NEW YORK--When News Corp. mogul Rupert Murdoch plunked down $580 million to buy the social networking site MySpace in 2005, C.H. Low had a reaction not that uncommon among tech industry veterans.
"I said, 'This is ridiculous! Are we in another bubble?' " said Low. "But I thought, 'Murdoch is a smart man. Something else must be going on here.' "
Three years later, Low is the CEO of the software startup Orbius, one of an estimated 50 to 100 companies selling software and on-demand tools to help everyone from automakers to traditional publishing companies add social networking and improved community functions on their Web sites.
For many of the companies here at O'Reilly's Web 2.0 Expo, the approach to selling these community-building tools is downright old-fashioned: Site licenses, maintenance fees, and all sorts of enterprise software business models (of course, many with a software-as-a-services spin) that sound more like something out of the 1990s than the business plans of start-ups trying to get traction at the end of the Bush era.
But the conference taking on a decidedly business-focused tone shouldn't be all that surprising. In fact, it's a change remarkably similar (but on a smaller scale) to what happened in Web 1.0.
In the early days of the dot-com boom, many skeptics wondered loudly if the Web could offer any real business value. Sure, it was fun; the cool kids were able to brag about their cyber credentials, and it was a good way to sell things like books and CDs. But a place to do serious, global corporation kind of business? Unlikely. And all those advertising-based business models? Craziness.
Then a new generation of companies working on software to allow businesses to conduct transactions online and move their pricey corporate software to a more affordable Internet-based model. Only a few of them are still around, but they forced big corporate software names like IBM, Oracle and SAP to come up with viable Internet software that eventually helped drive the little guys out of business or into acquisitions (and a few of those companies running on ads managed to survive).
Today, Web 2.0 technology just may be passing from the "cool kid' phase to the business-to-business phase. (A little ominously for the little software companies here, IBM announced Wednesday that it's opening a center in Cambridge, Mass. to study social networking and create a set of social networking software tools it can sell to customers.)
Strolling away from the "Long Tail Pavilion" (named after Wired editor Chris Anderson's oft-cited and occasionally ridiculed book), Low recalled his career as a serial entrepreneur. He was chief technology officer at VerticalNet, one of the biggest (and ultimately disappointing) names in the first dot-com boom. After that, he founded several small companies, and was taking time of when the MySpace acquisition gave him the bug to get back in the game.
"Web 2.0 needs to be a utility" Low said. "It can't be just for fun."
An enterprise software guy" fits right in
That's exactly what Majid Abai, chief executive of Los Angeles startup Pringo, is counting on. Pringo sells community-building and management software that typically costs in the range of $20,000 to $50,000. He wasn't all that surprised so many companies at the Web 2.0 Expo were focused on selling tools for community building rather because there's a good sales pitch for it: It allows companies to improve communications with customers, distributors and employees. And the best way to do it, he believes, it to build those communities on top of packaged software.
"I'm an enterprise software guy," Abai said. "If this conference had been here last year, it would have been a completely different game" focused more on flashy companies targeting consumers.
In a conference room overlooking the show floor, LiveWorld CEO Peter Friedman was demonstrating new software that allows the managers of a Web site to quickly create a discussion group around a particularly topic, whether it's a story on a news site or a car. His company, which was founded in the 1990s and was nearly gutted in the dot-com bust, sells community-building software and management services that isn't all that different than the discussion forums Friedman helped run at Apple in the 1980s.
Don't tell the guys out there," he said, motioning to the show floor below him, "but what we're doing is basically enterprise software." He added that technology and needs have changed, 'but what we're doing isn't all that different from what we were doing years ago."
Ever want to own a third-party enterprise applications software maintenance and support company?
Better hurry. Tuesday's the deadline to declare your interest to its owner SAP, as the deadline draws near, according to sources.
SAP, back in November, said it was considering putting TomorrowNow on the auction block, and apparently it's headed in that direction. But whether the software applications vendor ultimately selects a buyer from among TomorrowNow's competitors and new parties interested in entering the market has yet to be seen, sources said.
SAP could also just wind down the operations and let it go at that. In its recent preliminary fourth quarter announcement, SAP noted is in its footnote about its U.S. GAAP requirements that the company is "required to present its results of discontinued operations (TomorrowNow) separately from its results from continuing operations."
That TomorrowNow reference was part of SAP's preliminary fourth quarter announcement and is not my add.
One source speculated SAP may want to let its TomorrowNow business slip into the sunset without a buyer, if it cannot find one that can adequately care for its TomorrowNow customers. The last thing SAP needs is more controversy surrounding TomorrowNow, which is entangled in a legal mess with arch-rival Oracle.
