Apple and Oracle on way to do what IBM and Microsoft could not: Dominate entire markets

Apple and Oracle on way to do what IBM and Microsoft could not: Dominate entire markets

Summary: Apple and Oracle may be unstoppable in their burgeoning power to dominate the collection of profits across vast and essential markets for decades.


I was a bit distracted from the Apple iPad news due to the marathon Oracle conference Wednesday on its shiny new Sun Microsystems acquisition.

But the more I thought about it, the more these two companies are extremely well positioned to actually fulfill what other powerful companies tried to do and failed. Apple and Oracle may be unstoppable in their burgeoning power to dominate the collection of profits across vast and essential markets for decades.

Apple is well on the way to dominating the way that multimedia content is priced and distributed, perhaps unlike any company since Hearst in its 1920s heyday. Apple is not killing the old to usher in the new, as Google is. Apple is rescuing the old media models with a viable online direct payment model. Then it will take all the real dough.

The iPad is a red herring, almost certainly a loss leader, like Apple TV. The real business is brokering a critical mass of music, spoken word, movies, TV, books, magazines, and newspapers. All the digital content that's fit to access. The iPad simply helps convince the producers and consumers to take the iTunes and App Store model into the domain of the formerly printed word. It should work, too.

Oracle is off to becoming the one-stop shop for mission-critical enterprise IT ... as a service. IT can come as an Oracle-provided service, from soup to nuts, applications to silicon. The "service" is that you only need go to Oracle, and that the stuff actually works well. Just leave the driving to Oracle. It should work, too.

This is a mighty attractive bid right now to a lot of corporations. The in-house suppliers of raw compute infrastructure resources are caught in a huge, decades-in-the-making vice -- of needing to cut costs, manage energy, reduce risk and back off of complexity. Can't do that under the status quo.

In doing complete IT package gig, Oracle has signaled the end of the best-of-breed, heterogeneous, and perhaps open source components era of IT. In the new IT era, services are king. The way you actually serve or acquire them is far less of a concern. Enterprises focus on the business and the IT comes, well, like electricity.

This is why "cloud" makes no sense to Oracle's CEO Larry Ellison. He'd rather we take out the word "cloud" from cloud computing and replace it with "Oracle." Now that makes sense!

All the necessary ingredients

Oracle has all the major parts and smarts it needs to do this, by the way. Oracle may need an acquisition or two more for better management and perhaps hosting. But that's about it.

Like Apple, Oracle is not killing the old IT era to usher in the new. Oracle is rescuing the old IT models with a viable complete IT acquisition model. Then it too will take all the real dough.

Incidentally, IBM tired to, and came quite close to a similar variety of enterprise IT domination. That was more than 30 years ago. IBM was an era or two too early. Microsoft tried, and came moderately close -- at least in vision -- to the same thing, moving from the desktop backward into the data center. But, alas, Microsoft was also an era too early.

Both Sun and IBM were seduced over the past 15 years by the interchangeable parts version of IT ... It's what Java is all about. Microsoft hated Java, never veered from their all-us-or-nothing mantle, which is now passing to Oracle. But Microsoft never had the heft in the core enterprise data center to pull it off. Oracle does.

Yes, Apple and Oracle have clearly learned well from their brethren. And the timing has never been better, the recession a god-send.

So now as consumers, we have some big choices .... er, actually maybe we have a big buy-in, yes, but maybe not too much in the way of choices. As any mainstream consumer and producer of media, I will really need to do business with Apple. Not too much choice. Convenience across the content supply chain has become the killer app. And I love it all the way.

I want my MTV, my New York Times, my Mahler and my Madmen. Apple gets it to me as I wish at an acceptable price. Case closed. The end device is not so important any more, be it big, medium or small, be it Mac or PC. Because of my full-bore consumer seduction, the producers of the content need to follow the gold Apple ring. Same for consumer applications and games, though they are all fundamentally content.

