Until now, it has supported a series of specialists, each operating in a different part of the market. But as companies demand more integrated software in place of the patchwork quilt of programs that they use at the moment, and as they demand lower costs and more accountability from their technology suppliers, the days of the specialist look numbered.

Mr Ellison's earlier efforts to break out have been mixed. An early release of a family of enterprise software applications - things like customer relationship management and supply chain management software, which handle individual corporate functions - was riddled with bugs, and more recent releases have failed to make big inroads.

Compared with two years ago, when new licence revenues reached more than $1bn, Oracle's income from applications has fallen by nearly half, reflecting a broader market collapse.

The push into applications, meanwhile, may expose a weakness in another core area of the enterprise software business: the so-called "middleware" that companies need to develop, deploy and manage their various software applications over the internet. This remains one of the few growth markets, and has been the focus of IBM's own push into software.

Mr Phillips said Oracle's database position gives it a springboard in selling applications: because the data that companies need to feed their applications resides in its databases, then linking the two will bring obvious advantages. The tie-in will help Oracle just as Microsoft's control of the desktop operating system has enabled it to dominate the market for PC applications.

Rivals disagree. Alfred Chuang, chairman of BEA Systems, the biggest independent middleware company, contends that the key position to hold is in the middleware that is used to deploy and integrate applications. Mr Ellison may himself have helped to give some credence to this claim with his own public musings in the past about whether he should try to buy BEA.

Oracle has not closed off that possibility with its PeopleSoft bid, says Mr Phillips: after assuming PeopleSoft's own cash reserves, the deal would only cost Oracle about one year's free cashflow, he says. That leaves plenty of firepower as Mr Ellison gears up for the war ahead.

Additional pages

First Page
Test Page 1

Back to Entertainment Industry

AOL Time warner

	Microsoft Corp. settles 750 M$ with AOL
	AOL-Bertelsmann music merger talks