Ellison exit: getting old or an indicator of change?

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19 September 2014

Paul HearnsI love The Register. Ever since I discovered it in the early 2000s, I’ve been a fan of the red top headlines, the irreverent attitude and the lovely tag line: “Biting the hand that feeds IT” — brilliant.

So when something momentous happens in the world of ITC, I always check out what is being said there as that august organ will often go further than other more circumspect outlets and say things that people are thinking, as opposed the accepted dialogue. I wonder if they share the same legal firm as Ian Hislop?

Anyway, there is an excellent analysis/opinion piece there today by Gavin Clarke, that assesses the career and exit of Larry Ellison from Oracle.

Clarke uses the historical record to argue that Ellison should leave the Oracle big chair because he is old, he is very, very rich and he has now presided over earnings forecast misses in four out of the last five quarters. That is hardly mismanagement, given the recent turbulence and change in the market. Oracle is a behemoth and cannot turn on the proverbial sixpence. But, I personally, having been at Oracle OpenWorld last year when Larry not only failed to turn up for his own keynote but essentially suspended the event to lay on busses for anyone who wanted to see the final race-off in the America’s Cup, could easily envisage him reading the earnings report, sighing briefly and muttering “Feck this for a game of soldiers!”

OK, maybe it’s just me then.

But, more to the point is that Clarke points out that it is consistently the hardware end of things that is dragging Oracle down.

In five years, who will make all the hardware?

This refrain is reverberating around the industry. Microsoft has just begun a cull, mostly from the newly acquired Nokia mobile business, even as it released a new Surface device. IBM is in the final stages of divestiture of its small server business to Lenovo. Sony is struggling with smart phones, as is HTC. Even Apple, in its cash rich state, appears to think of its PCs as an afterthought, accounting as they do for around a quarter, or it may be even less by now, of its profits.

Now, HP has just launched its Gen 9 servers and Dell its 13g, but it appears as if traditional hardware makers and those that may have strayed in that direction in recent years are struggling. Even EMC is reported to be finding things difficult on the hardware side.

Clarke reminds us that it was Ellison who pushed through the Sun acquisition and it is now being referred to as the ‘Curse of Sun’, dragging down Oracle’s numbers even as its cloud business grows admirably, but from small beginnings.

This leads one to ask: in five years, who will make all the hardware?

If the likes of Oracle, EMC and perhaps even HP get out of hardware altogether, who will make the tin on which the new world of cloud runs?

Will Lenovo, Huawei, ZTE and others in the Far East make everybody’s kit?

It is an interesting prospect, and given recent revelations regarding state sponsored snooping on all sides, and worries about same, as it brings with it some serious challenges. But if the economics of the ICT industry keep going the way they are, where even Toshiba is struggling to make money from consumer PCs having once made some of the finest examples of same, will there emerge a handful, or less, of major manufacturers to whom all others must go? Will Foxconn become the new Apple, bestriding the market like a giant through sheer volume?

It is not a ridiculous prospect. As many traditional IT companies move towards services and cloud models, the tin becomes less and less important. Interoperability, open source and open standards have meant that the base level of quality and capability has risen across the board, from personal devices, to servers, storage and networking. The software defined trend has driven this even further, meaning that virtual versions of hardware will now run on commodity versions of actual hardware.

And as for Mr Ellison, well, I’d have to agree with some sentiments that have been expressed by Clarke and others. Larry isn’t really going away, and the fact that the new co-CEOs, Hurd and Catz, have very specific remits, with would suggest that there will be more of a triumvirate, with Larry being CTO. Larry might just be taking one for the team, deflecting the wrath of investors.

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