Oracle's 'drag' strategy

Is Oracle biting off more than it can chew or is the company??s aggressive acquisition strategy just misunderstood?

To many people, Oracle is first and foremost a database business. Some financial analysts said that Oracle should have dropped its pursuit of PeopeSoft and that getting into a bidding war with SAP over Retek was a mistake.

Ask Oracle president Charles Phillips and he says that they just don't get it.

"What's not widely understood is that being successful in the applications business is probably the best thing for our database business," Phillips said at customer event outside Boston on Wednesday. "If you want to grow the database business, you'd better own the applications."

In fact, the applications will "drag" even more infrastructure software sales as companies seek a more flexible and cost-effective software underpinning their business applications, he says.

"The leverage factor of Fusion middleware, the leverage factor of the grid (Oracle database) by having more of the applications is huge. It always has been and it's growing. This whole discussion about application-optimized infrastructure means the drag factor is going to be higher. People are going to want applications and the infrastructure from the same company-well, that was our original vision."