Jose Delameilleure: Why are you still at Oracle? You could have been the CEO, the number one at a number of companies. What keeps you at Oracle?
Ray Lane: I guess a couple of reasons. First, I really enjoy Oracle. I really enjoy what I do. I am allowed to be number one at what I do best. So I know how to sell and service, consult for customers, and give them a good experience. I really don't know how to develop products. Larry [Ellison] says: 'I am the head of development, you are the head of operations and we are partners'. That's the way we run the business. He does not tell me what to do in operations. And I don't tell him what to do in development.
Q: Do you see yourself as a number two?
A: Yes, well. He's my boss and I have a lot of respect for him, and I ask him a lot of advice. I learn a lot from him. I enjoy working with him. If he were telling me what to do, I think I would feel differently about that. Also, the potential of Oracle is tremendous. There aren't a lot of software companies today. Period. Many little ones, but I like working in large companies. I've worked in Booz Allen & Hamilton, I've worked in EDS, I've worked in IBM. I like big companies. I'm on the board of some small companies and I like to go visit. But I couldn't work there. I know how to run a big company, so I like it.
And then, to be perfectly honest, the value of my stock. I own a significant portion, and if the shares rise 10 points, that's more money than I could get at another company. Let's meet again in a year, and if you haven't invested in Oracle, I'll tell you how much money you've lost in that year.
Q: You've worked at EDS and at Oracle. What's the difference between Ross Perot and Larry Ellison?
A: There are some similarities, but there are also differences. Both are driven enterpreneurs that people don't understand very well. People think they understand. Everybody is an expert on Ross Perot and everybody is an expert on Larry Ellison. Very few people really know them. The key is their ability to focus. Everything else goes away but that one thing. My critical goal in the last few years has been to convince Larry to pick applications as his one focus. And now it's done. It's taken me a long time, but I won it.
Q: In an interview, Larry said he thinks the world of you, saying "I think he's fabulous". How do you feel about him?
A: Same thing. I could not work for somebody unless they teach me. I've learned a lot from him. He's the guy who is a very succesful entrepreneur. But he's a developer, a programmer, a technical person. I didn't think databases were high in the strategic value, so I wasn't looking forward to learning from him, but it was quite the opposite. I've learned to focus, I've learned how to make decisions better, so I think the world of him. It's a great partnership.
People walk away saying Larry is awful to deal with. I've also heard people say he is the warmest human being they had ever met. And he is. Very softhearted, very warm, very giving. Very benevolent. And it's very hard to understand that. Ross Perot is the same. He is the most ruthless businessperson I have ever met. Ruthless, do anything to win. Yet, he's viewed as this patriotic, very american saviour, getting prisoners of war out of prison and giving Vietnam prisoners food.
Q: When's Larry running for president?
A: I don't think he will. I don't think he has any political aspirations at all. I may be surprised, but I don't think so.
Q: You're on the board of Marimba. It's been awfully quiet. Is it still alive?
A: Yes, but it's done on purpose. I think Marimba spent too much time marketing in their early days. I think everyone felt like 'just deliver'. Plus the company had to change from what was push technology. They were categorized as a push company, but it's not hard to develop push technology. So they had to reposition them from push to application management. And that's what they do now.
Q: Everyone is going very strong on applications. Oracle isn't. Why is that?
A: I wish I knew. We should be growing as fast. There's a combination of a bunch of small reasons that all add up. The first one is we're not purely focused on it. It's only 20 per cent of our business. I know it could be more, but it hasn't had enough of Larry's attention. In the last 90 days, it has been getting more. It is his number one priority now. So I think it's going to change, and change rapidly. Because when Larry says somethings needs to be done, it gets done.
Secondly, I think we need to train our salesforce better on selling the advantages of our products. Thirdly, I think we have been essentially following, replicating what SAP does. SAP came to America in 1992 or '93, with a client/server product. We also had one. But when they came to America, they had all of the European localisation done. We did not. We have been working for five years to bring our product to Europe, which is difficult, with 20 different languages. We have been spending a lot of money to build a global product that can compete with SAP.
I think we should have been much more focused on our own strengths. No one can beat us on the manufacturing product. Information management, data warehouses to support our applications. It is our core competency. SAP has a very difficult time getting information out of their applications.
Q: Do you think you need to go on the AS/400?
A: No. It would totally defocus us. It would once again give us something that does not bring us an advantage. So let the others do it. I think we need to focus on what can make us strong. I say front office, I say application data warehouse, I say manufacturing, and we focus on financial services, telcos and industry, and we can't be beat.
Q: Do you believe Bill Gates when he says Microsoft isn't going into applications?
A: No, I think he will. Why wouldn't he? He's going into content, he's going into every other business, he's going into banking. So I think he will be going into applications as well. I don't know if he will be going in to enterprise applications like financials or manufacturing. But he will find out that that's a high growth market.
