Microsoft-Oracle tie-up: ‘The enemy of my enemy is my friend’
By Edwin Yapp June 27, 2013
- 'Co-opetition' in business rivalry enters new level; in a bid to fend off foes, companies seeking new ways to cooperate
- More upstart enterprises challenging traditional IT players; turf wars breed innovation, better products and services
Periscope by Edwin Yapp
BUSINESS rivalry is a part of life. After all, competition is what drives businesses forward and the quest to outdo your rivals, no matter how small or big, may be one of biggest catalysts for innovation.
In my early days of tech journalism, one of the first few huge conferences I attended was Oracle World 2003. That event left an impression on me beyond the glitz and glamour of such a big tech conference.
Sharing the stage with the main player, Oracle CEO Larry Ellison, were some of Silicon Valley’s biggest names of the day: Scott McNealy of the now defunct (and owned by Oracle) Sun Microsystems; and Carly Fiorina, then CEO of Hewlett-Packard (HP), who engineered one of the largest mergers at that time, the US$25-billion deal between Compaq and HP.
Whilst on stage, these rivals took potshots at each other, with witty banter going back and forth, about Oracle’s new product of the day – Oracle 10G Database and its Grid Computing vision.
That was the first real exposure I had to the word ‘co-opetition,’ a phrase which describes companies that both compete and cooperate with each other because no one had such a technology edge that they could go it alone.
In HP’s case, it needed Oracle’s database software, which was in pretty much every large enterprise of the day. In Oracle’s case, it needed HP’s hardware servers to which it could mate its software product – this prior to the US$7.4-billion Sun Microsystems acquisition in 2010.
But while co-opetition had for years worked as a win-win formula for these more traditional IT giants, new forces have begun surfacing in the heart of Silicon Valley and IMHO, act as a true impetus for these traditionalist to defend their turf from bright upstarts.
On June 24, news broke that two old foes in the cat and mouse software game have put aside some differences and are beginning to cross-deliver their flagship offerings on each others’ platform.
Reuters reported that Microsoft Corp will offer Oracle Corp's Java, Database and WebLogic Server to Windows Azure customers, while Oracle will make its Linux available to Windows Azure customers.
Noting that the two companies have long collaborated out of the public eye to meet customers’ needs Microsoft CEO Steve Ballmer said, “In the world of cloud computing, I think behind-the-scenes collaboration is not enough.”
And in a Bloomberg report, Ballmer also said, “It’s about time, and we’re really glad to have the chance to work in this much newer and more constructive way with Oracle. The partnership has an immediate benefit to customers of every size and shape.”
These revelations are telling, considering that these companies have been slugging it out since the 1970s.
After all, Ellison famously hired private investigators to sift through the trash of a research group Oracle suspected of being funded by Microsoft, according to a Bloomberg article.
“It's absolutely true we set out to expose Microsoft's covert activities,” Ellison said at a press conference at the time. "I feel very good about what we did … Maybe our investigation organisation may have done things unsavoury (sic)’, but it's not illegal. We got the truth out.”
So what’s melting the ice between these two fierce rivals?
Simply put: Competition and sagging sales.
Bloomberg noted that both companies are facing competition from nimbler rivals delivering computing power over the Internet, including Google, Amazon and Salesforce.com.
“Microsoft is seeking new sources of revenue from online services as demand for personal computers slumps, and Oracle is shifting its focus to business software sold through online subscriptions rather than installed on customers’ own computer servers,” said Bloomberg.
A decade ago, who would have thought that an online e-commerce website, which started in 1995 and struggled to break even after being in existence for seven years, would begin making chinks into two of the world’s largest software companies?
Ditto for Google, a company formed in 1998 by two university students who dropped out to concentrate on web search; and Salesforce.com, a company in which Ellison was an early investor and even a mentor of sorts to its founder, Marc Benioff, who was incidently booted out of his speaking slot at Oracle World 2011.
Of course, besides the innovation and initiative shown by these three latter companies, other factors too that have contributed to their success.
These include the shift from on-premise software to a cloud computing delivery model, and with it, a recurring subscription-driven charging model; the move away from the Microsoft PC-dominated world to one that has embraced tablets, smartphones and laptops; the ubiquitous nature of today’s wireless broadband; and the plummeting cost of storage, bandwidth and computing resources in general.
The plain truth is that tech stalwarts like Ellison and Ballmer (and their equivalents) can no longer afford to sit down and rest on their laurels. Doing so will only set them back and hurt the empires they’ve fought so long to build and keep.
To me, this is the true power of competition as it is these nimbler, research-driven startups that are truly changing the world we live in by creating disruptive scenarios that will in turn push other companies to respond.
As cloud computing, flash storage, in-memory computing, software-defined data centres and other up-and-coming technologies arrive in force, the world can expect newer and more innovative products and services to come to market, driven by more disruptive technologies.
So a word of advice to all traditionalists and aspiring startups out there, and no doubt from Ellison himself: “Running a company is ‘all about creative destruction, right?’ It's like Woody's Allen's great line about relationships: ‘A relationship is like a shark, it either has to move forward or it dies.’ And that's true about your company.”
(Oracle headquarters pix courtesy of Peter Kaminski of Flickr)