Recurring Revenue Authors: Liz McMillan, Yeshim Deniz, Elizabeth White, Xenia von Wedel, Carmen Gonzalez

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Recurring Revenue: Article

"Why I Didn't Buy JBoss," By Oracle CEO Larry Ellison

"I have a hard time writing checks for billions or hundreds of millions of dollars for things that are open source"

When Richard Waters of the Financial Times interviewed Larry Ellison - the chief executive officer of Oracle - last week, what caught people's attention most was where Ellison talked about having looked at buying Novell and at Red Hat. But there's another gem in the interview: Ellison also reveals his reasons for not buying JBoss last year - and they're important for anyone contemplating, let alone anticipating, the future trajectory of open source software.

Larry Ellison talks with Scott McNealy earlier this year on SYS-CON.TV

According to the newspaper, Oracle's boss said:

"If an open source product gets good enough, we’ll simply take it. Take Apache: once Apache got better than our own web server, we threw it away and took Apache."
Then Ellison goes on to say why he didn't, despite the rumors last year, buy JBoss.
"JBoss wanted to sell the company to us. Clearly if we wanted to buy JBoss we’d have bought JBoss. Why didn’t we buy JBoss? Because we don’t have to – if it ever got good enough we’d just take the intellectual property – just like Apache – embed it in our Fusion middleware suite, and we’re done. We always have that option available to us – IBM always has that option available to them."
Ellison went on then to explain why it wasn't only JBoss he could never buy. Oracle would never make a play for Red Hat either:

"The reason I have a hard time writing checks for billions or hundreds of millions of dollars for things that are open source is that if we could do this, other people could do this too. I don’t see how we could possibly buy Red Hat – IBM would just say, Larry, congratulations, we’re going our own way. They could hire Red Hat people and they’d be in business straight away. So I don’t see how anyone can buy Red Hat, not at anything near these prices, because anyone who feels like taking the code – they have no intellectual property."

Ellison then reinforced the commercial illogic of buying a 'professional open source' company as follows:

 "We see in China and India, all that stuff is freely available and Red Hat is just cut completely out of the market. I’m not gong to spend $5bn, or $6bn, for something that can just be so completely wiped off the map. They take all the Red Hat code, have their own equivalent of the Red Hat network, and Red Hat gets zero."
So where will Ellison – who in this same interview goes on record as saying; " I want to make $10BN" – look for new companies to buy? And why, if he's so down on open source, did he just buy the Berkeley DB, by acquiring Sleepycat Software?

Well, Oracle's fearless leader had the answer to that paradox too: he didn't buy IP, he bought the Sleepycat development team:

"The people. If the price is reasonable, and you’re getting a high quality development team – we love the Berkeley DB guys. It’s a great team." 

Since Oracle's profit margins are currently north of 40 per cent and Ellison's organizing principle for the company in the coming years is to drive them up past 50, one hesitates to quarrel.

If Larry Ellison bought the world rights to rainfall, somehow he'd find a way of making it go up, not down.


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Oracle News Desk trawls the world's news information sources and brings you timely updates on Oracle and its ever-expanding enterprise software portfolio, including its entire range of tools for managing business data, supporting business operations, and facilitating collaboration and application development.

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Most Recent Comments
johnny_bdog 04/22/06 04:44:47 AM EDT

||| He may not have bought JBoss, but John
||| Dvorak reckons he'll buy a brand-name
||| Linux

Oracle is a company with the resources and credibility to squeeze Novell on acquisitions price.

They are probably just bluffing about starting their own Linux distribution, and will ultimately buy Novell, but not at a huge premium.

There really is no reason to pay a large premium for a poorly performing company with declining revenues and a management team with zero credibility.

Dvorak Speaks Out 04/22/06 04:25:37 AM EDT

He may not have bought JBoss, but John Dvorak reckons he'll buy a brand-name Linux via snapping up either the Knoppix or the Mandrake team.

"I suspect that what Oracle will end up with is one of the lesser known companies working on variants such as CGL-Linux (carrier grade Linux) or Data Center Linux. The choice will be a surprise to investors," writes Dvorak.

germINe 04/22/06 04:02:54 AM EDT

Did Marc Fleury and the JBoss crew finish scooping up that Berlin-based system integrator? It was named Objectone, I believe.

germINe 04/22/06 04:02:44 AM EDT

Did Marc Fleury and the JBoss crew finish scooping up that Berlin-based system integrator? It was named Objectone, I believe.

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