Oracle -- Observations on Siebel and Sleepycat
Oracle hosted a conference call last week to discuss its acquisition of Siebel. Given that much has already been written summarizing the details as well as analyzing the implications for both Oracle and the industry, we will keep our comments very brief.
The content and tone of the call was entirely consistent with Oracle's well articulated strategy for building its enterprise applications business. The announced headcount reductions on the order of 2,000 people, as well as the fact that the cuts will come from both the Oracle and Siebel organizations was not surprising. The scale is in keeping with what would seem reasonable to achieve Oracle's goals with respect to both profitability and yet preserving the integrity of the Siebel franchise. Through the acquisitions of PeopleSoft/JDEdwards, Retek, iFlex and now Siebel, Oracle hopes to achieve the following objectives (the specific benefits and order of importance vary among the acquisitions).
1) Dramatically increase the breadth and depth of applications domain expertise both in terms of specific functional capabilities (ie. Human resources and CRM), and in terms of major vertical markets (retail, financial services and others).
2) Provide "lifetime support" in the effort to provide acquired customers confidence that their existing investments will be protected and that they will not be strong armed into a premature migration to new technology, whether it is Oracle's or a competitor's offering.
3) Achieve significant cost savings through economies of scale with respect to "back office" expenses, while largely preserving customer facing resources and keeping the best of the best in technical and support capabilities.
4) Through Fusion built on Oracle's e-business architecture and "open standards," Oracle will offer users the opportunity to access a broad range of applications based on a technically rich and flexible foundation.
5) Finally, Oracle's intent is to create a much stronger brand and further expand and deepen its large customer base.
We ask readers to excuse our liberal use of quotation marks, which we use as means to acknowledge the cynics who question the validity of these claims on Oracle's part.
Perhaps the most notable surprises from the call, in our view, had to do with the size of the Siebel analytics business, as well as the overall scale of the combined "On Demand" application service business.
Guidance commentary, we expect Oracle learned a lesson from the PeopleSoft acquisition. Last but not least a brief comment on Oracle's guidance outlook. As best we can tell, the increased expectation for license revenue growth for Oracle's February Q3 period in particular appears, to be driven almost entirely by organically derived growth. Our demand checks with various resellers, partners and field contacts have been very positive.
Acquisition of Sleepycat Software
Earlier this week Oracle announced its plans to buy Sleepycat Software, a privately held, open source database. Our view regarding the motivation behind this very small deal is that it provides Oracle with a bigger window into the burgeoning market for open source software. Given the size of Sleepycat relative to the size of Oracle we strongly doubt that Oracle has any interest in terms of driving revenue through increasing prices on Sleepycat products. Rather we believe that Oracle will work to improve the Sleepycat product capabilities to make it more competitive with alternative open source databases, but not to improve it so much that it hastens the pace of market share gains of open source databases vs. Oracle's core offerings. Put another way, to the extent open source alternatives gain, Oracle would like to be the primary beneficiary. The deal underscores the momentum of the open source market.
The acquisition of Sleepycat also represents a further effort on Oracle's part to broaden and deepen its capabilities in its core technology business, compleacquisitionslier acquistions such as TimesTen and Oblix.
Legal Disclaimer
Nothing herein constitutes an offer or solicitation to buy any security. Readers are advised to review their own financial situation, risk tolerance, and investment objectives as to any investment. Information provided here is based, in part, from sources believed to be accurate and reliable, although no representations or guarantees can be provided as to its accuracy or completeness.
Blue Atlas Management, LLC is our official business entity for consulting related work. In addition, we now have a website www.blueatlasmanagement.com for those of you who are interested in learning more a little more about our services. Please feel free to contact us at jmendelson@blueatlasmanagement.com, with any comments or questions.
The content and tone of the call was entirely consistent with Oracle's well articulated strategy for building its enterprise applications business. The announced headcount reductions on the order of 2,000 people, as well as the fact that the cuts will come from both the Oracle and Siebel organizations was not surprising. The scale is in keeping with what would seem reasonable to achieve Oracle's goals with respect to both profitability and yet preserving the integrity of the Siebel franchise. Through the acquisitions of PeopleSoft/JDEdwards, Retek, iFlex and now Siebel, Oracle hopes to achieve the following objectives (the specific benefits and order of importance vary among the acquisitions).
1) Dramatically increase the breadth and depth of applications domain expertise both in terms of specific functional capabilities (ie. Human resources and CRM), and in terms of major vertical markets (retail, financial services and others).
2) Provide "lifetime support" in the effort to provide acquired customers confidence that their existing investments will be protected and that they will not be strong armed into a premature migration to new technology, whether it is Oracle's or a competitor's offering.
3) Achieve significant cost savings through economies of scale with respect to "back office" expenses, while largely preserving customer facing resources and keeping the best of the best in technical and support capabilities.
4) Through Fusion built on Oracle's e-business architecture and "open standards," Oracle will offer users the opportunity to access a broad range of applications based on a technically rich and flexible foundation.
5) Finally, Oracle's intent is to create a much stronger brand and further expand and deepen its large customer base.
We ask readers to excuse our liberal use of quotation marks, which we use as means to acknowledge the cynics who question the validity of these claims on Oracle's part.
Perhaps the most notable surprises from the call, in our view, had to do with the size of the Siebel analytics business, as well as the overall scale of the combined "On Demand" application service business.
Guidance commentary, we expect Oracle learned a lesson from the PeopleSoft acquisition. Last but not least a brief comment on Oracle's guidance outlook. As best we can tell, the increased expectation for license revenue growth for Oracle's February Q3 period in particular appears, to be driven almost entirely by organically derived growth. Our demand checks with various resellers, partners and field contacts have been very positive.
Acquisition of Sleepycat Software
Earlier this week Oracle announced its plans to buy Sleepycat Software, a privately held, open source database. Our view regarding the motivation behind this very small deal is that it provides Oracle with a bigger window into the burgeoning market for open source software. Given the size of Sleepycat relative to the size of Oracle we strongly doubt that Oracle has any interest in terms of driving revenue through increasing prices on Sleepycat products. Rather we believe that Oracle will work to improve the Sleepycat product capabilities to make it more competitive with alternative open source databases, but not to improve it so much that it hastens the pace of market share gains of open source databases vs. Oracle's core offerings. Put another way, to the extent open source alternatives gain, Oracle would like to be the primary beneficiary. The deal underscores the momentum of the open source market.
The acquisition of Sleepycat also represents a further effort on Oracle's part to broaden and deepen its capabilities in its core technology business, compleacquisitionslier acquistions such as TimesTen and Oblix.
Legal Disclaimer
Nothing herein constitutes an offer or solicitation to buy any security. Readers are advised to review their own financial situation, risk tolerance, and investment objectives as to any investment. Information provided here is based, in part, from sources believed to be accurate and reliable, although no representations or guarantees can be provided as to its accuracy or completeness.
Blue Atlas Management, LLC is our official business entity for consulting related work. In addition, we now have a website www.blueatlasmanagement.com for those of you who are interested in learning more a little more about our services. Please feel free to contact us at jmendelson@blueatlasmanagement.com, with any comments or questions.
posted by jcm at 6:49 AM
0 Comments:
Post a Comment
<< Home