Oracle's Alleged False Advertising Showcases Deeper Problems

Rob Enderle

The National Advertising Division (NAD) has once again called foul over what it believes is an Oracle false advertising claim for Exadata against IBM. And Oracle has pulled the ads vowing to appeal. This is now the second time this year we have had an event like this, so it is a trend and this trend points to the core weakness in Oracle’s unique executive team.

Oracle is one of the few companies led by sales and sales-led organizations tend to function tactically, tend to trend more to high inaccuracy with advertising claims (particularly when their products aren’t competitive) and have a tendency to create teaser pricing plans where what you think you are going to be charged is a fraction of what you are charged. All of these are consistent with complaints common with Oracle customers.

Now the fact that Oracle has been hit with what appear to be obvious false claims and these claims appear to be in conflict as the first claimed a 2x advantage and the second a 20x. Given the first was found to be false it would seem prudent to reduce, not massively increase, the claim, but this is the nature of a sales-driven company in trouble; being prudent often isn’t in their playbook and they are more likely to double down (or in this case deca down).

This escalation of marketing and sales rhetoric suggests a company under stress and when firms are under stress they can both make bad decisions and put their customers under increasing stress as well.

Oracle’s Issues

At the core of Oracle’s problem is clearly that its new hardware division isn’t working out. We’ve already seen internal communications from its own sales people (I believe the term used was "Sun hardware blows"). I’ve personally reviewed a case (PULSE) recently where, in a mixed shop, Oracle wasn’t even invited to bid Exadata because the IT organization felt the technology was obviously not competitive.

And after the Sun acquisition, Oracle got rid of its CFO and put Larry Ellison’s most loyal lieutenant into that role, which had me issuing a caution for Oracle customers and investors . Separately, each of these is a concern, but together, particularly with the trend of becoming ever-more outrageous with the claims, they are troubling. (Even if they were true, you never make a claim like this without substantial evidence because folks wouldn’t believe it otherwise and the competitor would likely sue you.)

HP Is Oracle’s Russia

I think the HP break is what is pushing Oracle over the edge. In the second World War, Germany was unbeatable largely because it wasn’t fighting all of Europe and had a partnership with Russia initially. When it attacked Russia, turning that country against it, Germany broke and lost the war. HP was more than Russia to Oracle, it was what allowed Oracle to truly compete with IBM; losing HP meant it really wasn't competitive with IBM anymore, and instead of turning it into a more efficient weapon, Sun turned Oracle into a dud. Its customer lock-in on the Oracle side is offsetting what otherwise might be a disaster, but now having to face both HP and IBM has proven daunting, particularly since it appears EMC, Cisco and SAP are aligning to attack it as well (more on this later in the week).

In the end, this extra stress is clearly causing Oracle to break from reality and take unusual, and ill-advised, risks, like making claims that appear to be both untrue and unbelievable.

Wrapping Up

It is always ill advised to take competitive claims from any vendor, but a vendor that makes claims that it can’t support and are increasingly unbelievable is a vendor that has broken with reality. When a vendor has broken with reality in one area, it may be breaking in others and if that vendor already has a history of mining customers for money through aggressive billing, it is likely time to begin auditing your invoices for both sales and services to make sure you aren’t being overcharged.

It might also be time to consider other vendors that are under far less stress so you have one less concern to keep you up at night. That was one of the things driving the PULSE case last week and that firm looks particularly intelligent today. Unless Oracle corrects the pattern of behavior it is exhibiting, it will end badly for all connected stake holders.

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