Saint Larry and the distribution dragon

Oracle wants to reinvent itself as a server to desktop systemscompany but has some hurdles to clear

There was not a lot of talk about databases earlier this month at Oracle Open World in San Francisco - which these days is not as unusual as it appears for the world's biggest database software company.

Instead we were given a mission statement about how CEO Larry Ellison wants to enable the information society - what he called the 'common heritage of all mankind'. There was also a lot of talk about a new-look Oracle, which will deliver working solutions direct to the world's top 20 per cent of companies and through partnerships with the big six systems integrators.

And the company will service the rest of the industry through an expanding Var channel of applications developers and resellers.

Ellison used the phrase 'common heritage' in his keynote speech when talking about how Microsoft has failed to deliver on the promise of information for all. He made the point that even in the US, 'the world's richest country, 70 per cent of homes do not own a PC'. His idea is a simple one: to make network computers (NCs) as ubiquitous as the telephone.

When he arrived on stage at the Moscone Center, in front of several thousand users and partners, Ellison quipped: 'I can see the light.'

In his battle with Microsoft - and since he grew a beard - Ellison wants to be seen as Saint Larry of competition, while casting Gates as the prince of monopolistic darkness.

Ellison's dream of real competition at the desktop level is to be achieved through the network computing architecture (NCA), which will be marketed by Oracle subsidiary Network Computing Inc (NCI) in direct competition to Sun's Java Station and IBM's Net Station.

NCA is a set of software protocols which will be licensed to the various manufacturers that will be producing NCs from Q1 1997 onwards.

It couldn't be simpler. But there are a few things to be sorted out before Ellison's vision of an information-enabled society comes to pass.

The first thing that Oracle has to do is shake up its internal structure as part of a serious move into applications aimed at particular vertical markets.

Then it has to work out its distribution strategy for its new business model and for the NC. At the moment NCI is still working on its distribution strategy and it is not even clear if the Oracle salesforce will be shipping the products.

According to Oracle president and COO Ray Lane, the Oracle salesforce is distracted and keeps asking him if it is going to get paid for selling NCs. 'NCI has to look at distribution models, but it can't ignore the potential of the Oracle salesforce,' he said.

In the UK, Oracle distributor Sphinx Level V is negotiating with three hardware manufacturers that have signed up to the NCA, and the company expects to make some announcements before the end of the year.

Azlan, Oracle's other distributor, has no intention of selling any kind of hardware. Nick Sears, Azlan product marketing manager, says: 'Azlan is interested in selling network computing, not network computers.'

Neither distributor is expecting anything radical to happen with Oracle's more traditional business, in spite of Oracle European senior vice president Pier Carlo Falotti saying that there will be an expanding distribution model in Europe which will involve regional, country as well as pan-European distributors.

Sears said: 'There is no pan-European Oracle distributor. We do not distribute Oracle in Europe, although our contract does not stop us doing this.'

The UK setup consists of Sphinx selling on the Unix platform, although it has access to NT, while Azlan concentrates on NT and Netware. It is an arrangement that has been described as devoid of conflict - something that is probably unique in a channel setup.

While all of this camaraderie is wonderful, the question is how long can it last?

Last year at the comparable event to Oracle Open World - it was then known as the Oracle user group conference, but the vendor and its user group had a falling out - Jeff Henley, chief financial officer of Oracle, lambasted the European subsidiaries in the UK operation for dragging the company's performance down.

This year he was a bit more circumspect. But he said: 'We clearly feel we can do better in Europe: we are not doing as well as we would like.'

Henley admitted that Oracle didn't do some things well in Europe, noting that the company suffered from a lack of applications on the continent.

But he was cautiously optimistic, saying: 'France has continued its transition, while the UK, as it improves, will bring Europe forward.'

Falotti is more scathing about Europe. 'Germany is searching for itself,' he said. 'France is very poor and Italy - in Italy they don't care.'

The solution, said Falotti, is to get the organisation to think globally.

The European side still thinks of itself as a small company - a problem which is self-created. Although Oracle grew 30 per cent in Europe last year, this was below the US growth rate - something that Falotti has pledged to mend. Next year he wants a 50 per cent growth rate and is under no illusions that the only way to do this is to grow indirect sales.

There will be a pan-European distributor for Oracle. And although no one can say for certain when the company will have a third UK distributor, even the existing distribution partners will only say they see nothing changing 'for the foreseeable future'.