Oracle in March filed a lawsuit against SAP and its TomorrowNow subsidiary, alleging TomorrowNow downloaded proprietary Oracle software that it was not entitled to access.
TomorrowNow provides third-party maintenance and support to PeopleSoft, J.D. Edwards, and Siebel customers--all companies that Oracle has acquired over the years.
Get those bidder paddles ready. NetSuite launched on Monday its long-anticipated IPO auction, with hopes of raising in excess of $99 million.
The auction, the first of NetSuite's four-step IPO process, is expected to close as early as December 19 at the market's close.
NetSuite, the on-demand applications company backed by Larry Ellison of Oracle fame, will then use the bid information to set a final IPO price, which will help it determine who should receive an allocation of shares.
For example, if a bidder wants 100 shares at $8 a share, another 100 shares at $10 a share, and finally another 100 shares at $15 a share, the bidder could potentially end of up with 200 shares and an outlay of $2,500, should NetSuite's IPO price at $10 a share.
NetSuite last week set an initial pricing range of $13 to $16 a share, but, of course, when all is said and done, auction participants may ultimately push the final IPO price above or below that range.
Do I hear $13? Now, do I hear $14? What about $15?
As SAP tries to untwine its third-party support and maintenance company, TomorrowNow, from its legal entanglements with archrival Oracle, a sale, or effort to wind down the company, may be its preferred path.
SAP, which earlier this week announced TomorrowNow's chief executive and several managers had resigned, is now apparently operating without its senior vice president of sales, Bob Geib, and vice president of international sales, Nigel Pullan. Both executives are no longer on the company's management roster, and Pullan's office phone is no longer active. Geib, when contacted by his mobile phone, referred all calls to the company's press contacts.
Meanwhile, one source noted that a couple of TomorrowNow's best sales representatives have been folded into SAP's sales team.
Calls and e-mails to SAP were not immediately returned. It's not clear whether SAP plans to fill those TomorrowNow sales positions, in light of its announcement earlier this week that it was considering selling its subsidiary. TomorrowNow continues to be run by Mark White, TomorrowNow executive chairman.
Meanwhile, TomorrowNow customers were migrated off the company's systems Wednesday and left to get their Oracle updates for PeopleSoft, JD Edwards, and Siebel Systems applications on their own systems, according to a report in eWeek.
TomorrowNow was making good on a promise it made last August during its case management hearing in federal court. SAP said it had revamped its download policies and planned to require any download of Oracle updates for PeopleSoft, JD Edwards, and Siebel be done on the customers' premises, rather than hosting that work on its own servers.
SAP, which acknowledged it had engaged in some improper downloads of Oracle's support and maintenance software on behalf of the customers it wooed away from its rival, is debating its next steps for TomorrowNow, a company it acquired nearly three years ago.
Upate: November 21, 1 p.m.
TomorrowNow's remaining sales team will now report into Mark White, TomorrowNow's executive chairman, a representative for SAP said in an e-mail late Wednesday. The representative declined to elaborate, however, on whether the company is winding down its operations.
SAP announced Monday its third-party support and maintenance company TomorrowNow, which is embroiled in a legal battle with archrival Oracle, may be put up for sale. TomorrowNow's founder and several executives have resigned effective immediately.
SAP acquired TomorrowNow as a means to woo away maintenance and support customers from Oracle. TomorrowNow provides third-party support and maintenance for PeopleSoft and JD Edwards, two companies that Oracle acquired.
But earlier this year, Oracle filed a lawsuit against TomorrowNow and SAP, alleging the company went beyond its former customers' contracts and downloaded proprietary Oracle software and materials.
SAP and Oracle have been in the process of seeking documents and depositions from each other and are scheduled to give the court an update in February on that process.
In the announcement, SAP said it is exploring its options for TomorrowNow's business, including the possible sale of TomorrowNow. An SAP spokesman declined to comment on whether these options are currently being explored because TomorrowNow has seen a drop-off in customers since the controversy erupted, or whether it may be part of any potential settlement negotiations with Oracle.
Mark White, TomorrowNow executive chairman, will continue in his role in running the company.
You've heard of the "killer app."
But have you really seen one?
Ed Abbo, Oracle's senior vice president of applications development, thinks he has--several times over. But then again, what else would you expect an apps guy to say?
Keenly aware that a number of attendees at Oracle OpenWorld were interested in the company's applications strategy, Abbo set out to deliver some answers--with varying degrees of the "wow" factor.
