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The state of the Net

Ellison, who founded Oracle in 1977, has used the network model for his own company, moving human resources information and employees' email onto the Internet, making them accessible through Web browsers. He's also Web-enabled every Oracle product, from its market-leading database to applications.

CNET News.com Newsmakers
May 6, 1999, Larry Ellison
The state of the Net
By Wylie Wong and Jeff Pelline
Staff Writers, CNET NEWS.COM

Larry Ellison has an incredible knack for making headlines.

This year alone, the avid yacht racer steered his 80-foot vessel through a ferocious--and deadly--hurricane to win a contest in Australia. What astonished me was how quickly the personal computer mutated
into a network computer. Then the rich, jet-setting bachelor infuriated San Jose International Airport officials as his new private jet routinely broke curfew, landing at all hours of the night. And most recently, he publicly pondered a future run for California governor.

The limelight--or notoriety--results from the position he's best known for: the Microsoft-bashing, Internet-touting leader of Oracle.

But love him or hate him, Ellison is a visionary.

For years, his mantra was the network is the computer. He pushed the network computer, a $500 device with no hard drive that ran the operating system and applications off of a main server. The threat of the low-cost device compelled PC makers to drive down the cost of computers. And as a result, the NC itself mostly fizzled, but the concept of the network as the computer has begun to take hold with the Internet's emergence.

Ellison, who founded Oracle in 1977, has used the network model for his own company, moving human resources information and employees' email onto the Internet, making them accessible through Web browsers. He's also Web-enabled every Oracle product, from its market-leading database to applications.

In a recent interview with CNET News.com, Ellison said he wouldn't presume to tell Microsoft--the "richest, most successful company"--how to run their business, but he couldn't resist. He discusses his strategy if he were Microsoft CEO Bill Gates and shares with us his dream outcome for the Department of Justice antitrust trial against Microsoft. He also talks about Oracle's and Apple's future and denies any interest in running for political office.

CNET News.com: The network computer failed, but your idea of the network as a computer is coming true. Your thoughts?
Ellison: Everyone grabbed onto the idea of the NC, the appliance. What I said was what the world needed would be $500 computers with Internet browsers. What astonished me was how quickly the personal computer mutated into a network computer.

My guess was your television will become a network computer--and it will be. Your telephone will become a network computer. You'll have Internet access on your telephone. But the very first device that became the primary access to the Internet was the PC, and we've seen the price drop from $2,500 to now under $1,000. So what I never guessed was the PC industry would flip over and drop their prices. But it is network computing, Internet computing, that is happening.

For the first time, computing looks like all the other networks: the electric, telephone, and television networks. They work exactly the same. A low-cost appliance gives users access to the wealth of that network. Centrally managed. Therefore, electricity is cheaper than if everybody had a generator. And the Internet makes computing much cheaper. You wake up and "My Yahoo" has changed a bunch, but you never installed a floppy disk.

Imagine if Amazon.com adopted the client/server model and sent out floppy disks with their book-buying program. They would have to have people help you install the book-buying program. It sounds ridiculous. That's still how most corporations do most of their computing, but not for much longer. Corporations will start mimicking the Internet with their corporate networks.

If you were president and chief executive of Microsoft, how would you run the company?
Microsoft thinks their future popular operating system is Windows NT. I think their future popular operating system is Windows CE. People want simpler. So I would aim NT totally at the very high end and stop worrying about NT on the desktop. They need to worry about Windows CE for low-cost appliances, because the world is going to be made up of big servers and low-cost, easy-to-use appliances.

NEXT: Advice for the Department of Justice and Apple.

 

  Stats
Age: 54

Claims to Fame: Founded Oracle in 1977. Made it a database powerhouse as CEO. Silicon Valley visionary who championed the network computer. Known for being a flamboyant bachelor.

Education: Attended both the University of Illinois and the University of Chicago.

Extracurricular activities: Sailing and flying.

CNET News.com Newsmakers
May 6, 1999, Larry Ellison
Advice for the Department of Justice, Apple

Are they missing anything else?
Far be it from me to tell the richest, most successful company in the history of the earth what they're missing. But if they keep living in the present and mistake the present for the future, that's a problem. Steve Ballmer is very smart and now that Ballmer is running the company, you're already seeing a lot of changes.

