By Siobhan Kennedy Oracle Corp president and COO Ray Lane told ComputerWire one reason it signed last week’s deal with Hewlett-Packard Co was it had become too reliant on Sun Microsystems Inc. But but he denied the move would have any effect on its relationship with the hardware vendor. Speaking to ComputerWire during Oracle’s four- […]
By Siobhan Kennedy
Oracle Corp president and COO Ray Lane told ComputerWire one reason it signed last week’s deal with Hewlett-Packard Co was it had become too reliant on Sun Microsystems Inc. But but he denied the move would have any effect on its relationship with the hardware vendor. Speaking to ComputerWire during Oracle’s four- day user conference in Orlando this week, Lane said that Oracle had absolutely no argument with Sun, they’ve done a great job, he said, but added I think we’d become over-reliant on them. Lane admitted that Oracle ran its entire business on Sun, both internally and for development. He said the deal was intended to change that.
We talked to Sun management before we did this, he said, they’re enjoying an exclusive right now, all this does is give HP a level playing field. You can’t argue with us for that. Of course Sun would love to keep it exclusive but this will make it tougher for them to compete. There’s no question of that. Under the terms of the agreement, HP said it would use and co-sell Oracle’s customer relationship management software in return for Oracle shifting half its internal platforms to HP and using HP’s Unix operating system as a development environment alongside Sun.
We want to make sure that the balance of trade is kept at an even keel, Lane explained. Customers have learnt to trust the quality and availability and scalability of HP and so we want HP to be supportive of Oracle. But does moving half its internal systems to HP mean dumping Sun? Not according to Lane. As Oracle continues its server and datacenter consolidation plan, it was 62, now its down to 37 and we’re going down to one [instance of Oracle], he says, Oracle will throw away the machines used to run it business and bring in bigger iron.
Lane said that unlike development, which is not mutually exclusive, Oracle could chose to run half its internal applications on Sun and half on HP. Basically they look like the same machine, the same applications, he said, but the intent is to try and get to half production on HP and make sure it’s a two- vendor environment. He wouldn’t say which applications Oracle intended to run on which platforms but added that would be decided over the next few months as the consolidation work continues.
In terms of development, the deal is more clear-cut. On the development side, we will always develop on Sun, exclusively, Lane said, but let’s be clear about what we mean by develop. Lane explained that Oracle traditionally runs a three-phase program: coding of products; building and testing; and the final customer testing stage. So what we did before is we would code on Sun, build and test on Sun and then when we got a final product ready for production we would port it to HP, Digital and all the other Unix platforms, he said. What we’re doing now is pulling HP up to the build phase. We will still code on Sun, but as soon as the coding is done, we will build and test on HP too, and Sun and NT.
Before that, Lane said, HP was at a disadvantage because the port to its platform could take a long time, a couple of months of more. They complained because they said they had to wait nine months while you [Oracle] do the building and testing and benchmarking with Sun. So this gives them the same advantage.
Oracle has obviously seen which way the wind is blowing and the deal appears to acknowledge HP’s return to form with vision, strategy and products that can compete with Sun. It is also a classic case of you scratch my back and I’ll scratch yours. HP agrees to use and resell Oracle’s CRM software, thereby giving it a huge leg up into the front office market at the expense of rival Siebel Systems Inc, in return for Oracle making room in its bed for HP alongside Sun, HP’s closest competitor.
Sun and Siebel are already working together to port Siebel’s applications onto Sun and indeed, when the deal was announced Siebel – the leading CRM vendor – said it wasn’t even considered, despite attempts to enter into negotiations with HP, a charge which Lane emphatically denied. If you know anything about Siebel, you know they don’t wait for customers to come to them, that’s horseshit, Lane said. You know perfectly well Siebel competed for this and they competed hard. And then, when they found out they were losing, they insulted the customer…they insulted the top management of HP…they said you’re stupid if you buy into them [Oracle].
Whatever you believe, the deal is certainly a departure from HP’s traditional way of doing business, one which Lane puts down to HP waking up and realizing it has to start partnering with some of the winners, or continue to be beat up by companies like Sun. Either way, Oracle appears to be treading a fine line with its closest ally. Earlier this year Lane stood side by side with HP to endorse the vendor’s e-services initiative, and now it has signed a deal which in Lane’s own words will make the competitive landscape much tougher for Sun. What next?