As an IT services buyer, Oracle is making a similar offer. Convenience is killer for IT managers too. Oracle, through its appliances, integrated stack, data ecosystem, tuned high-end hardware, business applications, business intelligence, and sales account heft, leaves me breathless. And taking a next breath will probably have an Oracle SLA attached. Whew!

Critical mass in the accounts that matter

Oracle is already irreplaceable in all -- and I mean all -- the major enterprise accounts. Oracle can substantially now reduce complexity across the IT infrastructure front, while seemingly cutting costs, apparently reducing risk. But a huge portion of the total savings goes into Oracle's pockets, making it stronger in more ways in more accounts for 20 years. Now they can take the lion's share of the profits in the IT as a service era. I call that dominance.

So let's hear it for the balancing acts still standing. Go IBM! Go Microsoft! Go Google! Go HP! Go SAP! How about Cisco and EMC? You all go for as long as you can, please. Or at least as long as it takes for the next IT and media eras to arrive. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

These handful of companies are about the only insurance policies against Apple and Oracle being able to price with impunity across vast markets that deeply affect us all.

Topics: IBM, Apple, CXO, iPad, Microsoft, Mobility, Oracle

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  • Wait a second, so all those monopoly abuse cases were not "domination"?

    Microsoft was found by the US and the EU to have a monopoly in operating systems, which it abused. If that doesn't qualify as "dominate entire markets", what does?
    • I was going to say..

      Well good then.. let them dominate markets and
      then get treated like Microsoft was treated for
      dominating a market.. All should be fair.. right?
      • @reclaim25

        Make sure you get it right. Oracle and Apple MUST ABUSE their position first, then they can be treated the way Microsoft was. Because then they would deserve it, like Microsoft deserved theirs. Then it would be fair.
        • RE:@reclaim25

          ...Oracle and Apple MUST ABUSE their position first,...

          Well, given the track records of Apple and Oracle, it shouldn't take long at all for that to happen.
          • @joe6pack_z

            So what are you saying? That they need to be punished now for a hypothetical future infraction?
          • I think he's saying

            Get ready, because it's going to happen as soon as they have a monopoly. Just look at the Google voice app for the iPhone, Apple is already trying to abuse power. Steve Jobs is a well known control freak.

            Absolute power corrupts absolutely, it is inevitable.
          • @T1Oracle

            If it's true, then they should be punished. Until proven, then it's speculation.
    • It wasn't that kind of monopoly

      Microsoft wasn't dominating in that way. They had a monopoly of
      sorts in the the OEM licensing market.

      People wanted Windows because most other people already had it. So
      PC and laptop makers wanted to offer their products with Windows
      pre-installed. In order to do that they needed OEM licenses for
      Windows from Microsoft. Microsoft sold them these licenses with the
      condition that they could not install any other OS except Windows on
      their machines.

      Even the manufacturers who refused were forced to pay Microsoft a
      fee for each machine sold, regardless of what OS was on it. In other
      words, if they wanted to pre-install Windows on ANY machine, they
      had to pay MS a fee for EVERY machine they sold, even those with
      Linux (or whatever) on them.

      This was the monopoly Microsoft was found to be abusing: forcing
      companies who wanted to provide a product that most people wanted
      into not providing any other product that some people wanted.
    • Right church, wrong pew

      As noted, IBM did really dominate computing until the Justice Department stepped in. The court order and its results - maybe IBM overcomplied - put serious restrictions on marketing, partnerships, etc, to the point that the company faced life-threatening cash flow problems. IBM recovered to once again become the largest IT firm on the planet (has HP taken that mantle?), but it no longer dominates standards and isn't reviled as the "Evil Empire" as in the past.

      Microsoft simply didn't get that level of attention. It is no longer permitted to charge manufacturers for software they don't install, but after Judge Jackson's order was overturned, the case hasn't gotten much attention from Justice or the courts. No public announcements that I'm aware of, but possibly MS just isn't considered to be a big enough fish to worry about - let the market correct itself.

      Yeah, you're right about the monopoly abuse cases, and turning the industry on its ear. But it was IBM that was the targeted monopolist; without Justice, I'm sure IT would be a vastly different world today.
  • Are seriously claiming that MS hasn't dominated the os market?

