Oracle CEO Larry Ellison is not a recluse, but he also doesn’t give that many one-on-one interviews. Usually it’s an on-stage talk at a major event, like Open World. So Reuters scored coup with its 2,600 word article on the always-quotable CEO.
Ellison’s enjoying some non-tech spotlight these days. The World Cup sailing team he sponsors won the World Cup, bringing it back to the U.S. for the first time in more than a decade. He’s also got a guest cameo in the movie Ironman 2 as a billionaire playboy software mogul. Sounds like a real stretch.
Much of the article deals with the acquisition of Sun and Oracle’s strategy to put Humpty Dumpty back together again. It’s the first real, honest assessment of the situation at Sun that we’ve gotten and it paints a very bad picture of how Sun was run and leaves little doubt as to why the company fell apart.
“Their management made some very bad decisions that damaged their business and allowed us to buy them for a bargain price,” he told Reuters.
Oracle has done a fast job of integrating Sun because it had nine months to put together a plan, since the antitrust reviews in the U.S. and EU took so long. He would meet with technical managers at Sun as often as four days a week to figure out what the problems were instead of leaving it to department heads and vice presidents.
He did not like what he saw. Sun had cut back the sales staff that sold its most profitable products, like the StorageTek tape storage business. StorageTek used to be tied with IBM as the market leader for tape backup in 2005. In 2009, sales were half of what IBM had.
Sun had an antiquated manufacturing and distribution system, which was discussed at the January event to discuss the integration of the company. It regularly sold hardware and software at a loss, sometimes losing more than $1 million on a single deal. That’s because the commission structure was completely screwed up.
The sales staff was compensated based on the size of the deal, not the profit. It didn’t matter if a $1 million deal netted the company $500,000, $50,000 or lost $500,000, the sales reps got the same commission every time. “The sales force could care less if they sold things that lost money because the commission was the same in either case,” he said.
He faulted CEO Jonathan Schwartz for ignoring the problems as they got worse, made poor strategic decisions and spent too much time working on his blog, which Sun translated into 11 languages.
“The underlying engineering teams are so good, but the direction they got was so astonishingly bad that even they couldn’t succeed,” said Ellison. “Really great blogs do not take the place of great microprocessors. Great blogs do not replace great software. Lots and lots of blogs does not replace lots and lots of sales.”
Schwartz, who has said on Twitter he plans to write a book following his departure with a $12 million golden parachute, did not comment when asked by Reuters.
The ill-fated “Rock” processor is described as a joke. “It was incredibly slow and it consumed vast amounts of energy. It was so hot that they had to put about 12 inches of cooling fans on top of it to cool the processor,” said Ellison. “It was just madness to continue that project.”
Everyone was expecting a bloodbath when Oracle bought Sun, but the opposite has happened. The day the acquisition closed, Oracle held a big event at its headquarters to meet with customers and advertised openings for some 2,000 hardware sales reps, which would almost double Sun’s previous sales force of 3,000.
Most Sun products have in fact survived. Unfortunately, there have been a lot of defections, which Reuters either didn’t cover or Ellison didn’t address. Oracle has lost some very prominent people, including Java’s creator James Gosling and XML co-creator Tim Bray. Both men left the company with no job waiting, indicating they chose unemployment than sticking around. Bray has since landed a job with Google, working on Android.
The story says that Oracle will introduce two more Exadata-like dedicated servers this September, when Oracle Open World takes over the Moscone Center in San Francisco. This year it will be augmented by JavaOne, the annual Java conference that usually takes place in June. At least one of the servers will be dedicated to Oracle’s database, middleware and the Fusion Apps programs.
(The headline is a reference to the Fake Steve Jobs blog, where author Dan Lyons routinely referred to Jonathan Schwartz as “My Little Pony” because Schwartz sports a pony tail hair style.)
