John Chen talks Sybase, Larry Ellison, and Sun

NEW YORK — John Chen, Sybase CEO for the past 11 years, told analysts that he and Larry Ellison have a long history in a talk on analyst day at the New York Stock Exchange last week.

It dates back at least seven years to when Sybase, then a pure database company, entered the enterprise mobility market, Chen said. “People thought we were nuts. It was right after the dot com bust, the telecom bust, the 3G bust. Wireless companies had bought [spectrum that was as worthless as] a highway with no cars running on it.”

He said that Oracle’s CEO Larry Ellison paid him a poisoned compliment. “Larry Ellison told all my customers that I was smart to leave the database business. Of course, I had not left the database business. Then, our wireless business was less than $10 million a year. Ellison told my customers how stupid they were to buy a database that Sybase wouldn’t support.”

On analyst day, Chen had the data to show that Sybase is doing well with enterprise databases. “Our Sybase Adaptive Server Enterprise (ASE) product has delivered good options, our Sybase IQ is the platform of choice for crunching large amounts of data, and thanks to Marty [Beard, president of Sybase 365 Mobile Services], we have been able to convince enterprise users to adopt messaging as a platform.”

The company reported revenues of $267 million and net income after taxes of $28 million for Q1, 2009.

He told analysts what they wanted to hear: that the company focuses on making money. “We are chasing the whole balance sheet, not just the top line,” he said. “We won’t take a $100 million engagement if it will result in a loss for us.”

Asked about Oracle’s pending Sun acquisition, Chen said that the acquisition has several interesting implications.

“With the acquisition of SPARC, Larry gets Intel as a competitor,” he noted.

Sybase is monitoring the situation. “About 38 percent of our base is installed on Sun,” Chen said.

Customers are worried about pricing. “We are creating an alternate path for customers in case they want it,” he said.

Chen praised Ellison for buying Java. “Larry’s right. The most valuable thing they bought is Java, not Solaris. If Larry keeps Java open, then there’s no discussion, like with IBM and Eclipse.”

If the pricing changes, there could be issues, he added. “Today we shipped a Java virtual machine and it was more cost effective to use Sun’s JVM than ours. But if the licensing scheme changes, our engineers have built our own JVM, and we could use that. Or maybe I’ll wake up screaming one night about writing a check to Larry.”

He hinted that the real change in the enterprise software industry is decoupling, not consolidation. “The cloud is diminishing the power of the vertical stack,” he said. “It’s not an immediate threat, and there’s time to deal with it.”

The state of the economy is hurting software revenue, he added. “CIOs have a reduced budget. They are not buying more seats. Some are saving money by going off maintenance.”

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