We focus on IBM as a competitor: Oracle CEO

BOSTON, USA: Self-made billionaire Larry Ellison has built Oracle Corp into one of the world's most powerful technology companies through a series of ambitious acquisitions.

In a recent interview with Reuters, Oracle CEO Ellison talked about competing against IBM and EMC Corp, plans for more acquisitions, how Salesforce.com is too expensive, litigation against SAP and possible succession plans at Oracle:

Q. Now that you're selling both software and hardware, what is your acquisition strategy?

A. You will see us make acquisitions in almost every area. Maybe not so much database anymore, though even around the peripheries of the database. You will see us make acquisitions in storage, networking, all sorts of low-level software management tools and applications in a great variety of industries.

Q. You didn't mention semiconductors.

A. I think you could see us buying into additional silicon for a variety of things, like security, for example. I really can't outline all of that, but you'll see us deep into silicon. I think you'll see a lot of the things that Oracle builds in software right now, you'll see finding its way down into silicon.

Q. Oracle is no longer just a software company. What is Oracle?

A. Oracle is a systems company. We're not a hardware company. We're not a software company. We are a systems company. We want to deliver compete working systems. Now, of course we are a software company. If you just want to buy our database, God bless you.

We sell system components like database and middleware and operating systems and chips and all that other jazz. We even sell tape heads. We sell tape heads to HP. So we are definitely in the system component business. Where we think we'll make our money.

Where we think we're able to differentiate ourselves from IBM and everybody else is by building complete and integrated systems from silicon all the way up through the software, all prepackaged together. You don't have to hire a systems integrator to put all these pieces together. A lot of this stuff is preintegrated, which should make it much more reliable much, more lower cost. Get it up and running much faster. That is our goal. Not to sell smaller and smaller parts, but to sell larger and larger parts to data centres.

Q. What is your long-term goal for Oracle?

A. We really focus on IBM as a competitor. We beat IBM in the database business. It's close, but we think we are number one in middleware and IBM is number two. We would like to beat IBM in high-end servers, we think that's very important. And we'd like to beat EMC in storage.

Q. You want to beat EMC in storage? Would you need to do some acquisitions first?

A. I think there might be a little bit technology we have to buy. On the IBM side no. I think we have all the pieces to beat IBM in high-end servers. We might have to make some technology, but not business, acquisitions to beat EMC. But I think EMC is vulnerable.

Q. Why is EMC vulnerable?

A. I think their technologies are aging. For example if you look at our Exadata storage. The Exadata storage servers are much faster and much lower cost and much more reliable than anything EMC has.

Q. How big a product is Exadata for Oracle today?

A. Right now our pipeline is approaching $1 billion for a fairly new product. I think in a few years the Exadata business will be measured in the billions of dollars per year of new sales. If you will, our iPhone.

Q. You're in litigation with SAP over TomorrowNow. Are you willing to settle?

A. We wish it never happened, but they already admitted to stealing our intellectual property. If we have to go to court, we will.

Q. Marc Benioff has said that you looked at buying Salesforce.com. Can you tell me about that?

A. We took a very close look and we decided not to do it because it was too expensive for how much money they make. We thought at the time it might be our first ever dilutive acquisition. It was so expensive and doesn't make very much money. That's still true today. It's a little better than it was. It's still got a very high P/E associated with it. We don't like buying companies where we can't make them profitable virtually immediately. So Salesforce was a problem for us. Very high price, minimist profits.

Q. How much longer do you plan on staying on as CEO?

A. Let's see. Unless I start sailing much more than I do now, I have no plans to retire. They may kick me out, but I have no plans to retire.

Q. Is there a succession plan?

A. Oracle has a number of talented people who could go and be CEOs at a lot of other companies if they wanted to be. I think the board will have a nice list of people to choose from if they decide to replace me.