In an era where so many firm’s corporate strategy and value propositions focus on data, it is only fitting that I should delve into one of the first pioneers of the database. This post will go into the history of Oracle to describe how it became the company it is today, set the stage for my presentation this Wednesday, and prepare us for next week’s visit.
Foundations and Early Beginnings
In 1970, Larry Ellison, a young computer programmer who recently dropped out of college for the second time, read a paper published by IBM that documented an interesting new programming language called SQL. Ellison saw the potential in this new language, which provided an innovative way for people to search through databases, and reached out to his boss creating a database using the language. In 1977, Larry Ellison, his boss Robert Miner, Ed Oates, and Bruce Scott co-founded Software Development Laboratories (later renamed Oracle after their partnership with the CIA who dubbed them “Project Oracle) with the intention of creating an innovative way for companies to digitally view and manage their data. Together, they launched the first commercial “relational database management system” and saw tremendous success by becoming the “behind the scenes” database company that not everybody had heard about, but everybody used on a daily basis. Today, A whopping 97% of the fortune 100 companies and the majority governments worldwide use Oracle for their database services. Founder and former CEO Larry Ellison said “If you live today, you use Oracle.”
Current Offerings and Products
Recently, Oracle has been a late mover into the Cloud-backed database storage industry, into which I will dive much deeper during my presentation on Wednesday. However, I could not make a summary of Oracle without mentioning their main product offerings. Despite Amazon’s current dominance in the cloud industry, Oracle does have one massive advantage over its main competitor. Oracle has the immense breadth of its extremely intertwined portfolio within the technology industry. If Oracle can successfully bundle all the fantastic products and services into one high performance cloud package, the switching costs could be low enough for Oracle to gain substantial market share. Oracle announced in its recent shareholder meeting that it would pledge a massive investment into its cloud products and make the “only cloud you would ever need to run your organization”. Dave Donatelli, Oracle’s Executive Vice President of Worldwide Sales and Marketing Strategy for the Oracle Cloud, announced that Oracle Cloud will introduction automated technology to run self-repairs on the cloud among other speed, size, and security improvements to create “one cloud to rule them all”. Oh, and by the way, Dave is a BC graduate and will be the person that we are scheduled to meet with at Oracle. No pressure guys!!
Here is a video of Dave speaking at their shareholder meeting:
Oracle’s Business Philosophy and Troubles
Much of Oracle’s success can be directly attributed to Larry Ellison’s uber-competitive, win-at-all costs mentality. Scott Feigin, who was the 5th employee to work at Oracle, once said: “if you want to compete against Larry, you better be prepared to be completely crushed.” His competitive nature gave him the nick-name of the Samurai of Silicon Valley and created a few legendary stories along the way, such as publicly admitting to hiring private investigators to go through Microsoft’s trash.
Although it did help the company grow into the juggernaut it is today, it was not without some legal issues along the way. The Depart of Justice has previously sued Oracle for violating anti-trust laws for attempting to buy PeopleSoft, major competitor in the database industry. In typical Larry Ellison fashion, he managed to beat the federal government in its own game in court and was reward in over $1 billion in damages from the government. At other times, Oracle has not been so victorious. They have recently been sued by the Department of Labor for favoring white men for high wages and is currently still facing that legal battle. Additionally, Oracle has been sued by previous female engineers on the basis of wage discrimination based on gender. In the midst of all of this, the board at Oracle asked for shareholders to vote against a proposed report on internal gender wage gaps. Oracle declared the lawsuit as “baseless”, but it will be interesting to see how these lawsuits end nonetheless.
Oracle is a fascinating company that, admittedly, I did not know too much about before starting my research for TechTrek. They are a company that solved the largest logistical database problem at the start of the technology age. As other major tech companies became massive giants, Oracle grew right with them and provided them with exceptional database solutions that helped optimize internal efficiency. Although they have a storied past, the future still holds much in front of them. As a database firm, it is concerning how late they have entered the Cloud database market. However, I do believe that since Oracle is already so interconnected to major firms, solid products should keep switching costs low enough for them to gain respectable market share. I cannot wait to dive into more of the specifics in class on Wednesday!
If I were to ask the board at Oracle a few questions, it would be:
-Why the late entry to Cloud industry, despite all the infrastructure that would have make them dominate everyone from the beginning?
– If/how does the corporate culture at Oracle reflect Larry Ellison’s mindset?
-What steps would you need necessary for Oracle to take in order to flip the market share in the cloud industry?