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The Greatest Show On Earth

Larry Ellison is leading oracle into a battle that's partly brilliant, partly barnum, but never boring.

By Luc Hatlestad

People in the high-tech industry have said many things about Larry Ellison, but this probably isn't one of them: Hess great with kids. This lesser-known talent was in evidence during a May symposium in Baltimore sponsored by the American Academy of Achievement. The week long event brought together exceptional high schoolers from all over the country and sat them down in front of luminaries from the government, business, entertainment, and the arts to listen to each celebrity's philosophy of how to achieve success.

Although the roster included the likes of General Colin Powell and Barbara Bush, the sessions occasionally became a bit te-dious. But when Mr. Ellison strode to the podium and pronounced his recipe for success- "Always question authority and conventional wisdom"- the teens perked right up.

On a later panel, Mr. Ellison was flanked by Supreme Court Justice Stephen Breyer, Auschwitz survivor and Nobel Peace Prize winner Elie Wiesel, and Coretta Scott King, among others. While the other pan-elists spoke earnestly of the need for envi-ronmental, community, and racial ac-tivism, Mr. Ellison unabashedly hawked computers. Network computers. Granted, his words were cloaked in the egalitarian aphorisms of an NC on every desktop ushering in an era of individual attention in the classroom, but it was, unmistak-ably, a pitch.
Of course, as a pitchman, Mr. Ellison is unparalleled, and after the session, so many students surged forward to ask him questions and solicit opinions that he was the last person to leave the room. His encounter with the youths- indeed, the en-tire day- left him buoyant. 'They brought us in here to inspire the kids, but I'm the one who's been inspired by their energy and intelligence,' he said. He'd seen an encouraging picture of America's future, he'd grabbed much of the attention in a room full of habitual attention grabbers, and he'd preached his network computing message to yet another flock. Just another day in the life of a high-tech maverick.

Midlife Metamorphosis

Oracle spent the better part of the past 20 years developing, then nominating, the database market. But as the company en-ters its third decade, its sights are set on a much bigger goal: the throne of the software realm, which is currently ruled with unconscionable malevolence, in Mr. Ellison's Opinion  by Microsoft and Bill Gates. As Oracle has begun its metamorphosis into a full-service software empire, 50 too has Mr. Ellison evolved into a new type of businessman.

After using his computer programming background to help found Oracle and growing it into a tidy little enterprise, a se-ries of sloppy accounting practices almost brought the whole thing crashing down early in this decade. Mr. Ellison still cites the near collapse of Oracle as his most sobering professional experience, but he used it to propel himself and Oracle to an entirely different level.

Mr. Ellison's greatest strength may he his ability to recognize his limitations and to delegate authority. In the aftermath of his company's downturn, he installed a management team headed by Oracle's widely admired president, Ray Lane. This team has allowed Mr. Ellison to do what he does best: he his aggressive, visionary, evangelistic self. So though he is still very much in tune with the day-to-day opera-tions, his primary role has him getting the Oracle and NC messages out to anyone who'll listen.

Regardless of their opinions of Mr. Ellison's personality, analysts agree that his adjustments to the Oracle management structure have proved extremely savvy. Carolyn DiCenzo, the director of client server software for Dataquest, says many companies face problems like Oracle's when they reach a certain size. "Often when companies get to about $1 billion in revenues and want to roll into worldwide markets, they need to stabilize their sys-tems and get their infrastructure in place," she says. "Everyone wants to be on the product launch teams, and the process and management side can be a very bor-ing skill set. We in the public don't see Ray Lane much because what he does is boring, but the operational focus is what enables a company to grow past $1 billion."
Donald DeFalma, an analyst with For-rester Research, agrees. "Oracle's manage-ment team is very highly respected, and they have Larry's ear, which is critical," he says. "It's important to have a strong cabi-net of advisers who can lead the com-pany's efforts toward on their own when they need to."

