"We think that's the way customers are gonna go forward as they build their data centers: not buying components but buying systems like Exadata. And one of the big reasons we bought Sun is that we want to apply that same strategy to middleware, to applications, to the operating system itself: we're not gonna sell operating systems just for an individual computer, but we're gonna sell the next generation of Solaris that's gonna be a Cloud Edition of Solaris, where it manages a group, a cloud, a cluster of these computers that we sell together as a unit.
"That's highly differentiated: high-margin for us, and no systems integration for the customer. How big is that business? We think that's what the computer business is gonna look like for the largest customers going forward, so we think that's billions and billions of dollars. That is our business in the future."
3. Fusion Applications As Components: Rip-And-Replace Not Required
"The big thing for us is we've designed Fusion applications as components: they've got a service-oriented architecture and are componentized. . . . So it's not a rip-and-replace strategy that we have with Fusion: we can go in and sell you a lot of point solutions, we can sell you a specific application like Order Orchestration that integrates your existing SAP systems and existing Oracle systems, your JD Edwards systems and your PeopleSoft systems. Though, we can do a complete replacement over time and that's our plan but that's over a long period of time.
"We want [customers] to start with some of the components, like Order Orchestration or like some of our HR Incentive-Management systems. We've got a long list of things, and they'll buy them a piece at a time but they're designed to be easily integrated with what they already have. We think that's gonna allow us to sell Fusion aggressively out of the box and allow us to increase our share over SAP over time."
So that's how Larry Ellison sees Oracle evolving, and the impact Sun will have, and how those visions represent Ellison's larger view of where the entire IT industry is headed. At this point, it's mostly speculative—mostly, but not all. The one bit of tangible evidence we do have—Exadata—sheds some light on the merits of the integrated-system strategy so passionately embraced by Ellison, so as a final thought let's take a quick look at that.
During yesterday's call, Oracle president Charles Phillips said "Exadata is on fire—it nearly tripled in sales sequentially—the pipelines are growing week to week—we're now having some of the initial customers come back and ask for multiple systems, which is always a good sign. The main constraint we have now is just production capacity, and the field [sales force] is fighting for them in each region, so it's a red-hot product and we expect that to continue to add momentum going forward." And president Safra Catz (yes, Oracle has two presidents), speaking of Oracle sales momentum, added that "there's an enormous amount of heat around the Exadata product."
Does Larry Ellison's strategy of the rise of integrated systems make sense to you? Is that the shape of things to come, or just some smooth rationale for pursuing Sun through the gates of hell (er, the EU)? Let us know at the address below.
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