Oracle Delivers, Denounces a Rival

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In my forecast for Oracle's (Nasdaq: ORCL) latest earnings report, I mused that there would be another easy earnings target, followed by quotably entertaining words from CEO Larry Ellison about Oracle's place in the software market.

You know, it feels good to be absolutely right.

The quarter itself was another great one for the books, with 32% year-over-year sales growth to $3.2 billion and 24% earnings growth to $0.18 per share. Those numbers easily exceeded forward guidance and analyst expectations. I'm batting 1-for-1 so far, then.

And then Ellison and his senior executive staff decided to rip into competitor SAP (NYSE: SAP). President Charles Philips noted that Oracle's new license applications grew by 80% -- again-- versus SAP's most-recent-quarter 8% growth rate. Ellison then spent a good 15 minutes of the conference call outlining the many ways in which Oracle is outperforming its rival in enterprise-management software.

This speech centered on the adoption of service-oriented architecture (SOA) solutions (here's more about that subject) and open industry standards. Ellison pointed out that SAP's software suite is entirely proprietary, while his own is based on Sun's (Nasdaq: SUNW) Java language and will work with competing middleware suites like IBM's (NYSE: IBM) WebSphere or BEA's (Nasdaq: BEAS) WebLogic in addition to running on Oracle's own products.

That puts Oracle in position to grab market share by selling to companies that already have expertise and a comfort level with these competing toolkits. It should be a much easier sell than SAP's "retrain or rehire your middleware team" alternative. As for SOA, Ellison said that Oracle is two years ahead of SAP on the road to a complete suite of pluggable components.

"We are trying to be best in class, open and hot-pluggable with competing components," Ellison says, "but we hope over time, if Oracle does a good job in delivering its components, you will prefer to use our completely integrated suite as opposed to trying to mix and match amongst multiple vendors." As this comment implies, Oracle does have a long-term plan in place, and it's performing ahead of schedule to boot. Yes, Larry talks a big game, but his company is still backing him up on every point.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like. Foolish disclosure can back up every tough word it says.