It is perhaps with good reason that Larry Ellison does not speak in public that often. Whenever he does, the famously bombastic Oracle chief executive seems certain to trash his rivals, make bold predictions about Oracle’s future, and wander off topic.
Last night at a meeting of the Churchill Club, Mr Ellison said that Sun Microsystems was losing $100m a month as European regulators scrutinise Oracle’s proposed takeover of the struggling hardware maker.
On the economy, Mr Ellison said it would be at least another five years before the US begins to recover. He said it would not be a V shaped recovery with a sharp rebound, or a W shaped recovery with a double dip, or a U shaped recovery with a pause before an uptick, but an L shaped recovery — “down and not coming back up.”
In an onstage interview by former Sun No. 2 Ed Zander, Mr Ellison didn’t miss the opportunity to diss IBM, SAP and Microsoft, dismiss cloud computing as jargon, and weigh in on his bid for the America’s Cup.
Mr Ellison has been Oracle’s chief since he founded the company 32 years ago with $2,000. It’s a remarkable run, and one is hard-pressed to name another chief executive who has been in place for as long. But Mr Ellison said he began with modest ambitions. “I wanted a nice car, I wanted a house,” he said. “We thought the idea was just to have a small software company.”
Today Mr Ellison, the fourth-richest man in the world according to Forbes, is thinking very, very big. He said that with the Sun acquisition, Oracle is aiming to provide more integrated computing systems that offer customers storage hardware and database software in one package. “We believe in this model where we deliver complete computers systems,” he said. “It’s not good when the customer has to buy a bunch of technology components and then has to assemble them.”
In a rare compliment to a rival, Mr Ellison cited Cisco as an exemplary company that has done as much by successfully combining hardware and software. “Cisco has a hardware/software combination that allows them to be instrumental in the internet,” he said.
Critics had wondered if Oracle, a software company, would sell off Sun’s substantial hardware divisions. But Mr Ellison said he would keep all of Sun’s divisions. “We are keeping everything,” he said. “We’re keeping tape, we’re storage, we’re keeping x86 technology and Sparc technology.” Mr Ellison said that at $7.4bn, Oracle was getting Sun for a steep discount, citing the company’s deep pool of technology, talent and patents.
Yet with uncertainty surrounding the Sun deal, rivals IBM and Hewlett-Packard have bragged that they are stealing customers. Mr Ellison challenged IBM and HP to provide details on their new customers, and he said once Oracle and Sun were integrated, the tide will turn.
Mr Ellison was most impassioned when asked about the threat of cloud computing to Oracle’s core business. “The cloud is water vapor,” he said, dismissing the hype as semantics. “Is Intel dead? There will be no microprocessors in the cloud?
“All it is is a computer attached to the network,” he said. “You still need databases, and memory and microprocessors. Cloud computing is not only the future of computing, but the present and the entire past of computing.”
Mr Ellison said he saw Microsoft increasingly turning into a consumer-oriented business, despite the fact that the bulk of its revenue still come from licenses for Windows and Office. “I think they are obsessed with Apple, and they’re obsessed with Google, and to some degree with Sony and the PS3,” he said. “Culturally now, under the new administration at Microsoft, I see all their energies going into being successful in the consumer space.”
As advice to budding entrepreneurs, Mr Ellison said to avoid the computer industry because the innovation rate is slowing. “I would probably go into biotech, not computing,” he said. “I think you want to go into a field where the innovation rate is very high. The computer industry is maturing. You go through a consolidation phase. And there are a relatively small number of computer companies that are competing. The innovation rates have slowed down.”
Besides running Oracle, Mr Ellison also spearheads the BMW-Oracle sailing team, which will compete in the upcoming America’s Cup. This year BMW-Oracle will be trying to win the title from the Swiss Alinghi team, but the two sides are embroiled in a legal dispute.
Alinghi says the BMW-Oracle boat doesn’t meet the required dimensions. But Mr Ellison said the Swiss, who also run the competition, are changing the rules because Alinghi was afraid to race against Sir Russell Coutts, the former skipper of Alinghi who Mr Ellison hired away. “Who’s ever head of a sporting event where the umpires and referees work for one team?” asked an exasperated Mr Ellison.
Mr Coutts, considered by many to be the best sailor ever, previously won the America’s Cup for Team New Zealand and Alinghi. “They’re so uncomfortable racing against Russell Coutts, they’re twisting he rules,” said Mr Ellison. “We have the fastest boat, we have the best crew, and if it’s a fair race, we’ll win.”
When Mr Zander asked if Mr Ellison would rather beat Alinghi in a race or SAP in a deal, Mr Ellison didn’t hesitate to respond. “Alinghi,” he said. “We beat SAP all the time.”
Finally, Mr Ellison, who is 64, said he would stay at Oracle for at least another five years. “I would like us to be the successor to IBM,” he said. “If the information age was fully upon us and Oracle was storing and retrieving most of that information, I would be very happy.”