Expect the unexpected

A big part of Mr. Ellison's current role is never, ever passing up an opportunity to take a swipe at Mr. Gates, Microsoft, Windows, or the personal computer. Examples can be culled from almost any public ap-pearance Mr. Ellison ever has made. When he shared a stage with Ted Turner, giving a demo of a new CNN online service at the spring Comdex trade show in Atlanta, the two billionaires couldn't get the page to come op on the screen. "It wouldn't work on Windows," Mr. Ellison later shrugged. "I tried it on an NC and it opened right up:'

This might not be the mildest thing he has ever said about Microsoft, but being Larry Ellison means being, by his own intention, a little outrageous. So if he wants to use a platform like the Academy of Achievement to get a little more mind share for the NC, he's simply being true to his vocation. "When someone asks me a question, I al-ways do my best to answer it truthfully," he says. "But an enormous number of people become highly threatened and very critical if I give them an answer that's different from what they were expecting."
Indeed, this upending of anticipations clearly has become something of a sport for him, to the point where the unexpected becomes the expected. That's why he can happily tell a roomful of accomplished students to question their teachers and why he'll say of the time he played two-on-two basketball with NBA all-star Tim Hardaway only, "He's good."

Mr. Gates is legendary in the industry for his hands-on approach to every Microsoft endeavor, constantly meeting with product development team leaders to learn as much as he can about each technology. While Mr. Ellison's schedule is similarly hectic-the time and location for his interview with THE HERRING were changed several times right up to the moment it began-the Lord of Redwood Shores' role is more about telling Oracle's story to anyone who'll lend him an ear.

Even though Mr. Ellison is sometimes portrayed as lacking in substance, others say he's exactly the right person taking exactly the right approach to increasing Oracle's brand recognition. "He's a loose cannon, but he has a good, visionary track record in the industry, and he's very effec-tive at getting publicity for Oracle:' says Mr. DePalma. "It was a smart move for him to get in front of the company and be a lightning rod in the war for notoriety."

This approach has trickled down through the ranks of Oracle employees, all believers in Mr. Ellison's mission and message. Jerry Held is Oracle's senior vice president of server technology. In speaking with him, it's clear that Mr. Ellison's methods and style have been well heeded by his employees. "Larry is truly visionary, more so than a lot of people in the industry," Mr. Held says. "Bill Gates is extremely good at imple-menting other people's ideas, but he's not a visionary. Larry is often perceived as not being in the center of things here, but maybe he shouldn't be, because in his cur-rent role he drives people to look where they're going, not where they've been!"

Networking an idea

The vehicle for the campaign to put Oracle on the lips of every PC-oppressed con-sumer is, of course, the network computer. The NC wasn't even Mr. Ellison's or Oracle's idea, and, the public's impression to the contrary, Oracle at this point has had little to do with its development. (Mr. Held says that only a "very small" percentage of the company's development efforts are directed at the NC.) But Mr. Ellison has co-opted the idea and turned it into his anti-Microsoft rallying cry-prompting, naturally, a contention from some that the NC vs. PC de-bate is more about two kids trying to one-up each other on the playground than about anything technologically compelling. "Gates and Ellison are two very strong people having a macho war, and as with most CEOs, I wouldn't want to get caught standing between them and something they want',' says Dan Kusnetzky; an analyst with the International Data Corporation. Personalities aside, how does the NC rate as a concept? Opinions on this run the gamut, but Mr. Kusnetzky agrees with NC proponents' assertion that the PC hasn’t proliferated the way it could have because of the costs and difficulties of management. "The United States leads the world in PC use, but only 40 percent of us use PCs, so the model of the PC hasn't worked in reaching the maximum number of people:' he says. "For the PC model to work, some-one would have to come to every house and upgrade each PC manually."

Mr. Kusnetzky also agrees with Mr. Ellison that a better technology to emulate is a device we all use every day: the telephone. "It takes five minutes to figure out, and users don’t need to understand or care how the infrastructure works," Mr. Kusnetzlcy says. He claims that one of the PC model's primary tenets is inherently flawed, saying, "The PC assumption is that the user is a hobbyist who wants to twiddle. The NC is aimed at people whose VCR is flashing 12:00 but who still want to play tapes."

