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Saturday, September 22, 2007

BBD or not; Larry Ellison is in no hurry

Larry Ellison never shoots from the hip. He is quite level headed and makes sure that he’s never caught with his pants down. I am referring to his casual dismissal of SAP’s SaaS offering – Business By Design (BBD) – by saying that it’s not going to make a lot of money.

But the fact is that he owns NetSuite, a SaaS ERP provider that is prepping an IPO. If Ellison really thought there would be no money in SaaS ERP he wouldn’t own NetSuite. But Ellison’s comments, which were delivered (transcript) after the company’s solid earnings report, do reveal Oracle’s strategy. Oracle isn’t going to try and replicate what SAP has done. Here’s Ellison’s strategy: Let SAP figure SaaS out and crow if the rival fails. If SAP is successful–it probably will be over time–Ellison buys NetSuite from himself.

Here you got what Ellison had to say about the growth strategies of Oracle and SAP and the SaaS market.

Simply put, Oracle will just buy NetSuite when the time is right. Sure, there are corporate governance hackles to be raised since Ellison is basically buying his own venture, but that’ll be worked out with some independent committee and a healthy premium. So when folks figure out this SaaS thing, Ellison will answer with another acquisition.

If BBD fails, he can start a grapevine and say Henning Kagermann, CEO of SAP was a daffy professor who bullshitted his way into a project that never made any sense in the first place, and predictably failed. But I have this question for you Mr.Ellison - costing a tenth of your economics, why would you think BBD will fail...? Wouldn't you agree it'll make up in volumes what it loses in the width of its margins...?

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