Open Source Technology
Larry Ellison is chairman of Oracle Corporation and chief technology officer's Opinion of Open Source Product Use in Technology. Ellison started the high-flying tech company Oracle with $1,200 in 1977 and turned it into a billion-dollar Silicon Valley giant. His rise to fame and fortune is a tale of entrepreneurial brilliance alongside ruthless tactics.
Why do you prefer relatively lower percentage margins?
We make more margin dollars. In the end, the only thing that really matters is how many billions we make this year. I'd much rather make $10bn at 40 per cent margins than $8bn at 50 per cent margins. I want to make $10bn. Our margin dollars will increase at a higher rate with software-as-a-service. Plus there's no piracy, and no need to maintain old versions. There are huge advantages to the model.
Has open source ever been disruptive to Oracle?
No. If an open source product gets good enough, we'll simply take it. Take [the web server software] Apache: once Apache got better than our own web server, we threw it away and took Apache. So the great thing about open source is nobody owns it - a company like Oracle is free to take it for nothing, include it in our products and charge for support, and that's what we'll do. So it is not disruptive at all - you have to find places to add value. Once open source gets good enough, competing with it would be insane. Keep in mind it's not that good in most places yet.
We're a big supporter of Linux. At some point we may embed Linux in all of our products and provide support. Just like software-as-a-service, we have to be good at it. We don't have to fight open source, we have to exploit open source. At some point we could very well choose to have Linux as part of the Oracle database server. We certify it, we test it. We could have JBoss as part of our middleware. It costs us nothing. We can do that, IBM can do that, HP can do that - anyone with a large support organization is free to take that intellectual property and embed it in their own products.
I've had this discussion with the CEOs of open source companies. We've looked at buying some, some with very high price tags - but since we already have access to all the intellectual property, why wouldn't we just embed this technology in our technology and provide support.