Oracle continues with merger prowl

Company president Charles Phillips hints at further acquisition of industry-centric applications; dismisses Microsoft threat.
Written by Aaron Tan, Contributor

SINGAPORE--Oracle is not done with its acquisition spree, especially in niche IT segments across different industries, says company president Charles Phillips.

Speaking on Thursday at the BBC World event honoring business leaders, Phillips said Oracle's acquisition strategy is still in its early days. "There are many areas in the industry where there are very complicated domain experts in different industries that are not part of a larger software company."

Phillips said: "There has been resistance from customers about buying [software] from a small company because it's a very important decision." He added that Oracle could dispel such customer concerns by acquiring smaller software players.

"So, there [are] plenty of [acquisitions] left to do, and we think we can do it better than our competitors. Most of those companies are based in Silicon Valley…and a lot of them are our partners, so we already know them."

Michael Warrilow, director of analyst company Hydrasight, told ZDNet Asia that "other than the top five companies like IBM, Oracle, Cisco and Microsoft, everyone's up for sale".

Warrilow noted that big companies usually need to maintain their growth, primarily to meet Wall Street expectations. "They meet their financial expectations through the growth of their existing products, and more importantly, also by acquiring companies," he said.

Oracle is likely to continue with its buying spree this year, Warrilow said, noting that the software giant has been "buying up and down the whole computing stack".

"Siebel was a quite big acquisition last year, and I don't see them slowing down anytime soon," he said.

However, in a conference call with analysts last year, Oracle CEO Larry Ellison revealed a willingness to support rival middleware specialist BEA Systems--an indication, an analyst noted, that Oracle is starting to show interest in working with rivals.

Next wave of killer applications
Phillips said the killer application for most companies is not always ERP (enterprise resource planning). Rather, it is the business applications that meet specific needs, such as banking and telecommunications.

While SAP and Oracle will continue to compete in the ERP market, Phillips said the biggest opportunity is in industry-specific applications. He added that the two software vendors only supply about a third of enterprise applications in use today, with a majority developed in-house by businesses.

"That's the bigger pie," Phillips said. "The financial services industry spends US$30 billion a year building their applications--that's bigger than ERP."

Apart from SAP and Oracle, Microsoft is also making a dash for the enterprise applications dollar with its Dynamics line of business software.

Phillips conceded that Oracle was worried about competition from Microsoft five years ago, but said the situation today has changed. "I think they've got a little defocused in areas that we are in," he said. "We're probably most thankful to Google which has distracted Microsoft."

"Microsoft is now more worried about search, Xboxes, games and other things," he added. "They don't come to the table in the enterprise space like they used to. I don't think they are really that relevant to large companies making enterprise decisions."

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