As Oracle executives patted themselves on the back after reporting another strong financial quarter, they couldn't resist having a go at prime applications rival, SAP.
"Oracle had another very strong quarter," co-president and CFO, Safra Catz, said "We had our strongest first-quarter license growth in more than five years by gaining market share." Co-president, Charles Phillips, said it had won 88 deals going head-to-head with SAP during the quarter including contracts with Electrolux, Lockheed Martin and US Steel. Some of the deals were "win backs" of business Oracle had previously lost to SAP, including a strategic win at Wal-Mart Stores.
In recent months, the bitter competitive back-and-forth between Oracle and SAP has reached a crescendo. Oracle jumped on SAP's July announcement of lower than expected sales and cited it as proof that the applications vendor's growth had stalled. SAP retorted that the results were a slight blip and not indicative of a major issue with its performance.
Oracle CEO, Larry Ellison, cited two factors working in Oracle's favour over SAP - Java-based middleware and its aggressive focus on getting industry-specific expertise and products through acquisitions.
Ellison claimed Oracle's Fusion middleware was "years ahead" of SAP's NetWeaver integration platform.
Oracle's so-called "hot pluggable" or component-based Fusion middleware strategy is paying off, Phillips said. Typically, the company sells one or two of its middleware components into a customer account with the hope that over time that customer will expand their use of Oracle's middleware.
Turning to applications, Ellison criticized SAP's recent decision to retain the current version of its enterprise resource planning (ERP) software, mySAP ERP 2005, through 2010 and provide new functionality through regularly issued optional enhancement packages.
"SAP has delayed the next release of its applications until 2010," he said. "They'll be two full years behind our Fusion release." Oracle is working on a new suite of enterprise applications, known as Project Fusion, which is due out in 2008.
By contrast, SAP executives have positioned the company's move to a more modular approach to product upgrades as being driven by customer demands to pick and choose functionality.
This quarter will be the last time Oracle provides separate database and middleware growth figures, Catz said. In the first quarter, database revenue grew 10 per cent, while middleware rose 56 per cent. In future, Oracle will adopt the practice of IBM and Microsoft and not break out those sales, she said.
Looking to the second quarter, Catz expects Oracle's net income to grow by between 13 per cent and 17 per cent as revenue increases by 22-24 per cent.