Oracle is looking to add a taste of social networking structure into its apps and, like a number of companies, a pinch of Web 2.0.
For example, Oracle wants to deliver a "social CRM" solution. Basically, it would be customer relationship management (CRM) software that brings information in from the Internet into the application, with the help of iGoogle, Google's personal home page creator.
Sales reps, for example, could pull in information on prospective customers and potential references and leads.
On the less surprising front, Abbo reassured apps customers--yes, that's, PeopleSoft, Siebel, J.D. Edwards and other customers acquired by Oracle--that you can still evolve your business by staying in the same vein of software applications, without having to jump into Oracle's latest-greatest-next-generation Fusion Middleware and apps.
Oracle is adding some of its Fusion Middleware into the apps, as each enhancement is made to the next version of PeopleSoft, Siebel, J.D. Edwards, and the like. Customers, however, can expect to receive support, maintenance, and enhancements on these non-Fusion versions of Oracle's software indefinitely, Abbo noted.
"The center of our (apps) strategy is around offering customers choice," said Abbo.
How's that for a killer concept?
Fusion, or confusion?
For Niranjan Reddy, a technical lead at Office Depot, the answer was Fusion, with less confusion.
That was Reddy's assessment, after listening to Thomas Kurian, top executive on Oracle's Fusion middleware efforts, during his keynote speech Tuesday at Oracle OpenWorld on the company's Fusion Middleware 11g beta.
"We wanted to see how much better it would be to use Fusion 11g with E-Business (Suite) 12," Reddy said. "Right now, we're using many different adapters outside of Fusion Middleware, but with Fusion 11g and E-Business 12 we could bring it all in--we could develop and deploy within E-Business 12."
And for John Doe consumer perusing the isles or Web site at Office Depot, Reddy said it will help get an improved picture of the inventory carried on the shelves.
Kurian, taking the stage at Oracle OpenWorld, touted the new features, from offering a Service Oriented Architecture (SOA), enterprise 2.0 functionality and grid computing via a single platform.
He added the new features will also include greater security, such as encryption and authentication, as well as the ability to develop richer enterprise applications via Oracle's Applications Development Framework.
Fusion Middleware 11g, which is slated for delivery next year, may offer additional bells and whistles, but it's debatable how many customers will switch over from their current Oracle installations.
Although Fusion Middleware will feature a PeopleSoft user interface, the actual PeopleSoft code will not be baked in. A number of Oracle's PeopleSoft customers use middleware from other vendors, such as BEA Systems--a company Oracle recently tried to acquire but was rebuffed.
"It won't be a smooth transition for PeopleSoft customers. It's not as simple as an upgrade. It will be equivalent to a re-implementation," said Lee Geishecker, enterprise strategies vice president for AMR Research.
Because Oracle is not forcing customers of the companies it acquires to adopt its Fusion Middleware, or Fusion applications once the software is released, it will need to woo them over with the technology Fusion offers, Geishecker said.
And Kurian attempted to do just that Tuesday.
OK, kids. Sharpen those pencils, sharpen those minds. Here's a pop quiz on a bit of Oracle nostalgia, as Larry Ellison, Oracle co-founder and chief executive, kicked off Oracle OpenWorld in San Francisco on Sunday with 30 years of highlights:
Larry Ellison at Oracle OpenWorld
(Credit: CNET Networks/ Dawn Kawamoto)
What was the name of Oracle, before it became Oracle?
A: Software Development Laboratories (SDL)
B: Laboratories Software Development (LSD)
C: BEL Systems (Bob Miner, Ed Oates, Larry Ellison, founders)
Answer: Software Development Laboratories. Ellison, during his keynote speech, dedicated the evening's event to the late Bob Miner.
When Oracle began selling its first commercial SQL relational database management system in 1978, which version was first officially released?
A: Version 1.0
B: Version 2.0
C: Version 3.0
Answer: Version 2.0. There was never a 1.0 version. Said Ellison: "Who'd buy a version 1.0 from four guys in California?"
And as government contracts began to payoff and money came rolling into the company in its early years, Ellison said he struggled to understand the items on a balance sheet and sought help. Who was the company's first official bean counter?
A: a waitress
B: an H&R accountant
C: a pizza delivery boy
Answer: A pizza delivery boy. Ellison noted that in the early days of Oracle, the company would often order dinner from a local pizzeria. And in talking with the delivery boy, they learned he was majoring in accounting at UC Berkeley. The student was hired to do the company's financials. Said Ellison: "He said, 'he wouldn't quit college, but he'd help us do our books.' We said, 'take whatever you need (for pay). We'd never know.'"
