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THE DAY AHEAD: Is Oracle the next Microsoft of B2B?

For one of Microsoft Corp.'s biggest critics, Oracle chief Larry Ellison sure is sounding a lot like Bill Gates these days, especially when it comes to e-business.

The Microsoft (Nasdaq: MSFT) playbook is the following: Use the Windows operating system standard to open doors. Then take disparate programs such as browsing, spreadsheets and word processors and integrate them into one suite. That highly profitable approach, which got Microsoft in hot water with regulators, created a cash cow called Microsoft Office.

Now let's check out Oracle's business-to-business plan: Use your industry-standard database. Then take marketing, service, supply chain, Internet procurement and exchange, manufacturing and accounting, and human resources software, put it all together in one business-to-business suite and watch it fly off the shelves. Sound familiar?

Ellison, on a conference call Tuesday night, made the Microsoft Office and Oracle e-business suite connection. The results are about the same. Oracle (Nasdaq: ORCL) officials were short on adjectives (a first) when it came to its fiscal fourth quarter -- it was that good. The company creamed estimates with fourth quarter earnings of 31 cents a share on sales of $3.4 billion. Aside from light database sales growth -- officials said they designed it that way -- there wasn't much to complain about.

With all of Oracle's pistons firing, it didn't take long for the Oracle crew to start talking B2B.

"No one else is trying a global e-business suite," said Ellison, who took jabs at all of Oracle's competition. "It's an attractive idea. Our suite fits together, it's easy to understand, and it works on the Internet."

It's also a huge market. Ellison's classic example is a big company that's struggling to meld a bunch of different programs. The Oracle e-Business suite competes in marketing with Broadvision (Nasdaq: BVSN), sales with Siebel (Nasdaq: SEBL), service with Clarify, supply chain with I2 (Nasdaq: ITWO), Internet procurement with Ariba (Nasdaq: ARBA), exchanges with Commerce One (Nasdaq: CMRC), manufacturing and accounting with SAP (NYSE: SAP), and human resources with Peoplesoft (Nasdaq: PSFT).

Ellison's pitch to large customers is this: Why spend lots of money and time and take enormous risks trying to put these programs together? "It's easy to sell," said Ellison.

Analysts agreed. "Oracle's e-business applications are flying off the shelf," said Bob Austrian, an analyst with NationsBanc Montgomery Securities. Austrian said the e-business suite is about 10 percent of revenue now, but that target over a few years could reach 25 percent or so. In the quarter, applications software sales jumped 61 percent to $447 million.

At a recent B2B conference Commerce One CFO Peter Pervere countered Ellison's one-suite view. He said Commerce One is winning against Oracle because it has open standards. "Oracle's one-size-fits-all approach won't work," he said. "Not all companies are running on Oracle."

Acquisitions and partnerships, however, speak louder than words. Commerce One is beefing up quickly, and we have a hunch it has a lot to do with Oracle's e-business suite.

Commerce One recently hopped in bed with SAP, the biggest threat to Oracle. SAP has a lot of software, a lot of money and a huge installed base. Commerce One partnered with SAP because it knew it had to be bundled in with a larger suite.

In a press release, Commerce One sounded like it was quoting Ellison. "The to-be-named marketplace suite promises to revolutionize business by offering companies one-stop shopping for the entire range of e-business marketplace services," said Commerce One. SAP invested $250 million in Commerce One.

Ellison had a different take, especially since SAP is hardly famous for its open standards. "SAP is admitting it can't do something as simple as creating an auction by partnering with Commerce One," said Ellison, who just can't resist taking a swing at Commerce One and SAP.

Commerce One followed up its SAP pact by purchasing AppNet (Nasdaq: APNT), a Net services and integration firm, for $1.4 billion. AppNet sets up e-business applications and integrates them with existing technology.

Commerce One said the acquisition would significantly enhance its ability to deliver e-commerce services to its customers and would speed implementation of its business-to-business exchanges worldwide. ``We are a solutions company delivering both software and services. The SAP deal last week strengthens our software side, and AppNet strengthens the service side,'' said Commerce One CEO Mark Hoffman.

Ellison would counter that Commerce One isn't strong enough. The B2B software game will hinge on scaleable e-business architecture, not the applications themselves, according to Oracle. Ellison's integration-is-everything mantra is catching on quickly.

Commerce One got the hint -- it's beefing up so it won't become a WordPerfect in the B2B world. TDAIN