Oracle Lying About SAP
Oracle is putting out the word that it's gaining market share at the expense of SAP to distract attention from its declining revenues and profits, but the numbers put the lie to the spin. Oracle held its own in database and middleware revenues, where it doesn't compete with SAP, but in applications, where it does go head to head with the business applications vendor, new license sales declined almost 20 percent and total applications, including support and license updates, declined by 9 percent. It was able to make up some of that ground thanks to twelve percent growth in license updates and product support for middleware and databases.
But Oracle president Charles Phillips boasted that, "We grew faster and took market share from SAP in every region around the world." The funny thing is, when I spoke to SAP vice president of field communications Bill Wohl back in May, he predicted that Oracle would try to spin its results this way. While granting that Oracle is the bigger company, and is growing in some areas, Wohl assured me that "in the space where we compete we're doing very well, thank you."
It doesn't surprise me that Oracle is trying to deflect attention from its deficiencies. I recently criticized both companies for treating existing customers as cash cows, a situation to which SAP responded by entering into a pact with its user group; Oracle, meanwhile, made a meaningless announcement about freezing maintenance costs that in fact affect a very small number of customers and legacy products.
Oracle is also apparently reversing course on cloud computing, a software delivery mechanism CEO Larry Ellison recently derided as gibberish just last September. Then yesterday, Ellison said all the products associated with its Fusion middleware suite will be available on-demand. I found his earlier dismissal of software-as-a-service (SaaS) impossible to take seriously in any case, since Ellison was an early backer of Salesforce.com, the most well-known cloud-computing vendor, as well as SaaS business applications vendor NetSuite, which is trying to compete with SAP at the low end of the market. In fact, Oracle has proclaimed itself a SaaS vendor since at least 2007. (It's my understanding that lying to the public isn't a violation of Regulation FD so long as you lie to everyone at the same time.)
As customers turn from hunkering down for the duration of the recession to planning how to best take advantage of the recovery without incurring too many costs, SaaS will emerge as a tempting way to outsource all that IT infrastructure stuff. The movement won't all come at once, of course, but with every physical server that needs to get replaced, the boardroom discussion will turn to whether to buy more servers, or simply rent the stuff from the cloud. Oracle and SAP would be well-served to stop focusing on their rivalry and begin taking SaaS more seriously, because it's customers sure are.