The point about Windows CE. Is there anything concrete that Microsoft could do in terms of making that transition? We thought Ballmer was chained to NT for the profit margins.
That's what's so deadly. You're wedded to this for the profit margins. But they're not going to come. If all you're going to run is a browser and maybe Microsoft Office on a desktop computer, do you really need NT underneath it? It's crazy. You need a fairly simple computer and computers are going to get cheaper, not more expensive; they're going to get simpler, not more complex. NT is a complicated beast.

What remedies are appropriate to rein in Microsoft?
Microsoft should be broken up into four companies, all of which have access to all of the technology. It's very silly to break Microsoft into a Microsoft Office company and a Microsoft Windows company--then you've got two companies, both monopolies, which makes no sense at all. You've got two monsters instead of one, like those horrible sci-fi movies.

If you want real competition, which spurs innovation and lowers prices, then you have to break the company up. You get competition immediately and there will be tremendous innovation. And then [the Department of] Justice can just back off. They don't have to regulate it.

Let's talk about Oracle. After the last fiscal quarter, some analysts said the new Oracle 8i database is a good product, but it won't counteract the slower applications sales. What's your reaction to that?
Our products have never been more competitive. We have the only database aimed at the Internet. We have the only applications that run 100 percent pure Web. Other people have some Web stuff, but we're 100 percent pure: Everything is for a Web browser. We're the only Enterprise Resource Planning vendor that also has CRM, customer relationship management. So we're unique. We're in great shape product-wise. Now for the quarter: We're up 36 percent in profits, 19 percent in revenue. Now, if I can do that again for every quarter for the next five years, where do I sign up?

How are you going to account for the slower ERP sales as businesses focus their efforts on the Year 2000 bug?
Baan and PeopleSoft are in very serious trouble. As powerful as SAP is, they're going to be damaged. As we approach Y2K we can just see the fall-off in ERP. Now we are somewhat insulated from that. ERP is a small portion of our business. If you want real competition, then you have to break Microsoft up. We're diversified. We have databases and a front-office business which is growing very rapidly, which we expect to be larger than our back-office.

What's the next step for Apple?
Apple has the potential of being the great provider of digital appliances in the future. So look at Sony as the No. 1 analog-appliance manufacturer. Who is going to be the No. 1 digital-appliance manufacturer? Have the world's coolest TV/computer combination you have in your room that looks really great? The "wow, got to have that" kind of stuff. I think that's what Apple should do. I've seen some of their new products coming downstream--and you want them.

What are your thoughts on America Online's recent purchase of Netscape?
One of the saddest things that ever happened in Silicon Valley is the demise of Netscape. The stock is through the roof and guys made money and that's great, but this is the most innovative company in Silicon Valley in a decade and it was decimated by Microsoft. The biggest, toughest company in the world decided to destroy the most innovative company in the world--and they did it.

That's why I'm rooting for the Justice Department. I think what Microsoft did was illegal, immoral. And then for Microsoft to say, "All we want is a chance to innovate." Wasn't it Netscape that did it? I mean, that is the most cynical, hypocritical, terrible thing I've heard ever in this industry. It's viscerally upsetting.

Bill [Gates] destroyed Netscape. He did it illegally, going beyond giving browsers away for free. He paid people to use his browser, to not use Netscape's browser. We'll miss Netscape. I think we will all be using software that's not as good as it would have been. Innovation will have been dramatically slowed.

You were recently quoted as saying you have an interest in becoming governor of California. When do you plan to run for office?
I was at U.C.-Berkeley, I was being interviewed, and I said I wasn't interested in running for office. But then he asked another question, which was, "Would anything make you run for office?"

I said, "There are a few things I feel passionately about: education, medical research. But if I felt I could radically reform education in California, if I thought I could make a huge difference and make the world better, then yes, I would run for office."

I pick up the newspaper and it says, "Larry Ellison running for governor." I'm actually very happy with my job here at Oracle. I have no real ambition to become governor. I worked with the last governor, and I will work with this governor trying to reform education because it is an absolute disaster.