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Oracle had a big year in 2005: From the SAP/Oracle rivalry, to the emergence of open source databases gunning for Oracle, to the blockbuster deals that only a company with a fat wallet and a boisterous CEO could ever think of attempting.
Compiled meticulously in the much-ballyhooed "top five" format, here's a look back at the year in Oracle and an idea of what's coming down the pipeline for 2006.
1. The battle between Oracle and SAP intensifies
One of the biggest battles to date between these giants occurred early in the year when comparatively tiny Minneapolis-based retail applications vendor Retek caught the eye of SAP to the tune of a $496 million offer. Oracle quickly countered the offer and the bidding war began.
Oracle declared victory on March 22 with a final $670 million bid, but perhaps more importantly, the move signaled the renewal of a fierce and multifaceted rivalry between Oracle and SAP.
"Retek highlighted the extreme level of competition and was also a watershed event in terms of helping both companies solidify their standing with one another," said Joshua Greenbaum, founder of Enterprise Applications Consulting in Berkeley, Calif. "It's safe to say there is really no domain where these companies are not competing today --whether it's for customers, human resources or partners -- at every level both companies are spending tremendous amounts of strategy on each other."
Greenbaum said the rivalry highlights the emergence of two distinct sets of strategies for developing service innovation at each company. These strategies will continue to develop in 2006, Greenbaum predicted.
"With Oracle, the bulk of its growth is in acquisitions; Oracle pledged in the vertical industry that it would be buying more companies, potentially buying more customers," he said. "Meanwhile, another emerging battleground is in the database market itself. We started to see SAP trying to dislodge Oracle as merely a database vendor for SAP customers."
2. Open source databases smell blood, Oracle bites back
Andy Astor, president of Edison, N.J.-based open source database vendor EnterpriseDB, and SleepyCat Software CEO Michael Olsen were very optimistic about the prospects for open source databases at November's Open Source Business Conference in Boston.
Referring to Oracle's year-end purchase of Innobase, whose storage engine InnoDB ships with the open source MySQL database, Olsen said: "Any attempt to disrupt a competitor is an acknowledgment that the competitor matters; and I think that acquisition was part of an attempt to disrupt MySQL's business."
MySQL AB, which is under a contractual agreement with Innobase that will come up for renewal next year, has stated publicly that it is pursuing alternatives to replace that functionality in some way. Oracle has said it intends to renew MySQL's contract for InnoDB.
Both Astor and Olsen were optimistic of their chances in the database market, even if that market is dominated by Oracle.
"We are not going to replace Oracle or MySQL or anybody else overnight," Astor said. "This is a $15 billion market for all of us. So we will work side by side and bring in new customers when appropriate."
Oracle also made a foray into the free low-end database arena in 2005, with the release of Oracle Database 10g Express Edition.
Astor, never afraid to attack a giant, lambasted the move as "late to the game" and said it reflected a frantic attempt to adjust to a changing market.
3. The Siebel surprise
Oracle sent shivers through the customer relationship management (CRM) market in September when it announced its intention to purchase Siebel Systems Inc. for $5.85 billion -- a deal that experts expect to be finalized in 2006.
Oracle, which purchased PeopleSoft Inc. a year earlier, is already a relatively strong player in CRM. But a completed Oracle-Siebel acquisition would considerably strengthen that position with the addition of about 4,000 new CRM customers.
"In a single step, Oracle becomes the No. 1 CRM applications company in the world," Oracle CEO Larry Ellison, said of the deal.
Founded by Tom Siebel in 1993, the San Mateo, Calif.-based company attained a leadership position but has struggled of late. Oracle said Siebel software will make up the core of its forthcoming Fusion CRM offering.
Oracle president Charles Phillips has said the planned buyout will fortify his company's position against SAP.
4. Identity management through acquisition
Oracle has made no secret of its strategy to buy and integrate the technology of companies whose products fit into the Project Fusion roadmap.
And in no other area this year has Oracle made more market-specific purchases than in identity management (ID management). First there was Oblix in the spring, then Thor Technologies and finally OctetString; each brought another component of the growing ID management space. ID management software helps ensure that only authorized users have access to systems and databases.
Oracle was quick to integrate the spoils of at least one of these purchases. Oblix technology was present in an update to the Oracle Identity Management Suite, released two months after Oblix was acquired.
The Oblix purchase, as well as the acquisitions of OctetString and Thor in November, was seen by many analysts as a sign that Oracle was finally well on its way to offering the completely integrated, all-in-one package it was calling Project Fusion.
Charles King, principal analyst with Hayward, Calif.-based Pund-IT Research, sees the Oblix integration as validation of Oracle's continued claim that Project Fusion would be a "best of" compilation of components from each of its acquisitions.
To date Oblix's ID management tools have allowed customers to use a single password to log onto applications in Oracle's eBusiness suite and software from PeopleSoft and J.D. Edwards.
With the new release of its Identity Management Suite, Oracle said it is extending that capability to all leading applications, directories and platforms.
5. Acquisitions, acquisitions and acquisitions
Though not a very specific "top five" item, Oracle's overall strategy of acquisitions made big headlines in 2005.
Forrester Research senior analyst Noel Yuhanna said Oracle moved aggressively into other areas, especially applications, with its multimillion dollar purchases.
"They have aggressively wanted to dominate the applications space for the past two years," Yuhanna said. "Their aggressive moves to acquire PeopleSoft and Siebel have certainly put them in line with SAP this year in regards to the applications platform."
Yuhanna said consolidation was already happening in the tech industry this year, and that Oracle was right in its decision to jump ahead of competitors that might have bought up applications vendors first.
"Oracle has done a good job in databases but has to expand into other markets, and applications is the closet thing," he said. "Instead of being the last one in line behind its competitors, Oracle broke ranks and went ahead."
However, Yuhanna was quick to caution Oracle as it moves forward into 2006.
"The challenge for Oracle still lies in integration, and it will take a while before they can get there," he said. "One thing customers complained about this year was support, just because Oracle has too many things on its plate, and support is getting hampered."
Long term, however, Yuhanna said Oracle should be able to address these concerns.
One final accomplishment that Yuhanna saw in 2005 was the purchase of TimesTen, a provider of high-speed software for managing customer data and transactions.
"The reason for mentioning this buy is the in-memory database, and how it will impact the industry in the future," Yuhanna said. "The number of users accessing the database is growing, and the bottleneck is at disk IO."
Oracle can now work to eliminate this hurdle through the in-memory database, by caching the data so the database can respond to queries faster.
"This was a very important and strategic move by Oracle, which is certainly good for them in long run," Yuhanna said.