This all sounds logical enough, so logical that entire companies have sprung up around the idea. Puma Pareek is CEO of Apptivity, a Web database tools developer whose profile could be raised considerably if the NC concept takes off. Mr. Pareek sug-gests that the most prevalent NC may not be the set-top box many envision, but rather the multifunctional "smart" appliances that people use for everyday scheduling and or-ganizing. (See "Piecemealing the PC, "August 1996, issue 34, page 46.) "I don’t think they can get the cost of it under $500 like Larry says they can, but having NC concepts em-bedded in appliance-type devices is a great idea," he says. "We’re betting on it, actually."

Playing in Peoria

Some critics have accused Mr. Ellison of being too willing to sacrifice his everyday duties at Oracle to wage a quixotic war against Mr. Gates, and he has exhibited the occasional tendency to become distracted. In the aftermath of his aborted attempt to buy Apple, he seemed almost contrite about the endeavor's effect on Oracle, as if a group of shareholders or board members had dressed him down a bit for letting his at-tention stray. Again, observers cite the in-fluence of the Oracle management as a key regulator of Mr. Ellison's intermittent flights of fancy "Ellison's role is to be a gadfly in the industry. What he talks about and what Or-acle invests in may not be the same thing,' Ms. DiCenzo says. "But as long as the board keeps him under control, then he's fine"

Regardless of what you think of Larry Ellison, his vision of the NC is achieving one undeniable result: it's putting Oracle on the map. That seems like an odd thing to say about a company that dominates its indus-try sector to the tune of more than $5 billion in annual sales and a market cap approach-ing $27 billion. But its industry sector is databases, a technology that makes net-working seem about as complicated as Legos. By championing the NC, Oracle and, more specifically, Mr. Ellison may be able to reach the hallowed ground reserved so far for Microsoft, Intel, Apple, and the scant few others whose names mean something to people who think high tech is epitomized by the universal remote control.

"The NC gives Oracle a lot of visibility it didn't have before,' says Jim Moore, a soft-ware research analyst at Alex. Brown. "It gives them the ability to go into high-level meetings with Fortune 2,000 companies that want to discuss reducing their desktop costs." He believes this sort of clearance is essential to bringing Oracle to the next level. "Oracle right now looks a lot like IBM in the '60s and '70s-- a dominant market share, very good account controls, incredible bandwidth, and a great vision of where to take applications around the Web,' he says.
And although the press and the industry may find it difficult to keep pace with Mr. Ellison's movements and whims, his peri-patetic lifestyle and relentless drive leave no doubts about who or what Oracle's target is. "He's very good at getting people to focus on who the competition is; every employee here thinks a little bit every day about beating Microsoft," Mr. Held says. "Usually when companies get to a certain size, they slow down and lose the fire, but Oracle still has that energy and sense of urgency. It's a lot more like a startup than most companies one-thousandth its size are."

And so, after weeks of telephone calls, arrangements changed too many times to count, and a last-minute cross-country flight, a HERRING reporter finally gets some small idea of what it’s like to exist in Mr. Ellison's world. It's a world where things hap-pen fast; they're rarely what they seem, but they all point in a very definite direction. Some might say it's a little too crazy, to which Mr. Ellison would likely reply, "There are two possibilities when people say you're nuts: either you really are nuts, or you're onto something no one else has tried."

Write to luc@herring.com

Sidebar: "Speaking to the future: the new era of network computing"

                  The Herring: As Oracle celebrates its 20th anniversary, how
                  does the company compare with how you first imagined it, and
                  how do you think it will look 20 years from now?

                  Ellison: In all honesty, 20 years ago the goal was to reach 50
                  employees, and now we have about 30,000, so we've clearly
                  overachieved. When designing Oracle, we weren't trying to
                  create a large company, so I really had no idea that it would
                  become such a major force.

