base. There are a lot of Oracle customers who might want to standardize with one software company."

Customers can either buy the Collaboration Suite and install it themselves or pay Oracle to host and manage the software, Oracle representatives said.