Oracle buys RightNow for US$1.5B for cloud lift

Software maker buys hosted customer service company to boost its cloud offerings, and go head-to-head with rival Salesforce.com.
Written by Jamie Yap, Contributor

Oracle has bought online customer service company RightNow Technologies for US$1.5 billion in a move that will beef up its cloud offerings as well as heat up head-to-head competition with rival Salesforce.com.

RightNow is a software-as-a-service (SaaS) company that helps organizations provide customer service via call centers, the Internet and social networks. The acquisition will enable a "superior customer experience at every contact and across every channel", Redwood City, Calif.-based Oracle said in statement Monday.

"Oracle is moving aggressively to offer customers a full range of cloud solutions including sales force automation, human resources, talent management, social networking, databases and Java as part of the Oracle Public Cloud," said Thomas Kurian, executive vice president, Oracle Development, in the statement. He added that RightNow's customer service cloud is a very important addition to Oracle's Public Cloud.

Unveiled at the Oracle Open World event by CEO Larry Ellison earlier this month, the Oracle Public Cloud is the company's latest cloud offering that delivers software online via cloud computing.

The RightNow deal is Oracle's biggest purchase since its US$7 billion takeover of Sun Microsystems which was completed in January last year, Bloomberg reported Monday.

"Oracle is getting serious about its own cloud," Richard Williams, an analyst at Cross Research in Livingston, New Jersey, told Bloomberg. "This is the first infrastructure buy, and it means they're putting the plumbing for the cloud together," he said.

Companies that offer SaaS are "sought after", Williams noted. "Oracle is paying a premium to lock them up. It's not unexpected that this would be an expensive acquisition because SaaS companies are trading at very high multiples," he said in the Bloomberg report.

The acquisition of RightNow has sparked speculation of bids for cloud computing companies, especially smaller firms which are being eyed by large tech companies, Reuters said Monday.

Oracle's purchase of RightNow will also make it a "more direct competitor and formidable threat to SalesForce.com's service cloud offering", Oppenheimer analyst Brad Reback told the newswire.

Salesforce.com CEO Marc Benioff was originally scheduled to speak at Oracle Open World, but was pulled at the eleventh hour--which technology blog ReadWriteWeb suggested in a post Monday was due to the RightNow acquisition.

Carter Lusher, chief technology analyst at Ovum, described Oracle's buy as a "smart move" that will strengthen its position in customer relationship management (CRM).

According to him, the RightNow move is a key plank in the commerce and customer experience management platform that Oracle has been constructing in 2011, adding on to the prior acquisitions of ATG, Fatwire, Inquira and Endeca. These represent "best available" technologies in their respective areas and are clearly part of a strategic roadmap for Oracle in this space, Lusher said.

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