Oracle’s Ellison and Salesforce’s Benioff Are Friends Again After Broad Cloud Alliance
Last week, Oracle CEO Larry Ellison promised some “startling” news relating to the cloud, and he wasn’t kidding. Yesterday it was a deal with longtime software rival Microsoft. Today it’s a nine-year, broad-based alliance with the world’s biggest cloud software player, Salesforce.com.
It’s a lot bigger than most people expected, too. Essentially, Salesforce will standardize its services on a lot of Oracle software and hardware, and resell a lot of Oracle cloud applications alongside its own.
Salesforce will run on Oracle’s version of Linux, and its cloud applications will be running on ExaData-branded hardware. The ExaData buy in particular should be a shot in the arm for Oracle’s hardware business, which it has been building up since its 2010 acquisition of Sun Microsystems. Last week, on a conference call with analysts, Oracle CFO Safra Catz predicted that the hardware division would start growing after numerous quarters of revenue declines, as soon as this quarter. Now we can see what she meant by that. As the biggest provider of software-as-a-service, Salesforce is giving Oracle’s Exa line of hardware a pretty ringing endorsement that other companies may want to follow. And as Om Malik noted today, it’s a loss for Dell, whose hardware Salesforce had used previously.
Salesforce is certainly growing. It’s on the way to its first $4 billion year. And last year it landed Hewlett-Packard as its biggest customer, second only to the government of Japan. It has also been adding to its portfolio by buying SAAS companies with other specialties, most recently ExactTarget, for which it paid $2.5 billion.
What does Salesforce get? Oracle will integrate Salesforce.com’s key customer relationship management product with its human resources and financial software. Salesforce will not only standardize on the Oracle products internally, but will resell them alongside Salesforce’s main CRM product. But Oracle is still a big player in CRM software on its own, so here Oracle and Salesforce will still compete.
Clearly this is a blow to Workday, which has been known to go in on deals with Salesforce, but probably not a serious one. Workday shares barely moved on the news, but we’ll see if it has an effect over the longer term. Ellison and Oracle president Mark Hurd have been trashing Workday nearly every chance that get near an open microphone. It’s also a key move on the board against SAP, which also sells HR software, and in 2011 spent $3.4 billion to acquire SuccessFactors.
The alliance also appears to mark an end to the peculiar feud between Ellison and Salesforce CEO Marc Benioff. It had simmered quietly for a few years, and then burst into open flame two years ago, when Ellison ordered Benioff off the stage where he was about to speak at an Oracle conference in San Francisco.
After Microsoft yesterday, this marks the onset of two major instances of detente, both for Oracle and for Ellison himself. Benioff is, of course, a former Oracle executive who learned a lot of what he knows at Ellison’s side. One wonders what other feuds Ellison may be in a mood to sort out.