Oracle, HP: When You See an Ugly Divorce, Run!

Rob Enderle

I think we are seeing something really unusual between companies in the Oracle/HP fight and one question keeps plaguing a number of us: Why does Oracle seem so fixated on HP? Some of us think those in charge are behaving like children. I think it is because they are behaving like adults in a divorce.

 

In theory, HP is really a different kind of company than Oracle is at its core. IBM is, by far, the more similar alternative. IBM was the largest software company in the world and it has the only packaged solution that can force a full Oracle displacement. HP isn't and has no interest in becoming a relational database company. So why so much effort to personally attack HP and, as I mentioned last week, why risk bringing Intel into the mix ? (Note: Oracle basically said that Intel was killing Itanium, which isn't true.) I think it is because Oracle, in effect, cheated on HP and now is behaving much like a spouse who misbehaved and wants to blame his or her partner for the problem.

 

Let me walk you through my logic, and realize that much of the animosity isn't coming from Oracle, it is coming from Larry Ellison who has to be an expert on divorce. I think this is ugly because Larry is using behavior he has developed as an individual in his corporate role and this could end up very badly for Oracle customers or anyone else caught in the middle, like Intel.

 

The Sun/Hurd Question

 

Oracle and HP were very close. One might say they were as close as two companies could get and not be merged. They had a common enemy in IBM and the two CEOs for much of the last decade were personal friends. So why did Oracle (and recall this happened before HP fired Mark Hurd) buy Sun? There was no sign externally that the two firms had a problem and even if Oracle was working with Hurd to eventually lower HP's valuation so Oracle could buy the company-a possibility we should consider-the Sun acquisition seemed counterstrategic. Also, IBM engaged Sun first with Oracle entering only after IBM and Sun started to have issues about price.


 

Sun doesn't feel strategic; it kind of feels as though it was a decision that was made without thinking through the alternatives. Things clearly were getting tense between HP and Oracle post-Sun because Sun was a historic enemy of HP.

 

Then HP fires Mark Hurd and suddenly Oracle has cause to point at HP and ask for divorce because HP misacted. While to an outsider-much like a man who goes ballistic because his wife fired the maid and now wants a divorce-this seems nuts, in the context of someone looking for a reason to separate, it suddenly makes sense.

 

Oracle was simply looking for a cause and the Hurd firing became that cause.

 

The Oracle Problem

 

All of this suggests that Oracle is being run on the whims of its president and not on the deep, strategic focus that allowed it to become what it is today. When companies that have a significant client lock-in start to fail, they increase revenues by increasing prices largely because they, for a short time, can. We may already be seeing signs of this in the pricing that surrounds visualized solutions that appear to apply a VMware tax to the Oracle license fees equal to the cost of VMware. It doesn't make sense, but it does effectively allow Oracle to increase revenues when demand for Oracle's products is declining. IT buyers aren't idiots, however, and IBM went through a similar, though arguably less dramatic, decision process in the 80s and the result almost put the firm out of business.

 

We often forget that CEOs are people, too, and the behavior they may have developed at work may make it into the home and from the home into the business. I think it is likely that Larry Ellison's behavior against HP is starting to mirror an ugly divorce and things will get much worse before they get better.

 

Wrapping up: Ugly Divorce

 

If you haven't been through an ugly divorce, this is where one or both spouses go out of the way to do harm to the other. The first thing you learn in a divorce is that the truth simply does not matter. One or both parties aren't thinking logically, they stew on the situation and make emotional decisions that can do as much harm to themselves as to the other party. For HP, this means it needs to recognize and protect itself against the very real threat that it is going to have a repeat of the pre-texting mess that resulted when one of its own board members was fired and took it personally to a degree that almost got HP's entire board and CEO put into jail (as detailed in the book "The Big Lie"). Larry is a similar risk and this time the cost could be even higher. I've been joking about what Oracle could do next, but this is no joke.

 

For Oracle customers, being tied to an erratic company that, on the surface, is trying to force you to buy hardware you want to avoid is a call to action to take your business someplace else. There are alternatives and if you agree that this situation may implode, it might be wise to distance yourself from the firm before you become collateral damage. The one thing you learn quickly in an ugly divorce is that you don't want to be one of the kids. And I can speak to that as someone with experience.



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