Oracle unveils vision for the future

Consolidation and integration were the key themes at one of the biggest annual software events, Oracle OpenWorld, writes Karlin Lillingtonin San Francisco.

With 43,000 attendees - nearly as many people as live in Waterford - Oracle OpenWorld has become one of the biggest software events on the international calendar, and one of the largest annual events in San Francisco, pumping $80 million (€53 million) into the local economy.

It's gotten so big that chief executive Larry Ellison has managed to get the city to close off a major city street - the section of Howard Street that bisects the Moscone Convention Center where the event is held - just to set up marquees to serve delegates lunch.

Ellison also has the clout to throw closing parties that take over a major city concert arena and feature stars such as Elton John (last year), and Billy Joel (this year). But what delegates really come for is the line-up of big name chief executive keynotes, Ellison's own often caustically funny speech and a heads-up on new products and how to use them - and especially, on where the giant database and business applications company might be trying to push the whole industry in the coming years.

The company - and Ellison - have often been visionary, pushing products and services just ahead of the adoption curve, says Ronan Miles, chairman of the UK Oracle User Group.

But with 41 acquisitions in 45 months, the company's key message this year (echoed by most of the guest keynote speakers such as Dell's Michael Dell, HP's Mark Hurd, Sun's Jonathan Schwartz, and Intel's Paul Otellini) were consolidation and integration - across the industry, within Oracle as a business, within its massive portfolio of products and for customers themselves.

In previous years, Ellison has used his keynote to try to reassure customers that it will successfully fold in its array of acquisitions without risking Oracle's corporate health, while advancing its product portfolio and also continuing to support the individual products of its largest purchases (and former rivals) such as JD Edwards, PeopleSoft, and Siebel.

The company says its key to doing all of this is its "Fusion" product strategy, but - going by delegate questions Ellison always takes from the floor during his keynotes - Fusion clearly still baffles many Oracle users and partners. However, with the unveiling of some of the first Fusion applications at this year's OpenWorld, Ellison could finally put a shape on that strategy.

"All new applications in 2008 will be Fusion applications. They are built on an industry standard-based middleware and a service-oriented-architecture ," he said, during his keynote. "That's the primary characteristic of a Fusion app."

He also acknowledged a key customer concern: integration. "They're saying, 'My Fusion apps have to coexist with my other applications'," Ellison said. "That's priority number one."

Oracle's rude financial health and high level of adoption in the corporate space indicate its own consolidation and integration efforts are going well, at least for now. The company topped the rankings in a new corporate software usage study by investment research firm ChangeWave this week, leading every business category except ERP (enterprise resource planning), where archrival SAP retains a strong lead.

Ellison also used his keynote to hammer former partner, Linux vendor Red Hat. Last year, many delegates were shocked when Ellison announced that Oracle would itself start offering Red Hat linux, with regular bug fixes (Red Hat's version of operating system linux is freely available for use under its open source license). Most damaging to Red Hat, Oracle said it would offer support for 50 per cent less than Red Hat.

"With the Red Hat code, all we did for the first year was fix bugs," Ellison said this year. "Now Oracle is growing a lot faster than Red Hat." Ellison touted strong growth in its linux business, with 1,500 customers, in comparison to the 26 it announced at last year's keynote.

Nonetheless, as Ellison acknowledged, linux is a growing market generally, and Oracle hasn't inflicted the damage on Red Hat many predicted - or feared. Indeed, Red Hat revenue increased to $400 million this year, up from $278 million in 2006, with subscription revenue up 29 per cent year over year to $109.2 million in the fourth quarter.

Oracle's biggest announcement at OpenWorld was the release of Oracle VM, an open source application in the hot area of virtualisation. Virtualisation allows many "virtual" computers to run on a single server, while doing the job of multiple servers, thereby cutting energy and hardware costs. Oracle VM manages virtual machines on servers.

Oracle president Charles Philips claimed it was three times more efficient than other virtualisation applications - indicating the company is feinting at virtualisation sector star VMWare. With its acquisition strategy indicating it is also gunning for Microsoft, BEA, SAP and IBM in their areas of strength, Oracle clearly wants to be all things to all people, the first modern all-purpose applications giant.

And that has its dangers.

"One of the best things about Oracle is it is frequently ahead of its time. And one of the worst things is - it's frequently ahead of its time," said Miles, speaking on a customer panel. "It can make for an arrogant company."

Starring role for 'Friends of Larry'

OpenWorld always features a keynote line-up of top industry chief executives who are also "Friends of Larry". This year in these sessions, Dell chairman and chief executive Michael Dell touted green computing and said Dell would be "carbon-neutral" by 2008.

He warned of the need for computing systems with better performance and lower energy consumption and quoted figures by analyst Gartner predicting 70 per cent of companies would endure disruptions due to power restrictions and fluctuations in a few years.

Dell also offered a brief glimpse of some consumer products that will be introduced in coming months, including the XPS One A2010, an all-in-one computer similar to the flatscreen iMac, and an ultra-thin tablet notebook which may utilise some advanced touch capabilities similar to Apple's iPhone.

Earlier that day, pony-tailed Sun chief executive Jonathan Schwartz announced a surprise distribution agreement with rival Dell. As part of the agreement, Dell will offer its servers with Sun's Solaris operating system pre-installed.

While the deal between the rivals could dent Sun's own server sales, Schwartz argued that the company believed promoting the broader use of Solaris would drive wider industry adoption which, in turn, would generate income through service and support contracts as well as hardware sales.

He also announced a new Sun open source initiative for data centres.

Rival chipmaker chief executives Hector Ruiz of AMD and Paul Otellini of Intel took different tacks, with Ruiz focusing on how the technology industry might answer several specific business problems and Otellini stressing the advances of its new Penryn chip. Hewlett Packard's Mark Hurd tackled a series of questions posed by conference delegates in video interviews.

In his answers, Hurd noted that he felt major software industry consolidation almost certainly still lay before the sector, guessing that a handful of huge firms with $100 billion in cash would choose to put that cash into acquisitions rather than dividends or stock buybacks.

Oracle customers prefer to wait and see

Oracle customers and partners indicate that, while they may not be worried about the things that bother analysts and the media, they also may not be interested in some of Oracle's key announcements at OpenWorld - at least not yet.

A large panel of British customers and partners shrugged off concerns that Oracle's voracious appetite for acquisitions gave it too much to digest or produced an unclear strategy - issues regularly highlighted by analysts and media.

"Oracle has had a lot of acquisitions over the past few years, and is slowly getting this to work together," said Ronan Miles, head of the UK Oracle User Group.

He noted that Oracle's Fusion product strategy for integrating its acquisitions and enabling product interoperability was better understood now.

If anything, the increased range of products and services under one banner suits many customers.

"Integration [of systems and products] is the painful thing [for us], so if you can get an easier way to do that with Oracle, then that's great," said Richard Down of Vodafone UK.

"Vodafone would definitely like to deal with fewer suppliers," he added.

But another customer noted that it was "hard to understand what products are now in the product stack".

Oracle's biggest announcement was the release of Oracle VM, free, open source virtualisation software for managing virtual servers.

But echoing the consensus of the panel, Angela Murphy, head of ICT at City Building, a construction firm, said: "Virtualisation is just not something of interest to us at the moment."

Neither are the social networking "enterprise 2.0" features of Oracle's Web Center software.

Only a panel member who sells Oracle products to public sector organisations, where citizen interaction is valued, thought adding in features such as blogs, discussion boards or wikis "could be quite interesting" - but "not for a few years".