Oracle puts Salesforce.com in its sights

Oracle's fiscal second quarter conference call was interesting on a couple of fronts. Here are a few observations:

No. 1: Oracle has a new whipping boy: Salesforce.com.

Check out CEO Larry Ellison's comments about Salesforce.com, which totaled eight mentions (not quite SAP territory, but getting there), on the company's second quarter conference call. The call came after solid earnings results.

In sales on demand, our primary competitor there is salesforce.com and this quarter was conspicuous and a series of competitive wins against salesforce.com. One which was our largest ever on demand or cloud computing, whatever you want to call it, a competitive win over salesforce.com was actually a replacement of salesforce.com.

The customer will be de-installing salesforce and replacing it with Oracle sales on demand so we’re very excited about that. That business is now growing.

When we compete head-to-head with salesforce we win more deals then we lose and that’s new in the last couple of quarters.

And then there was co-president Charles Phillips:

We have strong customer adoption at Siemens, we had a 12,000-seat win, that’s [inaudible] implementation and we’ll become the standard there. US Food Service where we beat salesforce.com about 7,000 users there. [Matreol] Healthcare displaced salesforce.com there and in West Pack where we also beat saleforce.com.

So we have had quite a bit of momentum there and I forgot to mention [Swisscom] as well, another 3,000 seats.

Add it up and you have eight mentions of Salesforce.com from Oracle. You can read that mean:

• Oracle is going to buy Salesforce.com. The smack talk can preclude a merger. After all, executives said the company is still shopping for deals.
• Or Oracle is acknowledging that Salesforce.com is moving upstream and becoming a threat and Ellison is sending a brushback pitch. Speaking of Salesforce.com obsession Oracle just announced a bunch of CRM on demand wins (statement).

No. 2: Oracle's foray into hardware is going to take time to develop. Ellison noted the database machine will take a while to sell.

Ellison said:

And finally the Oracle database machine which we introduced in Open World or we announced in Open World and we’ve begun selling this past quarter. As measured by pipeline growth and pipeline size, this is the most successful introduction of a new product in Oracle’s history so there’s huge interest out there and quantified by an enormous pipeline which we’ve built.

We think its going to be a while before we are able to convert this pipeline, we’ve got a number of demonstration machines both Oracle and Hewlett Packard being put in the hands of customers but that business looks very, very promising and should help us drive growth over the next 18 months.

Memo to self: Check in on this in 18 months. It may be the last time Oracle mentions hardware.

No. 3: Big software deals are out but Oracle is diversified enough to weather the storm.

Ellison said:

I think customers are signing up for fewer multi year $100 million contracts and implementation but fortunately we have a very broad portfolio. We continue to add to it with Prima Vera, things like [Damantra], the number of things we purchase, allow them to implement very specific best of breed applications and get a very rapid return on investment where its not a multi year project before they get a benefit.

So we’re seeing more of those projects then let’s say a huge multi year ERP system coming in. Though we get those also. We’re winning deals in the government. We just recently won another state with a very large ERP implementation.