Mark Hurd’s task at Oracle: Build a hardware business

Posted Sep. 7, 2010 at 4:49 p.m.

Mark Hurd’s task at Oracle: Build a hardware business

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By STUART WILLIAMS, special to LTW

Editor’s note: Stuart Williams is the Software Business Practice Manager at Technology Business Research, Inc.

HAMPTON, N.H. - Oracle (Nasdaq: ORC L) CEO Larry Ellison has hired a heavyweight to build Oracle’s hardware business.

As Oracle continues to integrate its acquired Sun assets with its database, middleware and applications platforms, the addition of an execution-focused executive like ex-HP CEO Mark Hurd is a huge boost to the company.

“There is no executive in the IT world with more relevant experience than Mark,” says Ellison says. “Oracle’s future is engineering complete and integrated hardware and software systems for the enterprise. Mark pioneered the integration of hardware with software when Teradata was a part of NCR.”

(On Tuesday, HP (NYSE: HP) filed suit seeking to block Hurd’s move. Read the details here.)

Ellison’s comment is tied to the rising popularity of heavily integrated hardware and software systems, called purpose-built engines or appliances. Oracle is plotting a strategy that takes it into direct competition with traditional systems heavyweight IBM. IBM has huge advantages – with long-time enterprise customers, a services business, a strong IP-backed hardware business and a $20 billion software business of its own.

The ability to tie software with hardware to specific workloads such as data warehouse or online transaction processing meets rising customer requirements for easy-to-use devices that add capabilities without adding the cost of build-it-yourself solutions. In a recent TBR survey, over 50 percent of enterprise customers reported purchasing at least one of these higher-end “appliances” in the past 12 months.

Efficiency, efficiency, efficiency

Hurd will also bring his drive for operational efficiency to the Oracle/Sun business – a company that was notorious for its high operating expenses. It is a “back-to-the-future” moment for Hurd, who took the reins at HP under similar circumstances following HP’s acquisition of Compaq where HP had to drive out the cost from the acquired firm and construct a more efficient supply chain, sales model and sourcing strategy.

The difference this time around is that the HP hardware business is based on commodity computing assets (x86 architecture) while the Sun technology is based on proprietary SPARC chips. Additionally, HP uses a channel-led strategy for much of its hardware business, while Oracle is leading with its direct sales organization. The challenges remain the same; however the tools Hurd can use to achieve greater efficiencies are vastly different.

His experience at NCR building the Teradata data warehouse business will be instrumental in his Oracle activity.

Hurd complements Oracle’s focus on profitable growth

Oracle’s other President, Safra Catz has long been responsible for streamlining the operations side Oracle’s business. She has been instrumental in ensuring that the back-office sales support, maintenance renewal teams and software support operations have been globally sourced – a key driver for Oracle’s phenomenal profitability.

Going forward, she will continue her M&A responsibilities while Mr. Hurd will manage sales, marketing and software support; areas formerly under the purview of outgoing Co-President Charles Phillips. CEO Ellison will oversee engineering – maintaining his direct control over the vision and development of the Oracle portfolio.

In Hurd Catz gains a co-President who is also focused on operations – but from a sales point of view. “Mark is an outstanding executive and a proven winner,” she said. “I look forward to working with him for years to come. As Oracle continues to grow we need people experienced in operating a $100 billion business.”

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Tags: HP, PC industry, Opinion Analysis, IBM

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