Top Ten Reasons to Wonder About Oracle’s Judgment

Did you see this press release?

Oracle Stops All Software Development For Intel Itanium Microprocessor

REDWOOD SHORES, Calif., March 22, 201

After multiple conversations with Intel senior management Oracle has decided to discontinue all software development on the Intel Itanium microprocessor. Intel management made it clear that their strategic focus is on their x86 microprocessor and that Itanium was nearing the end of its life

Both Microsoft and RedHat have already stopped developing software for Itanium. HP CEO Leo Apotheker made no mention of Itanium in his long and detailed presentation on the future strategic direction of HP

Oracle will continue to provide customers with support for existing versions of Oracle software products that already run on Itanium.

I could hardly believe my eyes. Apparently, Oracle has absolutely no concept of karma, and is totally unaware of any helpful clichés reflecting the collected wisdom of humanity. Let me share my personal opinion

10. What goes around comes around.

Oracle is talking smack about its partner, Intel. Turn signals about processor architectures in enterprise computing are typically issued eight to ten years in advance, to allow customers to prepare. By saying it will discontinue all software development, Oracle makes it sound like Intel will let the axe fall on Itanium any minute now. This effectively implies that Intel has lied to its customers and/or is about to let them down. I believe that Oracle will soon learn that Intel does not react well to character defamation.

By implying that the x86 will emerge as the winner take all, Oracle thereby implies that its own SPARC will be one of the losers. This will leave Oracle selling x86, the processor architecture brought to you by the company Oracle says is untrustworthy and/or a liar. (What can explain this self-defeating plan? SUNstroke from too much time at sea on the corporate yacht?)

Oracle is also picking on HP, a company which styles itself a trusted advisor to enterprise IT. For all I know, new CEO Léo Apotheker could have been under an Intel NDA at the time. He is probably too diplomatic to point this out in a vitriolic way. But HP is perfectly capable of making a strong counter-argument to customers. In fact, to the extent that Oracle scares customers away from Itanium to x86, HP will probably retain its hardware business. But Oracle may not retain the software business.

9. Don’t bite the hand that feeds you.

Oracle is threatening to deliberately inconvenience HP-UX and OpenVMS customers that run the Oracle database on Itanium and are locked into Oracle’s programming environment. Breaking up a marriage is always hard, and most often involves some collateral damage. But the folks bearing the brunt of this business break-up aren’t defenseless children. They are some of the largest and savviest businesses, governments and institutions in the world. They can recognize exactly what’s happening.

I would hate to be the facilitator at Oracle’s next event for customer CEOs. Even Mark Hurd’s trademark eye-candy approach to such meetings may not be able to stop the bloodshed.

8. As FUD flinging goes, this is rather lame.

Oracle is trying to sow fear, uncertainty and doubt. But upon whom will it reflect badly? First, it is not Oracle’s place to announce Intel’s long-term news. Hello! Second, it is preposterously disingenuous to assert that the lack of specific commentary in a new CEO’s coming-out remarks indicates that HP customers have not been briefed on every step of the plan regarding Itanium. HP would never break up with customers via a press release.

Moreover, if changing processor architectures really were impossibly difficult, and had never been done before by HP and everyone else still in the business, those of us who hadn’t been clever enough to buy an IBM 360 would still be using the DEC PDP-11 or the HP 1000 or the IBM System 34.

7. Those who don’t learn the lessons of history are doomed to repeat them.

Is anybody out there old enough to remember IBM shortly before the arrival of Lou Gerstner? If not, let me share a look down memory lane. Big Blue had so alienated customers with its heavy-handed management of pricing, arbitrary upgrade schedules and inconsiderate product discontinuations that it had hardly a friend left in the world. As a Yankee Group analyst back in the 1980s, I interviewed plenty of mutinous CIOs. The company who thought it had customers wrapped around its little finger suddenly found itself reading this embarrassing headline in The New York Times:

I.B.M. Posts $5.46 Billion Loss for 4th Quarter;
1992 Deficit Is Biggest in U.S. Business

This is a reminder of how far a company can fall after pride as great as IBM’s was then and Oracle’s is now.

