September 12, 2005 1:23 PM PDT

Siebel and Ellison: Software's odd couple

Few people in the high-tech industry have feuded as openly as Oracle's flamboyant CEO Lawrence Ellison and Thomas Siebel, the co-founder and chairman of rival enterprise software maker Siebel Systems.

When Siebel, a longtime Oracle executive, launched his self-named software company in 1993, he set out to create an anti-Oracle of sorts. He had angrily quit Oracle several years earlier, as Siebel told the story, because Ellison couldn't see the potential in selling software for automating customer call centers. Siebel took that idea and turned it into a billion-dollar company, beating Oracle to what turned out to be huge market for software that manages a corporation's customer relationships.

But in the end, Oracle's sheer bulk, the slowdown in enterprise software spending and the move toward buying giant suites of software Oracle's--rather than so-called best-of-breed software like Siebel's--meant an apparent victory for Oracle. On Monday, Oracle announced that it will buy Siebel in a deal worth $5.8 billion.

Tom Siebel
Tom Siebel

Not long ago, an Oracle-Siebel deal was hard to imagine, and if history is a guide, it's still difficult to believe that Tom Siebel will stick around to work for his old boss once the deal is completed. If Siebel did move back to Oracle headquarters, just five miles down the road from Siebel central on Silicon Valley's Highway 101, it would be a remarkable detente for two very different men.

Where Oracle had a reputation for a technology-first pitch to customers, Siebel believed that his company should go to customers first, ask what they want and build it for them. The discount brokerage Charles Schwab was among Siebel's first customers, and Charles Schwab himself was for years a member of Siebel's board of directors.

Many consider Oracle, whose first customer was the Central Intelligence Agency, Silicon Valley typified, with fancy sports cars in the parking lots and employees eschewing old-fashioned corporate dress codes. On the other hand, Siebel wanted his company to be conservative--even a little stodgy--to better suit its big, often-stodgy customers.

But bringing Siebel Systems into the growing Oracle empire started seeming a lot more plausible in the summer of 2004, when court documents introduced in Oracle's antitrust fight with the U.S. Department of Justice revealed that Siebel and Ellison had already talked about combining their companies.

It's not clear what role, if any, Tom Siebel will have at Oracle, once the acquisition is completed. Siebel has not run day-to-day operations at his company since May 2004, but he was considered an active chairman, still involved in strategic planning. Analysts believe that he played a key role in the April ouster of Mike Lawrie, a former IBM executive who was briefly Siebel's CEO.

Larry Ellison
Larry Ellison

Ellison said on a conference call with investors Monday that Siebel was welcome to stay with the company but didn't say in what role. Siebel didn't address the issue on the call, and many analysts doubt that he'll stick around. "I don't think you're going to see much of Tom Siebel inside Oracle," Gartner analyst Michael Maoz said.

Sixty-one-year-old Ellison's bio reads more than a little like "The Great Gatsby." He is a well-respected yachtsman who has competed in the America's Cup, won the deadly Sydney-to-Hobart race off the coast of Australia and lavished a reported $80 million of his own money on his yacht-racing team.

Ellison has embraced--critics would say craved--the limelight, even allowing "60 Minutes II" to see his nearly completed, 23-acre compound in Woodside, Calif., which was built to look like a Japanese palace. Ellison brought in Japanese stonemasons to make the giant rocks in a manmade waterfall look as though they "were placed there by the hand of God over the last million years," as Ellison put it on "60 Minutes."

He's also wildly wealthy. Ellison is worth $18.4 billion, making him No. 9 on Forbes magazine's annual list of the wealthiest people in the world. He counts among his closest friends Apple Computer CEO

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