Technology

Oracle's Ellison: Fusion Will Dawn in 2010


Pledging that Oracle's long-awaited software lineup will make its debut soon, CEO Larry Ellison assured customers they won't be forced to switch

After spending years and years gestating a significant new lineup of business software, Oracle (ORCL) Chief Executive Larry Ellison said on Oct. 14 that the company's long-awaited Fusion applications would make their debut next year.

Ellison, delivering a keynote address at the company's OpenWorld conference in San Francisco, also tried to reassure customers who have been concerned that they might be forced to switch from older software to Fusion if Oracle were to discontinue supporting old iterations of its software. For the next 10 years, he said, Oracle will continue to develop and enhance older software from PeopleSoft, Siebel Systems, and other brands of the almost 60 companies it has acquired for $30 billion in the past half-decade.

"We're going to enhance those applications for the next decade," Ellison said. "We're a pretty large software company. We can afford not only to maintain the software you're running today, but to build the next generation of applications.…We don't think all customers are going to replace what they have today with Fusion."

Customers Doubted Fusion's Progress

The promise of 10 years' further support for software that Oracle has acquired, as well as its own current E-Business Suite, could ease some concerns on the part of customers who say that as Oracle expands in scope and market power, it is presenting them with fewer choices of software suppliers, raising prices, and holding a tough line on price negotiations. Companies use business applications from Oracle, its rival SAP (SAP), and others to manage human resources departments, plan manufacturing schedules, and track their financial performance.

Customers have also been skeptical that Oracle could deliver new Fusion versions of its business applications, built on the industry-standard Java programming language, in a timely fashion. Kris Kutchera, vice-president for information technology at Alaska Air Group (ALK)—which runs Oracle's databases, PeopleSoft HR systems, Siebel customer management software, and Hyperion data analysis tools—was briefed on the software about a year ago. "It just seemed like a concept," she says. "They were talking about it, but they couldn't really explain it."

Delivering the Fusion applications next year could also help Oracle's financial performance. "If Oracle executes well on the Fusion applications, they should represent a significant growth opportunity," said JMP Securities (JMP) analyst Patrick Walravens, who has a market perform rating on Oracle shares, in an Oct. 14 research note. Oracle—the No. 1 supplier of database software, in addition to its applications—on Aug. 31 reported that sales fell 5%, to $5.05 billion, missing Wall Street analysts' expectations.

Ellison: Sun Computers Outpace IBM's

Shares of Oracle closed on Oct. 14 up 28¢, or 1.3%, at 21.19. The shares have gained 19.5% this year.

The announcement that Oracle would deliver the first Fusion applications next year comes as the company is trying to close its $7.4 billion acquisition of Sun Microsystems (JAVA) amid regulatory scrutiny by the European Union. The deal had initially been expected to close in July. Ellison didn't address the delay during his keynote address, although he did discuss new Sun computers that run Oracle's database software—saying they are faster than comparable systems from IBM (IBM). IBM and Hewlett-Packard (HPQ) have targeted Sun's customers amid the uncertainty attending Oracle's completion of the acquisition.

In a speech on Oct. 11 at the beginning of OpenWorld, Sun Chairman Scott McNealy sought to assure Sun's customers that Oracle would continue to support many of Sun's key technologies, including Sparc processors. In a September panel discussion in Silicon Valley, Ellison said the delay in closing the deal was costing Sun $100 million each month. "The longer this takes, the more money Sun is going to lose," Ellison said at the time.

The upcoming Fusion applications will include software for financial management, human resources, sales and marketing, supply chain management, and other areas. Customers will be able to run the software on their own computers or have Oracle run the software on its machines. Ellison said Oracle consulted with customers, including Alcoa (AA), ING (ING), and Qualcomm (QCOM), to help design the Fusion applications.

So Far, Software Code Merged Poorly

Ellison has promised the Fusion programs before. Two years ago he said Oracle would deliver the first Fusion application, a customer management system, in 2008. It still hasn't arrived. In the meantime, Salesforce.com (CRM), whose CEO, Marc Benioff, gave a keynote speech on Oct. 13 at the conference, has been stressing the ease of use and easy maintenance of its online sales management software vs. offerings from Oracle and SAP. "Marc's really rubbing Larry's face in the fact that Oracle's late," says Bruce Richardson, chief research officer at industry consultant AMR Research.

Oracle's competitors note that the tech industry has a spotty track record of pulling off ambitious mergers of software code, such as what Oracle is attempting with Fusion. IBM in the '90s and Microsoft this decade scrapped efforts to stitch together various business software applications they'd bought. "I've always thought about Fusion in that category," says SAP Chief Technology Officer Vishal Sikka.

Near the end of his speech, Ellison said the long wait for the Fusion programs is nearly over. "It is a big project and we have been working on it a long time," he said. Now, Oracle will see whether customers are eager enough for the new capabilities to move away from the tried-and-true products they bought from the many companies Oracle has acquired.


Monsanto vs. GMO Haters
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

Sponsored Links

Buy a link now!

 
blog comments powered by Disqus