Oracle's Aggressive Goals Risk Alienating Customers

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The Oracle Open World conference is taking place this week in San Francisco. Oracle's takeover of the streets of San Francisco is like a metaphor for its assimilation of technology companies and its growing presence in hardware and software technologies--whether customers like it or not. Oracle has acquired many companies in recent years, and it is becoming increasingly difficult for customers to make sure all of their eggs aren't in Oracle's basket.

There are plenty of tech events throughout the year, but few rival Oracle's event for its sheer extravagance. Oracle Open World is almost more spectacle than trade show--with candy buffet bars, Lego blocks play areas, and an island carnival and concert performances by headlining acts such as The Black Eyed Peas, and The Steve Miller Band.

Scattered among the parties and entertainment, though, Oracle also makes its case to customers and presents its vision for the future of Oracle and of the IT industry. Oracle, which did just under $27 billion in revenue last year, and recently hired deposed HP CEO Mark Hurd, has its sights set on quadrupling to become a $100 billion company.

Of course, there is nothing wrong with that. It is what capitalism is about. It's the American way. The problem is that customers don't necessarily want to be too dependent on any single provider, and as the hardware and software technologies they rely on are snatched up it is harder and harder to stay diverse.

It's not just Oracle, either. The entire tech industry is going through a phase of mergers and acquisitions--consolidating hardware and software innovation in the hands of a few powerful companies. HP, Intel, Dell, and others--Oracle included--have been on a rabid buying frenzy.

The consolidation has advantages as well. Combining the various hardware and software technologies it has acquired should enable Oracle to deliver more seamless integration and more efficient operation, while also providing an opportunity for cost savings by dealing in greater volume with a single vendor. It also makes the relationship with Oracle more valuable, as Oracle can be viewed as a go-to solution provider.

The buying frenzy has consequences as well, though. Customers do not want their entire IT infrastructure to be dependent on a single vendor. The potential impact of a glitch or vulnerability could have repercussions throughout the company. If that single vendor folds its tent, or is acquired by another entity, it could be chaos for the customer's IT infrastructure.

There are also ramifications for customers that do business with the company being bought. What happens to all those customers that rely on Sun hardware, but don't want to run Oracle software? What about all of the customers who rely on Documents To Go if RIM chooses to abandon other platforms and focus only on BlackBerry?

The bottom line is that there are pros and cons to the aggressive consolidation of the tech industry. The strategic and tactical advantages typically outweigh the downsides, but the fallout of the buying frenzy has consequences for both the customers that do business with the acquiring company, and the customers that do business with the company being acquired.

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