Oracle on the rack over Itanium

There's a game some of us who read the enterprise tea leaves occasionally play. It's called 'Beat The Wife.' We sit around yapping about this and that vendor wondering which is beating up their wife this week. It's a sick metaphor I know but one that aptly describes the sometimes bizarre relationships between software vendors. This week it seems to be Oracle's turn for that dubious honor only this time it might also include swiping at the kids aka customers.

I started June wondering (among other things) whether recent project failures might crimp Oracle's legendary ability to wring more out of customers. AllThingsD floated an eyebrow raising prospect with its reporting of HP taking the hump over Oracle's recent decision to withdraw support for HP's Itanium based servers:

HP demands that Oracle honor confidential contractual obligations made between them, and return to developing software that works with Intel’s server chip, and for which HP is essentially the only significant vendor.

Referring to the AllThingsD article, I jokingly tweeted:

Did @billwohlhp just grow a big pair?

I was referring to Bill Wohl, chief communications officer at HP who was heavily quoted in the piece. He came back in fits of laughter but there is a serious side to this which I will get to in a minute.

Earlier today, Rob Enderle who has been around the block more times than most, raised the bar on the HP spat positing what he describes as tactical failures that could bring Oracle to the brink of bankruptcy. Waoh...hold on tiger, them's fighting words but doubtless not lost on Oracle.

Enderle's essential argument:

The real audience for that letter is the 140K customers who, like children in an ugly divorce where one spouse cheated but doesn’t want to admit that as the cause, have become collateral damage. The play is not only for their hearts and minds, but to turn these customers into litigation weapons against Oracle.

...rings true although his math is not so hot. He says if 1% of customer sue Oracle and counts 14,000 when he should count 1,400. That aside, he closes out with:

If you are one of the 140K customers, you may want to have initial conversations with your legal team in anticipation of being given a present by HP. You could use it to recover much of what you have spent on Oracle and if you want to take advantage of it, monitor the HP/Oracle dispute closely so you can be the first to move in case Oracle goes bankrupt in the process.

In between, Enderle raises the spectre of kickbacks and using this problem as a way of making Mark Hurd, Oracle co-president a scapegoat, rather than face the truth which is that in acquiring Sun, Larry Ellison and team got it wrong. Talk about emptying a five gallon jerry can of gas on an already smouldering fire!!

Now to the realité. Enderle raises good points but you have to wonder the extent to which HP's legal team is really up for this. Recent events suggest they're not the best in the world or if they are then the board of the past was not listening. Then there's the customer issue.

HP is placing one heck of a bet by essentially holding up its kids - aka customers - in front of Oracle and claiming that while they might be trying to beat on HP, it's the kids who are getting it in the neck. In any divorce where the kids get caught in the middle, ugliness surely follows.

But to my earlier mention of Bill Wohl. If you know him you also know he's not afraid of taking on tough battles. He is persuasive even when some of the arguments are patently ludicrous. I know. I've been on the receiving end and to that extent I give the man full credit for his professionalism and ability to make sour lemons seemingly taste sweet. From what I gather, Wohl was one of Leo Apotheker, CEO HP's personal hires.

Again, if you know Apotheker then you also know he's not afraid of a good fight. His tactics at times have not always been so good but on this occasion Enderle's read suggests better judgment. From what I saw in his masterful wiping of the D9 floor with Walt Mossberg, Apotheker is on good form. And again from personal experience, if you want to go toe to toe with that man you better make sure that you're not only outta bed early in the morning but have done all your homework and then some.

Now to Oracle. I have alluded to this on many an occasion but the company has several fundamental flaws. Enderle thinks that Ellison's ego will get in the way of him withdrawing from this fight. We're already in something like the fourth round of Oracle attempting to beat up on HP in this championship battle.

But in any good fight you need good seconds and Oracle doesn't have them. Internally, there is no-one behind the PR Iron Curtain that you can reach. There certainly isn't anyone of Wohl's caliber. In the recent past, colleagues have suggested that almost all the fighting talk (whether aimed at HP, SAP or Google) isn't coming from Oracle legal but from Ellison with limp legal support in the background. Given the recent bloody nose that Oracle inflicted on SAP, that's not a surprise. Who is going to argue with a boss who comes back with $1.3 billion in damages? There doesn't seem to be anyone capable of making Ellison see that sometimes, you just have to lie down and admit you were wrong. And that is Enderle's point.

Oracle - or rather Ellison and Safra Catz, co-president and now also CFO again - got it wrong in racking up the numbers on the Sun deal. HP is putting Oracle on the hook for breaking its word with customers. It's a tough situation for Oracle and without an early capitulation, there are real risks to the company.

Oracle will think that because Itanium has become niche that its downside risk is minimal. But then when you notice that Intel recently reported Itanium accounting for $4 billion in annual sales then you have to wonder just how big that niche really is. Only HP knows the answer to that question. I'm guessing they also know who will come to their side in any court battle. But over and above all of these considerations, Apotheker, Wohl and the legal team have a golden opportunity to play the 'nice guy' card in a way we've not seen before. If that doesn't get customers onside then I don't know what will.