    Whatever one's opinion about MS the fact is that they have a higher percentage of the pc os market than apple does of the mp3 player market. Higher by double digits. To claim that they have never dominated a market (this is to say nothing of their productivity suite domination) is utter nonsense. They actually have a higher percentage of the enterprise database market vs orcale than apple vs MS in the pc market! Do people actually pay you for your opinion? You are certainly dominating in clueless windbag market.

    >I want my MTV, my New York Times, my Mahler and my Madmen. Apple gets it to me as I wish at an acceptable price. Case closed.... about the only insurance policies against Apple

    The incoherent nature of your ramble is highlighted here - these other companies are insurance against apple hegemony? Yet you've already closed the case despite the fact that all your content is available elsewhere. If you are going to be as poor a consumer as you are an analyst nothing the other companies do will matter.
    • MSFT could care less

      .Net platform has covered pretty much everywhere from client to server to cloud. Were it not for their underperforming mobile business, they'd achieve 100%. Oracle / Sun is a side show. Apple is not even in the enterprise world.
  • business model

    "The iPad is a red herring, almost certainly a loss leader..."

    i don't think so. first estimates are in that suppose the
    margin for the iPad is even higher than that for the iphone.
    apple always said, that they don't make much money off of
    itunes. easy media access is only a way to make their
    hardware more desirable. that hasn't change with the iPad.
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  • Still missing third piece...Services

    Larry is keen to emulate IBM. The third piece of the enterprise is Service. IBM Global Services is a big part of the revenue pie. I'm talking about high end consulting, not just help desk and break/fix contracts.

    I'd look for more in this area from Oracle.

    Some fun facts:
    Latest quarterly revenue:
    Oracle $5.9B
    Sun $3.2B
    SAP $3.6B
    IBM $27.2B

    An IBM/SAP combination would give direct competition to Oracle/Peoplesoft/Sun.

    I wouldn't exactly say market domination by Oracle at this point.

    • And...

      Just for comparison, Apple's latest quarterly revenues were $15.7
      B--24% more than Oracle, Sun and SAP combined.
      • And...

        Let's not forget Microsoft's $19.02Billion...
  • Won't happen...

    That interchangeable piece called Java will be dropped
    like a bad habit if it all of a sudden becomes all Oracle
    all the time. Its to easy to fork it now and of course
    companies like Google, IBM and Red Hat would be more than
    happy to usher the forked version into enterprise. Oracle
    would have then simply overplayed their position and lost
    what they had.
  • What's your definition of 'dominating a market'?

    Because right now, Apple dominates just ONE market: music players and distribution. RIM and Nokia beat the pants off it in cellphones (contrary to what the Apple fawning press thinks), Hulu, Netflix and other beat it in video.

    Oracle dominates a very specific market: large, corporate DBs, but Microsoft's Access is still the mostly widely used DB out there.

    And of course, Windows is the infrastructure on which 93% of all of this runs. That's pretty dominant.

    If you want to define your markets tightly enough - you can make any company the dominant one (for example - one that actually comes up more often than you'd think in techblogs: cellphones that can sync with iTunes - which would be just one - the iPhone - and maybe Palm Pre from time to time).
    • Actually Apple

      is the #1 seller of Apple products. Maybe that is the market they dominate? Otherwise I'm not sure either.
    • Access?

      [i]Oracle dominates a very specific market: large, corporate DBs, but Microsoft's Access is still the mostly widely used DB out there.[/i]

      LOL. Um, yeah. Check again. I would sincerely doubt MS Access is even in the top 50 for databases used by corporations.

      Here's your top three to get you started:

      1) Oracle
      2) DB2
      3) MS SQL Server


      Just read your post again, and you specifically mention Oracle in relation to big business. Access on a home computer, I could see it being #1 since it comes with pretty much every PC, but you're really comparing apples and oranges here. Oracle and Access are two completely different breeds of databases.