Oracle is not your daddy's database company anymore.
Investors have been hearing Oracle Chief Executive Larry Ellison spout for years about how his company was going to leverage its database core to expand into new e-business areas. Ellison is still talking, but this time there is a difference.
He now has cold, hard customer numbers - not just future projections - to back up his claims. In fact, based on the initial successes of the e-commerce initiatives, Oracle is anticipating its own "dot com" spin-offs.
By all accounts, Oracle has become a major force on the electronic commerce front, while its competitors - most notably Enterprise Resource Planning foes PeopleSoft and SAP - are still struggling to get out of the gate.
"Oracle's positioned to do very well - that's pretty clear," said Teresa Wingfield, a senior analyst at Current Analysis. "Right now, Oracle has far better Internet technology than Siebel [its main competitor in the customer relationship management (CRM) market], and they seem to be light years ahead of SAP."
Vivek Rao, a stock analyst at Gruntal & Co., agreed that Oracle's position is somewhat remarkable because it appears to be steaming ahead on all fronts - including the hot Internet procurement market - not just one or two.
"The market perception of Oracle is rapidly changing from that of a traditional database/applications software vendor to a leading-edge provider of Internet-based e-business solutions," he said.
Oracle is notorious for hyping its new product offerings, then failing to deliver on time - or not delivering at all, as was the case with its early network computer initiative. Competitors on the electronic procurement and CRM fronts have used that spotty record to their advantage, persuading potential Oracle customers to back their efforts.
But that argument may be getting tired. Last week, Oracle revealed it now has more than 300 customers using its Internet-based procurement software. That's more than the two leading contenders in the procurement market - Ariba and Commerce One - have combined.
Mark Jarvis, Oracle's senior vice president of worldwide marketing, said the company has "several thousand" proposals in the pipeline for its Net procurement offering, a figure that would leave its competitors gasping for breath.
"It is surprising, when you consider that we really only started pushing it a month and a half ago," Jarvis said.
There are also some surprises on the company's other two e-commerce application fronts. Oracle said it now has more than 400 customers for its CRM application after two years in the market, and it now counts 30 application service provider customers using its Oracle Business OnLine apps. Oracle formally launched its ASP initiative in October, although it has been conducting pilots since May.
The impact of Oracle's Net initiatives on its revenue will be significant. Oracle is expected to earn about $4.3 billion in software licensing fees in calendar year 2000, with about $3.14 billion of that total coming from its database business. However, in two to three years, Jarvis said, Oracle expects more than half of its revenue will come from new areas. In particular, its Business OnLine division is expected to generate close to 50 percent of the company's revenue in five years. A recent partnership with automotive giant Ford Motor to create a procurement exchange is also expected to generate $1 billion in annual revenue within 12 months, and Jarvis said other major exchanges will be announced in the months ahead.
"The fact is, we are growing a lot faster in our new [Internet] business areas than in our traditional database business, which is also doing very well," Jarvis said. "Finally, I think people are seeing that we are a key Internet player."