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Oracle's Mark Hurd on the week when pigs flew in Silicon Valley

July 01, 2013|By Chris O'Brien
  • Oracle CEO Larry Ellison (left) and President Mark Hurd.
Oracle CEO Larry Ellison (left) and President Mark Hurd. (Paul Buck / EPA )

Even in a place where the seemingly fantastic happens on a daily basis, the events of last week involving Oracle Inc. left many long-time observers of the tech scene in Silicon Valley stunned.

Oracle, the Redwood City giant best known for its database software, announced a series of partnerships with two sworn blood enemies (Microsoft and Salesforce.com) and another rival with whom it has a complicated relationship (NetSuite). This followed by a few weeks another deal with a rival, Dell.

For those of you who don't follow the enterprise software market (OK, that's most of you), let's lay this out. 

This was the Hatfields marrying McCoys. This was Lannisters hugging Starks. This was Dodgers fans buying Giants fans a beer and giving them a high-five.

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People up here were using headlines with words like "Hell Freezes Over." Were they right?

"I think there's some truth to it," said Oracle President Mark Hurd. "I think it's different for us."

The shift to embrace more partnerships was a practical calculation by a company that hasn't always been known to play well with others.

Oracle's reputation has been built very much in the image of its founder, Larry Ellison. It's brash, competitive, hard-charging and confrontational. Though there have been some partnerships, Oracle preferred to sell technology it built itself with its own sales force, rather than relying on other companies to help it reach customers. 

The Oracle vs. the World mentality has served the company well since it was founded in 1977.

But there is also a growing sense among Wall Street analysts that the company was late to embrace cloud computing, focusing too long on its traditional software business.

Oracle shifted gears a couple of years ago, and Ellison declared the company "all in" on the cloud. But it's taking awhile for those efforts to get traction. In the last two quarters, the company missed some analysts' estimates. 

In the past, this might have been the moment when the competitive adrenaline spikes and war is declared.

But this week, something different happened. Oracle extended its hand to some of the unlikeliest of partners.

And some analysts pointed to Hurd's presence as an important catalyst in making that happen. 

"I think it probably took a Hurd to come in and deliver the sobering reality from somebody they trust," said Patrick Moorhead, principal analyst at Moor Insights and Strategy. "If there's someone that Larry Ellison trusts, it's Mark Hurd."

The pair were friends even when Hurd was chief executive at Hewlett-Packard, a competitor and partner. When Hurd left HP in 2010 amid a dispute with the board, Ellison publicly defended him and called the board's pushing out of Hurd the dumbest move in Silicon Valley since Steve Jobs left Apple.

Ellison hired Hurd just a few months after he left HP. 

Frenemies. Co-opetition. These are words that have been around Silicon Valley forever. You compete with companies in some places. You cooperate in others. You compartmentalize your feelings. 

Hurd dismisses the idea that he was the main force behind the shift, saying the decision to pursue the partnerships was the result of ongoing conversations between himself, Ellison and Oracle's other president, Safra Catz. 

"These were deals where we had an opportunity to bundle our [technology] with and increase our distribution and we took advantage of that," he said.

Over the past decade, Oracle has spent more than $45 billion acquiring more than 70 companies. That has significantly broadened the range of products Oracle sells, including getting into the hardware business of selling servers through its purchase of Sun Microsystems.

Throw in the new cloud services, and Oracle has a lot of new stuff the company is trying to sell customers. Oracle, Hurd said, concluded that it was time to change its approach to expose customers to those new products.

"We're in a position where we have marvelous [technology]," Hurd said. "And we really want to get in front of more customers. I consistently get the feedback that we have great technology. The awareness level of everything we have in portfolio is where we need more help.

"The reality for us is that we needed some ability to catalyze this," he said. "This was more about aligning our resources."

So, in early June, Oracle announced a partnership with Dell, to put Oracle software on Dell servers to help it reach smaller businesses. Both companies compete to sell servers. 

While that raised eyebrows, it was this past week that blew the valley's mind. 

First came a deal with Microsoft. Back in the 1990s, Ellison was one of the chief antagonists of Bill Gates and his company when it was facing the federal government's antitrust lawsuit.  

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