November 13, 1998 12:55 PM PST

The world according to Larry

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SAN FRANCISCO--In speeches to Oracle users, press conferences, and presentations to Wall Street analysts this week, Oracle CEO Larry Ellison touted the latest twist on his strategy to drive Microsoft from the center of the software industry's universe, and plant a stake in the outsourcing market.

On Monday, Ellison takes Oracle's show on the road to Las Vegas for Comdex, where he delivers a keynote address--just 24 hours after his nemesis, Microsoft chairman Bill Gates, does the same at the biggest computer show in America.

It'll be no surprise, say Oracle executives, if Ellison announces a new twist in Oracle's multipronged attack on Microsoft, just as this week he revealed new details about Oracle's application outsourcing service, Oracle Business Online.

Ellison said Oracle's outsourcing service, due to launch in January, will charge $395 to $895 per user per month to run Oracle applications for customers. For Internet email, the price will be $10 per user per month.

"Not only can do we do it at this price, we can do it at this price and make money," Ellison declared. Starting in June 1999, Oracle also will host applications from other developers that work with Oracle products. Both Sun and Hewlett-Packard have said they're providing hardware for Oracle's thrust into services.

Ellison's beat-Microsoft strategy pushes three tenets: Use big servers like Oracle's, not little ones like Microsoft's; put documents created with Microsoft software into Oracle databases; and broaden Oracle's base of software developers, preferably by drawing programmers now committed to Windows.

Ellison cloaks his strategies in the language of the Internet and Java, but the implications of Oracle's message might make even Java champion Sun Microsystems a mite uncomfortable.

"Microsoft tells us that it's a good idea to put a Windows NT server in every store, every bank branch, every doctor's office," Ellison said this week. "Little databases and little servers are a really bad idea. When companies do that, they pay an enormous price in labor costs."

The intent of Ellison's big servers' argument is hardly subtle--Oracle this week unveiled, for the third time, its flagship Oracle8i database, which Ellison is pushing along with Oracle applications to be installed in central locations to ease "managing the complexity." Not so accidentally, on Monday Microsoft will officially launch version 7.0 of its SQL Server database.

"As we move to Internet computing, we are centralizing complexity and doing a better job of simplifying it," Ellison said. "That will lower the cost of labor required to run desktops and servers, probably by a factor of five as we move from client-server to corporate Internets."

He added: "As we consolidate information into a smaller number of databases, we'll have more timely and better information. Consolidation is not simply a way to lower costs but also to improve the quality of the data we have."

Ellison trots out the total cost of ownership (TCO) argument--the cost of running applications makes even pricey Oracle software, which can run at a single location with fewer techies, a bargain over hard-to-manage software installed on desktop client machines, Microsoft's forte.

Here Business Online, its outsourcing service designed for small and medium-sized businesses that do not want to handle their computing needs in-house, comes into play. Oracle also intends to sell specific computing services, such as human resource outsourcing.

"The largest corporations are outsourcing--why should doctors and dentists put a little database in their offices?" Ellison said this week.

For Microsoft, Oracle8i's most threatening feature is its Internet File System (IFS), which allows users to store existing documents created in another application, including email or widely used Microsoft applications like Word or Excel, in an Oracle database.

"Microsoft's most important business is the file system, so we need to build a database file system that preserves the interfaces of Microsoft's file system and ease of use but yields all the benefits of a database, like searching and sharing documents," Ellison argues.

Finally, Oracle is intent on broadening Oracle's base of software developers--preferably by stealing programmers now using Microsoft development tools. That goal is at least partially behind Oracle's recent embrace of the Linux, a freeware Unix operating system.

"We made the huge shift to Linux because of its giant developer community," Ellison said. Added Mark Jarvis, an Oracle senior vice president: "We sign up 23,000 Linux developers in the first 10 days."

But Ellison is also touting Oracle's development tools as the best way for software developers to create Java applications, which could prove uncomfortable for Ellison's bosum buddy over at Sun, anti-Gates CEO Scott McNealy. Sun markets its own Java tools.

"We have the most powerful, richest development environment for Java," Ellison declared.

Even more threatening to Sun could be Ellison's somewhat cloaked language about operating systems in general, not just Windows.

"If you write all your new applications in Java, you can ignore the operating system," Ellison said, adding quickly, "We are not an operating systems company."

But he does boast that Oracle has the first pure Java server, and he also endorses the possibility that some developers may bypass Sun's Solaris operating system by developing for Oracle's platform--its database.

"On the Internet, big is beautiful. When you have tens or hundreds of thousands of users running an application, the right answer is Oracle," Ellison said. "Don't believe me, believe the market. I'd like to tell you this was the strategy, but we didn't even know what was going on until recently."

 

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