NEW: Oracle opens SF convention with a new purchase

Comments | Oakland Tribune, Oct 25, 2006 | by Barbara Grady

SAN FRANCISCO - As 42,000 people packed into the Moscone Center to attend Oracle Corp.'s annual users conference Monday, one thing became evident -- Oracle has bought its way to the top of the business software market.

Many -- a random sample suggests the majority -- of the crowd of customers and partners attending the show had been customers of the 24 companies Oracle acquired in the past two years in a $20 billion buying binge.

Oracle Vice President Tania Weidick said the crowd made this show the "biggest event in Oracle history."

Underscoring its voracious appetite, Oracle on Monday announced a deal to acquire MetaSolv Software Inc. for $219.2 million. MetaSolv sells applications used by telecommunications companies to fulfill orders for voice, Internet and other services.

"PeopleSoft is why I'm here," said Jeanne Ruggiero, an information technology manager for the state of Connecticut. She uses business intelligence analytic software that was supplied by the former PeopleSoft Inc. and now, since Oracle bought the Pleasanton company, by Oracle.

"I'm here for the Siebel applications," said another attendee, an IT employee of United Parcel Service who didn't want his name used. Oracle acquired the former Siebel Systems Inc. of San Mateo earlier this year.

A third, Harry Trumble, an executive for Nakoma Group, which both uses PeopleSoft applications and helps install them for other companies, had this to say, "This conference has opened up to where it has become an Oracle, PeopleSoft, JD Edwards and everything else" in business software.

Doctoral student Eugenio Capra of Carnegie Mellon University perhaps summed it up best: "I'm here to find out what is going on" in the whole field of information systems for business. Oracle is "the major player," Capra said.

Oracle's only true competitor, by its own definition, is SAP AG of Germany, and Oracle Chief Executive Officer Larry Ellison has made no secret of Oracle taking on SAP.

"We think our current strategy is helping us overtake SAP," Ellison said during an early October conference call with analysts and reporters. "Oracle's acquisition strategy has moved us ahead of SAP in several markets _ banking, telecommunications, retail."

Oracle historically has been in the business of supplying database software to businesses _ the underlying holder of corporate data or organizational data of all kinds and software used to dish out that data to specific tasks. Oracle also has been a vendor of the next layer, known as "middleware," which functions to smooth the workings of various applications on top of a database.

But a few years ago, as the database business began to plateau, Oracle dove into the applications business in a big way _ by acquiring.

Its first deal in the acquisition binge was also its biggest and boldest, a takeover of PeopleSoft in January 2005 for $11.1 billion.

Soon after, it bought Retek Inc., which sells applications for the retail industry; i-flex Solutions, an Indian company that makes banking applications; 360Commerce for e-commerce applications; Portal Software Inc. to provide telecommunications applications and so on. Along the way, it paid $5.85 billion for Siebel Systems, which specialized in a large market called customer relations management.

Oracle has been selling the applications of all these companies and providing customer support for them as it works on developing a software platform that fuses some parts of them all into a common foundation, what it calls its Fusion project. Oracle has already released Fusion Middleware products as a middle layer to link applications from these various companies and the Oracle database. It targets early 2008 as when it hopes to release actual applications under the Fusion name.

MetaSolv sells applications used by communications companies including AT&T Inc. and Sprint Nextel Corp. to fulfill customer orders for such things as voice services, Internet connections, voice over Internet and wireless services.

Based in Plano, Texas, MetaSolv agreed to accept $4.10 in cash for each of its shares. The deal has yet to be approved by shareholders and regulators, but MetaSolv shares jumped more than 20 percent on news of the deal Monday to $4.01 a share, up 69 cents. Oracle shares barely moved, however, up 17 cents, or less than 1 percent, to $19.15 a share.

In communications, Oracle already had acquired Telephony@Work Inc., HotSip AB and Portal Software, which provide applications to telecommunications companies.

Charles Phillips, Oracle president, told Oracle Open World conference attendees during a Sunday evening opening address that Oracle's strategy with all these acquisitions is to supply all parts of software needed by an organization in a unified package that works well together. Oracle's database and Fusion Middleware are akin to the supportive trunk of the Oracle infrastructure, then "the branches are the applications that leverage that core technology," he said.

-Business Writer Barbara Grady can be reached at (510) 208-6427 or bgrady@angnewspapers.com