For five straight quarters extending from early 2009 through the middle of this year, Oracle executives used their quarterly earnings reports as bully pulpits from which to blast archrival SAP. But in its September financial press release and in the most-recent one it posted yesterday, Oracle didn't have offer so much as a whisper about SAP—what the heck's going on here?
Could it be that Oracle execs have suddenly become all cuddly and lovey-dovey? Has Larry Ellison experienced a kumbaya moment?
Could it be that Oracle, since it's no longer a software-only company, has shifted its strategic sights beyond SAP and toward IBM and HP, as noted in Global CIO: Larry Ellison Declares War On IBM And SAP and Global CIO: Larry Ellison Vows To 'Go After' HP; Is Alliance Dead??
Or could it simply be that SAP's own financial and market-facing resurgence has choked off the rich flow of kick-me material that SAP was providing under former CEO Leo' Apotheker and before new co-CEOs Bill McDermott and Jim Hagemann Snabe took control of the company in February?
In a fascinating revelation, an analysis of market-facing made by Oracle executives over the past couple of years shows that two years ago, the company had its competitive energy focused on Salesforce.com; then one generic comment about beating competitors; then five straight quarters of SAP-bashing; and now, in the two most-recent quarterly announcements, Oracle has ignored SAP entirely and has been touting the major successes of its Exadata Database Machine.
To gain some insight into Oracle's strategic intentions, let's take a quick look at verbatim comments from Oracle execs made in the context of press releases announcing quarterly earnings over the last nine quarters:
Dec. 18, 2008: Market-facing comments target Salesforce.com and also mention Exadata for the first time: "We signed our largest on-demand sales force automation contract this quarter," said Oracle CEO Larry Ellison. "This was just one of several recent wins over Salesforce.com. We also sold our first database machine, launching an all new and important business for Oracle."
March 18, 2009: Oracle talks about beating competitors but doesn't call out SAP by name: "If you look past the effect of exchange rates, our new software license revenues for this quarter were higher than our new software license revenues for Q3 of last year," said Oracle President Charles Phillips. "Achieving constant currency growth in new software license sales in this very challenging economy shows that we continue to beat our competitors in both technology and applications."
June 23, 2009: Oracle starts hammering at SAP as Apotheker takes over as the company's sole CEO: "We grew faster and took market share from SAP in every region around the world," said Oracle President Charles Phillips. "In Europe our applications business grew 5 percent in constant currency versus negative 27 percent growth for SAP in their most recent quarter. Historically Europe has been an SAP stronghold, but these results prove that we can compete and beat them everywhere."
Sept. 16, 2009: Oracle continues to pound on SAP's sagging revenue: "We grew faster than SAP in every region around the world, including Europe, where our applications business grew 3 percent in constant currency versus negative 39 percent for SAP's most recent quarter," said Oracle President Charles Phillips. "Our applications team also executed especially well in North America, where our applications business grew 8 percent in constant currency versus negative 50 percent for SAP."
Dec. 17, 2009: Oracle continues to highlight the different directions the two companies are taking: "For the fourth consecutive quarter, Oracle took market share from SAP in every region around the world," said Oracle President Charles Phillips. "In constant currency, our applications business grew 1% in the Americas and 2% in Asia Pacific versus a negative 35% and negative 34% respectively for SAP."
March 25, 2010: Oracle CEO Larry Ellison himself joins in, skewering SAP's ongoing revenue declines and taking an additional jab at SAP's recent decision to oust Apotheker and name co-CEOs: "Every quarter we grab huge chunks of market share from SAP," said Oracle CEO Larry Ellison. "SAP's most recent quarter was the best quarter of their year, only down 15%, while Oracle's application sales were up 21%. But SAP is well ahead of us in the number of CEOs for this year, announcing their third and fourth, while we only had one."
June 24, 2010: As SAP returns to growth in its most-recent quarter, Oracle turns back thehands of time to continue its theme of having all the momentum in the market: "We continue to take large chunks of market share away from SAP," said Oracle President Charles Phillips. "Over the last twelve months Oracle’s applications business has grown 5% on a constant dollar basis while SAP's business has declined 24% over their previous four quarters. This trend has been going on for a long time: Oracle's applications business has grown 60% in the last four years while SAP's business is 7% smaller than it was four years ago."
Sept. 16, 2010: As SAP continues its sweeping turnaround under the assertive and upbeat leadership of McDermott and Hagemann Snabe, Ellison and Oracle say nothing about SAP and instead play up their big wins with Exadata: "Our Exadata database machine continued to win new customers in Q1," said Oracle CEO Larry Ellison. "The worldwide Exadata pipeline now exceeds $1.5 billion for the full fiscal year."
Dec. 16, 2010: As SAP's profitable double-digit revenue growth continues, Oracle continues to avoid mentioning SAP and instead again touts Exadata's market momentum in yesterday's press release announcing Oracle's quarterly financial results, with new president Mark Hurd doing the honors: "Since joining Oracle I've met with and visited many customers that have expressed a high level of enthusiasm around our strategy of engineering hardware and software that works together," said Oracle President, Mark Hurd. "That enthusiasm translates into an Exadata pipeline that has now grown to nearly $2 billion. That number is a good leading indicator that customers are planning to increase their investment in Oracle technology."
During the conference call with analysts yesterday afternoon, Oracle certainly took some swipes at SAP—they are, after all, significant competitors—but almost all of those were framed in longer reflections into the past because of SAP's revenue surge in the past couple of quarters.
On the call, Oracle president Safra Catz put it this way: "You can really see our momentum in our applications results as we continue to take share from SAP. Their most recent new license revenue is actually down 14% from two years ago, while ours has grown 23% over that same period."
But overall, Ellison and Catz and Hurd devoted little time to attacking SAP and instead made it clear that their primary focus is shifting toward the new wave of blunt-trauma competition they'll engage in with IBM and HP in high-end systems.
However, let me not suggest that Oracle no longer regards SAP as a primary competitor, or that Ellison has in any way backed away from the vow he made in March to overtake SAP as the world leader in enterprise applications (see Global CIO: Larry Ellison Declares War On IBM And SAP).
Rather, what we're now seeing from Oracle is a diversification of their competitive zeal, inspired in part by Oracle's broader aspirations but also influenced in part by SAP's recent significant turnaround.
So, good for SAP for reversing its fortunes and stripping away Oracle's opportunity to rub its face in the dirt.
And good for Oracle for recognizing that there's little to be gained by drawing attention to the thriving company that's beating you in the market.
