Today's SAP thirds quarter earnings call was peppered with implied and direct jabs at Oracle. The contrast between Oracle's CEO Larry Ellison and his street fighter style with that of SAP co-CEO's Bill McDermott and Jim Snabe could not be more striking.
As Larry Dignan points out in his op-ed on Mr Ellison's latest statement in the TomorrowNow case, it is not so much about SAP but about trying to derail HP's new CEO, Leo Apothéker - former CEO SAP - from doing his job. The threat could not be more transparent: 'Turn up at HP HQ and we'll subpoena you...so stay away.' From what I know of Mr Apothéker, he's not one to run away from a good scrap but the courtroom is not his chosen battleground. And neither is it the battleground that SAP more generally chooses. Instead and as was made clear on the earnings call, SAP prefers to fight it out where it matters: through the hearts and minds of customers.
"...you are basically seeing two trends there. Some companies were consolidating and they want to own the whole stack, and that is their strategy. Then you have innovators, who said I stay focused on my part, but then I run faster, I innovate faster. We believe that is a superior strategy. And for that to work you need strong partnerships so you still get the end-to-end stack to the customer." said Mr Snabe.
"We look forward to the day that they [Oracle] may have some kind of a new product or a new release level, because that will then put all those customers in their existing installed base of all the rollouts that they have done on the M&A front in a buying mode.
They will have to make a decision. They will have to make a decision to keep the legacy and the maintenance on that or they will have to make a decision to switch.
If they consider switching to a new platform or a new application from Oracle, you and I and everyone else on this call know that they're going to shop it against SAP, if for no other reason than just to keep Oracle honest on price. Which means we come to the table in a buying decision with a customer. When we are at that table in 25 industries and all geographies and market segments around the world, my money is on SAP." said Mr McDermott. Mine is too.
While Oracle is well known for parachuting Mr Ellison into large deals, his tactics of almost giving away the application in order to sell the database have not always worked. Customers don't like to think they're in a Turkish souk style haggle even though there is always an element of that in enterprise deals. There is genuine doubt whether the Oracle stack play will fare better.
For all the bravado coming out of Redwood Shores, I suspect much of it is based on a false hope. Consolidating the industry has been good for Oracle's share price but it is questionable whether it has really been good for customers or whether it is sustainable. Increasingly we see a company that is attempting to make the courtroom look like 'business as usual' when it should be considered the last resort in any dispute. The US is only one market on the global stage and while lawsuits are common, other markets look askance at such tactics.
SAP for its part spent the last week milking its ecosystem of enthusiastic developers for all its worth. Video slots talking up different aspects of SAP were counterbalanced by nuanced critique that enrich the debate about where SAP is going and what the strategy elements mean for customers. Contrast that with complaints that Oracle is trying to control the Java community.
We are entering an interesting period in enterprise applications. All the major players have much to lose as more organizations look to the cloud and the promise of lowered cost. Both Oracle and SAP are placing big bets, Oracle with the yet to be released Fusion and Exalogic, SAP with Business ByDesign, mobile and in-memory. Today, it is SAP that looks to have the more broad based and industry inclusive strategy. If SAP can become the center of gravity espoused by Messrs McDermott and Snabe, Oracle could quickly find itself marginalized. And in that situation no amount of street fighting trash talk will help it.
All of which brings me to a quote from one of Larry Ellison's favorite authors: Sun Tzu and his Art of War: 'When you're weak, look strong.' Is that what we're really seeing from Oracle? Or is it more like: 'Never will those who wage war tire of deception.' Or has Mr McDermott read it right and what he is really saying is more like 'Bring it on?'
Updated for quote accuracy.