                  Twenty years from now, we would like to be No. 1 in the
                  industry. Now we're No. 2, and had I done my job a little
                  better, we'd be in first place. But it's the dawning of the
                  information age--it's not called the PC age; it's called the
                  information age. And Oracle tops the list for supplying software
                  to manage information. That's a wonderful position to be in.

                  The Herring: And are you banking on the NC to achieve the
                  No. 1 spot, or is that just part of the picture?

                  Ellison: We're banking on the network's becoming the center of
                  the computer industry. So far, we've had two discernible eras of
                  computing: the first was the mainframe era, which was followed
                  by the PC era. We think the world is now moving to a new era:
                  network computing.

                  Because the NC appliance is so visible on the desktop, people
                  think of the NC as the center of our strategy. It's quite the
                  opposite. Our strategy centers on the network. The NC is the
                  vehicle whereby you access the network. Oracle's core
                  competence is building servers with large quantities of data and
                  delivering that data to a large number of users across the
                  network in a secure, reliable, and economical fashion. So we're
                  uniquely positioned to provide the technology for ushering in the
                  era of network computing.

                  The Herring: Some people still say the NC concept is
                  unrealistic. How do you respond to those critics?

                  Ellison: I just say, talk to Bill Gates. He thinks network
                  computing is a great idea. Microsoft has announced, count 'em,
                  four network computers: the NetPC, Windows CE, the Win
                  terminal, and WebTV. So if this is just a publicity stunt--boy,
                  has it fooled Microsoft.

                  The Herring: Why has the NC been so late to market?

                  Ellison: We actually completed version one of the NC last
                  November; we are now working on version two. We released
                  version one to a bunch of people and realized we had made
                  some mistakes; we were too focused on the appliance itself. It
                  dawned on us as we were installing these things in schools and
                  corporations that what the world really wanted was end-to-end
                  solutions. Not just NC clients and appliances, but also NC
                  servers. People want a low-cost server whereby you can install
                  all the software on the network easily and get the network up
                  and running in half an hour.

                  This June in New York we demonstrated NC appliances that
                  cost $300, $500, and $800; NC servers using standard PC
                  hardware and Oracle's NCOS server software; application
                  servers; data servers--all the necessary server and network
                  technology to run a complete NC network. So you can buy this
                  thing called Network in a Box and install the server and all the
                  appliances that access the server in about 30 minutes.

                  The Herring: Is it Oracle's aim to take a dominant position in
                  the NC market the way Microsoft has done with PCs, or have
                  you made it so cross-platform that you're not going to have a
                  lock-in?

                  Ellison: I hope we don't have a stranglehold on it. The Internet
                  is for all humankind. There are well-defined Internet standards,
                  and we think it's unacceptable for any one company to try to
                  pervert the Internet into its own proprietary property. Sun's,
                  Oracle's, and IBM's NCs all work pretty much the same way.
                  This differs greatly from the proprietary technology of the PC,
                  which is owned and controlled entirely by one company and one
                  person. If you want to build personal computers, you have to go
                  to Redmond and ask permission. I think that will change.

                  The Herring: Mr. Gates has said that server costs are going to
                  be too high to make the NC as cheap as you're claiming it will
                  be.

                  Ellison: It's interesting he said that because the primary server
                  for the NC is the PC. [Laughs.] So that's hilarious. We take a
                  standard desktop PC, and that can serve about 30 network
                  computers or it can serve one guy. So, I don't know what Bill's
                  talking about. Sounds like something Nathan Myhrvold might
                  say.

                  The Herring: You've said that the monthly charge for home use
                  of the NC might be about $15 or $20 per month. Is that still
                  your estimate?

                  Ellison: I think this $19 "all you can eat" Internet charge that
                  everyone has adopted is going to fall away. You'll see more
                  rational charging based on usage, where people who are on all
                  the time buy a premium service that costs a little more, and
                  infrequent users pay $10 a month or even less.

                  The Herring: Oracle recently signed a contract to build a
                  network for the Philippines. Will Asian markets and other
                  technologically developing markets be the de facto beta sites for
                  the NC?

