Friday, August 19, 2005

IBM and Oracle: strange bedfellows

Josh Greenbaum, writing for Datamation, has great insight into Oracle's budding relationship with IBM. Bitter foes on the database side, they now find themselves locked in a strategic partnership through Oracle's acquisitions of PeopleSoft (including J.D. Edwards), Retek, ProfitLogic, and most recently I-Flex, vendors that all had and still have deep relationships with IBM.

Josh also points out that Oracle's newfound relationship with IBM--whether intended or unintended by Oracle--has the side effect of undermining SAP's relationship with IBM.
The growing IBM factor isn't just interesting for what it means to Oracle, it also has tremendous repercussions for SAP. This “friend or foe” relationship with SAP has been going on for some time. In the run-up to SAP’s major partnership announcements this past spring, there was a lot of question about how close SAP and IBM could get. The result was SAP’s swooning embrace of IBM – and other new partners like HP, Cisco, and Microsoft – all designed in part to help isolate Oracle in the market. Ironically, Oracle’s unplanned bonus for its acquisitions may have been to trump the IBM part of SAP’s isolation strategy. Touché, Larry.
Whether Oracle had all this in mind when it first launched its bid for PeopleSoft is hard to say, but it certainly makes Larry Ellison look very foresightful. Personally, I don't think Oracle saw these developments. In statements by Oracle tri-president Charles Phillips immediately following the acquisition of PeopleSoft, he sounded wary of PeopleSoft's partnership with IBM. A few weeks later he spoke of maintaining relationships with IBM "as much as possible," as if he thought there might be problems on IBM's side in working with Oracle.

But, as Josh points out, an Oracle relationship really is in IBM's best interest. What IBM gets from its Global Services business in terms of its Oracle relationship is huge. It can still compete with Oracle in terms of Websphere and database sales. But services is the real money maker for IBM and it's not worth letting competition on the products side get in the way of making money on the services side.

Related posts
IBM: friend or foe to SAP?
IBM is a loser in Oracle/PeopleSoft deal
Oracle moves into core banking applications
Bidding war: Oracle fighting SAP over Retek
Oracle beefs up retail offerings with ProfitLogic bid
Brawl continues between Oracle and SAP

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