Wednesday, September 21, 2005

Oracle mulls support for competitor databases

Prior to Oracle's acquisition binge, one key aspect of its strategy was to use sales of its business applications to pull through sales of its database and tools, which represent 80% of Oracle's revenue. Oracle spoke convincingly of the benefits of owning the entire technology stack from applications down to development tools and database management systems.

But now Oracle is facing a major conflict between its acquisition strategy and its technology stack strategy. In buying PeopleSoft and J.D. Edwards, Oracle acquired a large customer base running IBM's DB2 and Microsoft's SQL Server databases. Its acquisition of Siebel adds a significant number of customers running IBM and Microsoft's databases.

Charles Phillips, an Oracle tri-President, acknowledged the problem at Oracle's OpenWorld user conference this week. He indicated that Oracle will decide March of next year whether its Project Fusion--its product roadmap for combining its many acquisitions--will include support for rival databases.

Since the PeopleSoft acquisition, I've been wondering what Oracle would do with this problem. Oracle is really caught in a no-win situation. On the one hand, supporting a single database will alienate a significant percentage of customers that don't see any benefit from migrating from their current database. On the other hand, supporting multiple databases will leave money on the table and allow IBM and Microsoft to maintain market share of their database sales.

Phillips did announce that Oracle will offer "lifetime support" to customers that want to stay on their existing systems, such as PeopleSoft, JDE, or Siebel, and not move to Project Fusion. That should help with customer retention, but not for those customers that want more than bug fixes and help desk support. Lifetime support for what will eventually be legacy systems seems to me to be a weak compromise, not a solution.

As I've said in the past, Oracle is aggressive, but its not stupid. I'm eager to see how it will resolve this conflict.

CNET has more.

Related posts
Oracle, IBM, Microsoft battle for technology infrastructure of PeopleSoft customers
IBM is a loser in Oracle/PeopleSoft deal

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