In the early 1990s, IBM customers were so alienated that we used to joke, “If IBM wanted fresh business, IBM would first have to send a space probe to discover some friendly Martians.” This is the problem that motivated incoming CEO Lou Gerstner to say, “The last thing IBM needs is a vision.” To this day, IBM is a chastened entity. Big Blue is no longer run as a feudal kingdom where customers are indentured servants

6. Customers hired Oracle to replace the bully, not to become the bully.

Customers shopping for a commercial-quality alternative to the closed systems of the 1980s and early 1990s made a bet on HP and Oracle as a team. Microsoft was not a serious player in the enterprise back then. Oracle was. If I, as the Open Systems Advisor, can still remember the promises Oracle and HP made, so can the customers.

5. What is suitable for the underdog is not suitable for the top dog.

Those of us who grew up in this industry really enjoyed watching the young Larry Ellison, Scott McNealy and Bill Gates in action. The stinging one-liners! The caustic analogies! The frat-house insults! The second-hand testosterone affected us all! Back in the day when these young upstarts were helping customers break the shackles of IBM’s lock-in, we all had good fun. It was great to see small underdog businesses getting some news coverage for their thought leadership.

But time flies by. Bill Gates sanded off his rough edges long ago and chose to make a meaningful contribution to the world. Scott McNealy, too, has moved on to the giving-back stage of life. Larry Ellison and Mark Hurd are still choosing to be remembered as ruthless competitors. As the now-somewhat-more-tactful Scott McNealy said recently, theirs may be a great approach to capitalism, but it is not a good one.

4. Oracle press release isn’t even worthy of the frat-house approach.

If we were all thirtysomething again and it was OK to do business by the headline-grabbing insult method, this would still be a pretty damp squib. Let’s see: let down your customers, diss two of your partners and shoot yourself in the foot, all at the same time. And do this not on April Fool’s Day but the week before!

3. If you lie down with dogs, you get up with fleas.

HP was a valued partner to Oracle back in the day when both companies broke out from the pack. So now, 20-plus years later, is it wrong for Oracle to want to change its business model — even if it means disadvantaging its former partner and inconveniencing their joint customers? Not necessarily. Hard choices are often necessary.

But if Oracle doesn’t handle the transition well, it will damage its relationship not only with customers but also with its other partners. Customers and partners alike are saying to themselves, “Fool me once, shame on you; fool me twice, shame on me.” Oracle’s arbitrary actions are leaving its channel partners with baffled customers and a lot of explaining to do. Why would they put themselves out in the future for a company this inconsiderate?

2. Don’t fight fire with gasoline.

Larry and Mark, this looks like a move to get even with Léo and the HP board. By imperiling the business of your own customers, you’re inviting competitors into the ring and forcing Intel and HP to rush to their own defense. And I am fairly confident that bad press, rants by analysts and flames by bloggers are nothing compared to what IBM is going to say about this behind closed doors, let alone your alienated partners HP and Intel.

Some IBMer is probably on the speaker with your customer’s CEO right now. IBM may well be saying, “Oracle just flushed 20% of the UNIX customers down the drain. Will your UNIX be next? Why not switch to DB/2 now?” And the CEO is probably thinking, “Hmmm, which two strategic suppliers make most sense: the smarter planet, the trusted advisor, or the frat-house bullies.” When IBM gets into the picture, Oracle risks losing the customer’s software business as well as its hardware business

Oracle has apparently decided to burn its bridges with HP and Intel. This shortsighted and unnecessary move pushes HP and Intel closer to each other and to Microsoft. Intel is not exactly without power to exact a quiet, behind-the-scenes revenge on the common enemy. In the software arena, HP is not exactly friendless, unimaginative, without resources, low in testosterone or lacking in experienced supervision. In a world moving back to the integrated enterprise stack, HP is bound to look back at its decision to exit so many of the system-level software businesses, and to make some different moves in Enterprise 2.0. Today there is a lot of opportunity for convergence (HP-speak for eliminating costly clutter) in the software space. If HP and Microsoft can collaborate on de-cluttering the stack of Oracle products, they will do so.

1. With leadership comes responsibility.

This kind of software is not a toy. Your customers are not in a boat race. This is a serious issue, with material consequences for customers. The database is what stores the operational DNA for businesses, institutions and governments. Programming environments like Oracle SQL Developer are how business processes are instantiated and evolved. Mess with this stuff, and you mess with business-critical processes. A vendor that has been so trusted has a moral responsibility to consider the consequences to its customers.

Larry, Mark: if you somehow missed the Parable of the Talents, let me put it to you another way. Kuleana, bra! That’s Hawaiian for “man up to your responsibility!”

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