Q: Do you intend to buy in the ERP market, or build?
A: Build. We have built, we have partnered, we have bought, so we have done all three. But as you measure in the amount of R&D that we do, our growth strategy is 80 per cent build. Because if you do, you get a better product at the end of the day. You may not get to market faster.
We also partner - i2 is a strategic partner, because it adds capability that makes our manufacturing product stronger. We partner with IMI, because it does a better job in the order management, pricing, trade accounting part of the business. There are times where it makes sense to partner, but for the predominant part of our products, it's best to build.
Q: Is Interoffice the next product to be halted, after Powerbrowser and Sedona? A: It depends what you consider Interoffice. Interoffice is a very powerful database messaging system. As an email or messaging system, it makes Microsoft Exchange or Lotus Notes look sick. As an email client, we don't know how to sell it. So what we will do is embed Interoffice in our Application Server and in that server we have database messaging and document exchange. Interoffice becomes the heart of the server. Use any client you want, but the client we recommend is Netscape Navigator.
Q: What do you tell Interoffice customers now?
A: We support the product but we are not going to sell the client. We have Interoffice 4.1, there will be other releases, but we'll convert the client over the long term to Netscape Navigator.
Q: Gartner tells customers you'll end the product.
A: Gartner does not know what it is talking about.
Q: Do analysts know what they are talking about when they say the network computer is not selling as expected?
A: That is correct. We are not in the NC business. The NC has very little relevance to our revenue, right? We focus on network computing. As long as the PC is as expensive as it is now, it will be replaced by other appliances in the marketplace. I keep saying that within a few years, three, four, five years, 75 per cent of the desktops will not be a PC. They may be a PC with a browser, not using the disk drive - that's the same thing as an NC. What's going to be interesting is to see whether customers will leave Windows. If they leave Windows and adopt Java and a browser, that's our major challenge. But once again, analysts have not understood. It's not NCs versus PCs.
Q: NCI [Oracle's NC subsidiary] is not going the way you wanted it to?
A: No. Not the way we wanted it to go, but it will still be successful. Our expectation is that by the end of the year, NCI will go public, and it will be a very successful company. It will be based on selling NCs to telephone companies to be repackaged for the home. Cable & Wireless have standardized on the NCI platform for delivering home services and we'll have more announcements in the cable industry in the next month. So we expect the cable, broadcast industry to standardize on the NCI product. That's not where we expected the success of the NC to come. We expected corporate customers to put NCs in to replace dumb terminals and then replace NT. But NCI is selling to the consumer market and IBM and Sun to the corporates.
You know it's amazing, but what NC has done is stop NT on the desktop. Go ask Microsoft how much NT on the desktop they expected to sell, versus where they are now. That's all the NC. It's really applications on the server. Corporate customers say I'll run my applications on the server and I no longer need NT on the desktop.
Q: How dead is the database market?
A: We largely are the database market. If you look at our database sales in north America and Europe, our sales are still going very well. Japan has gone from 70 per cent growth to minus 10 per cent, but that is not the database market, that's the economy in Japan. North America is still growing over 25 per cent, Europe over 20. There is a slowdown, caused by the Year 2000. All the money is going into repairing old systems.
Q: What's your strategy for low end databases? When are you buying Pervasive Software?
A: Why would we? We have a low end database that is compatible with Oracle 8. It run on Windows, it runs on Windows CE, it runs on the Palmpilot, on Psion,... It's called Oracle Lite.
Q: What's the new tools strategy?
A: We are very happy with our tools right now. Designer 2.0 is under production now. We are having a great success with full 100 per cent generation of code. Discoverer is a query tool that is growing over a 100%. Everyone is in love with it. The tools story is great. The trouble with tools is that it is difficult to get growth. The model in client/server has been to sell to developers and give away runtimes but we sell concurrent user licences. So for every desktop, you pay $200 dollars to use the tools, until some competitor comes along and gives it away. We have almost doubled our prices, and in the last two quarters in the US we have seen tools growth of over 35 per cent in a flat market.
Q: So it is possible to sell tools as a database company? Sybase and Informix have trouble with it.
A: The problem is not selling tools, it's making money out of tools. Powersoft is the one that did it. They screwed up the business by saying we'll sell developer licences and give away runtime. And free runtimes is silly, but we had to go along with it because our competitors did it.
Q: Last question - what about Sybase and Informix?
A: I like the management at Sybase, they're good people. But I don't think these two companies are going to make it. You have a choice of Oracle, Microsoft or IBM. Why would you choose Informix or Sybase? Don't they become irrelevant as number four or five? They become like Ingres now.
Josi Delameilleure is editor in chief of 'Datanews' in Belgium. He was talking to Ray Lane, chief operating officer of Oracle.
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