As Oracle began to grow and increase its presence on college campuses for recruiting young talent, the company tried to steer clear of students with a particular type of degree. What was it?
A: Masters in business administration
B: Mathematics
C: Liberal Arts
Answer: Masters in business administration. Ellison likened the company to operating in an MBA-free zone. But one such person's MBA status slipped by detection, until after having worked at Oracle for several years. Said Ellison: "Ron Wohl had an MBA from Harvard. It should have disqualified him from working at Oracle, but we didn't find out until (several years later)."
Those are just some of the tidbits from Oracle's 30 years of history that Ellison outlined during the Sunday opening keynote.
Oracle has been known to play musical chairs with its executives and retool its operations with a jack hammer.
And in this latest go-around, the enterprise applications software giant is cutting loose John Wookey, Oracle's senior vice president of applications development, who handled its Fusion efforts, .
Wookey, when reached at his home Monday night by CNET's News.com, declined to comment on his status. A spokesman for Oracle said Tuesday morning the company does not usually comment on executive changes.
Howlett, citing an e-mail sent throughout the company by Larry Ellison, Oracle's top dog and founder, notes Wookey's work of fusing together all of Oracle's acquisitions of applications companies under its Fusion efforts will now be headed by Thomas Kurian.
Kurian will now handle Oracle's Fusion middleware and applications efforts, while Ed Abbo will handle non-Fusion related application development, according to a report in the Wall Street Journal.
Although the changes are slated to take effect immediately, Wookey reportedly will remain with Oracle until the transition is humming along, the Journal reports.
SAP announced Sunday afternoon it plans to acquire Business Objects in a cash deal valued at slightly more than $6.8 billion.
The acquisition, which is expected to close in the first quarter of 2008, is SAP's largest acquisition ever. The deal is especially noteworthy for SAP, which has tended to favor developing its own technology rather than acquiring it. The acquisition of Business Objects, a leading player in business intelligence software, is designed to dovetail into SAP's previously announced plans to double its addressable market by 2010, said Henning Kagermann, SAP chief executive, during a press conference Sunday afternoon.Nearly a year ago, SAP noticed the business intelligence market was growing at a rapid rate. SAP's customers, meanwhile, have been calling on the enterprise applications giant to add an end-to-end solution for structured and unstructured business analytics and embed them into SAP's business suite, Kagermann noted.
"This acquisition accelerates our growth potential," Kagermann said.
Forrester Research estimates that the business-performance solutions market will grow by 11 percent through 2010.
Business Objects, based in San Jose, Calif., and Paris, will operate as a stand-alone business and be part of the SAP Group.
Roughly 40 percent of Business Objects' customers use SAP, said John Schwarz, Business Objects chief executive.
The companies said there is very little overlap among their products and neither company expects significant restructuring as a result.
With the Business Objects acquisition, SAP will be further positioned to compete against archrival Oracle. Last March, Oracle acquired business intelligence tool developer Hyperion Solutions in a $3.3 billion deal.
When the Hyperion acquisition was announced, Oracle said that "thousands of SAP customers" relied on Hyperion for things such as financial analysis and systems of record for financial reporting. With its acquisition, Oracle said, SAP customers would need to tie into Oracle's Hyperion software to view and analyze their underlying SAP enterprise resource planning (ERP) data.
Business Objects' Schwarz, however, noted that his company is roughly three times the size of Hyperion.
UPDATE on October 8 at 7:22 a.m. PDT:Analysts, however, believe the SAP-Business Objects deal was driven by Oracle's Hyperion acquisition and that restructuring is likely in store for the companies.
Roughly 20 percent of Business Objects' business overlaps with that of SAP, in the performance-management software side. Between them, SAP and Business Objects offer three financial consolidation products.
The other 80 percent of Business Objects' business, which deals with business-intelligence tools, is where SAP will find value, said Paul Hamerman, an enterprise applications analyst with Forrester Research.
"I think there will be restructuring. There are personnel and real estate costs that SAP will have to rationalize," Hamerman said.
Just last April, SAP apparently wasn't convinced it needed to buy itself into the business intelligence market. Hamerman said he spoke with Kagermann at Sapphire, SAP's annual user conference, where the SAP CEO said he couldn't expect to make a big push into the market with an acquisition and still get a return on investment by 2010.
Meanwhile, AMR Research notes that spending on business-intelligence and performance-management products is expected to reach $23.8 billion by the end of the year, up 3.6 percent from the previous year.
Shares of Business Objects soared 16 percent in morning trading on Monday to $58.36 a share. SAP shares dropped 5.2 percent to $56.14 a share.