                  Ellison: People who can't afford personal computers will be
                  some of the first to try NCs. Schools will be among the first, as
                  will people living in the Philippines. Several Asian markets have
                  some of the most advanced networks in the world. It makes
                  them ideally suited for network computers. I think we're going to
                  see experimentation throughout the remainder of this year, from
                  the largest American corporations down to the smallest school
                  districts.

                  The Herring: How will the NC affect the database market?

                  Ellison: The more people who are online and who can access
                  information electronically, the greater the demand for servers
                  and server software like what Oracle provides. Oracle has two
                  business opportunities here: to supply software for the Internet
                  appliance--the NC itself--and to supply software for the
                  network servers.

                  The Herring: How will Java affect the database market?

                  Ellison: Java affects the entire industry. There are now more
                  Java programmers and Java companies than there are Windows
                  companies. There are more people studying Java, writing Java
                  code, and taking classes in Java because Windows just isn't
                  cool anymore. Java is important because it is one of the key
                  enabling technologies for network computing. It's based on open
                  standards, which is good for the entire computer industry and
                  will allow for the creation of low-cost appliances to access our
                  databases. Getting an appliance in everyone's hands will
                  dramatically broaden the access to information, which means
                  people will have to build a more powerful network, more
                  powerful servers. And that's what Oracle does best.

                  The Herring: About a year ago, Oracle, Sybase, and Informix
                  were a virtual triumvirate of database powers, but the other two
                  have fallen on hard times. What are your thoughts on what
                  they've been through?

                  Ellison: First of all, the industry is consolidating because
                  customers expect a lot more from a database. Sybase and
                  Informix are simply too small to put together a server suite to do
                  all these things. In response, they adopted an acquisition
                  strategy--a "write checks, not code" strategy. Sybase was
                  buying companies right and left and trying to integrate all their
                  disparate technologies. But rather than having a beautiful mosaic
                  where all the pieces fit together, they've got a pile of bricks that
                  have collapsed on the floor.

                  What killed Informix was the notion they could buy Illustra and
                  glue the two companies together. It was a desperate move to
                  shore up their technical deficiencies with a checkbook. They
                  then very proudly said, "We have surpassed Oracle with our
                  new Universal Server." What they really did was write a check
                  for $400 million and buy a company called Illustra. They didn't
                  write code; they didn't do anything innovative. You can't buy
                  one database system and make it better just by gluing it into
                  another database system. It can't be done. They will never ever
                  be able to integrate Illustra with Informix.

                  The Herring: Is there any eventuality in your mind that might
                  make Oracle and Netscape a good merged company?

                  Ellison: Oh, I think people at Microsoft have said for a long
                  time that Netscape should merge with Oracle, and sometime
                  that may happen, though there are no discussions between the
                  companies right now. We work very, very closely with
                  Netscape.

                  The Herring: LG Electronics is another merger possibility that
                  has been raised.

                  Ellison: LG is a big customer of Oracle's in many areas. They
                  are the second-largest company in Korea. They would be an
                  ideal manufacturer of NCs and an ideal systems integrator of
                  NC networks in Korea. As we try to build computers that
                  everyone can afford, they could be an important partner.

                  The Herring: Does your most recent Apple foray close the
                  book on Apple for you, or is there something that could make
                  you pursue the company again?

                  Ellison: The book is closed for the time being. I've looked at
                  Apple three different times, and this was a close call. If the right
                  circumstances arose I might look at it again, but as of right now,
                  it made sense for me to devote all my energy and time to Oracle
                  and the NC and not get involved with Apple, which was very
                  time-consuming and a huge distraction.

                  The Herring: Might you write your own version of The Road
                  Ahead?

                  Ellison: I'm looking at doing it, but my concern is a little like the
                  Apple thing: you start to write a book, it takes a lot of time, and
                  it's a bit of a distraction. We're in a battle right now for markets.
                  We may get the credit in textbooks for the idea, but we'd much
                  rather have the credit in our stock price. It's probably more
                  important that I spend my time doing that than writing my
                  memoirs just yet.