October 11, 2012

Oracle and IBM — strategic context

By my standards, I’ve been writing a lot about Oracle and IBM recently. Let me now step back and review the context in which I view them.

At the highest level, Oracle and IBM have similar strategic priorities, in line with the Innovator’s Dilemma/Innovator’s Solution issues I keep mentioning. That is:

Of course, there are major differences in the two companies’ product and service portfolios. Some of the biggest are:

But while the two companies’ histories and specific choices are different, their general strategies are quite similar.

Now let’s drill down on the part about selling mainly to their existing customers.

*Even then, certain classes of system tend to stick around in some guise. In some product categories, true rip-and-replace is very rare.

Combining these points, it would make sense that:

For example, in the DBMS category:

It’s been ages since I talked with an enterprise considering a first-time purchase of Oracle or DB2 … or that I’ve advised an enterprise to make one. If you’re not already an Oracle or DB2 user, then you’re likely to find those products to be expensive and complicated.

However, suppose that in fact you already are an existing user. Then:

So there’s a fighting chance that your best course is to buy more of what you already have. What’s more, suppose you really are better off with something more modern — well, Oracle owns MySQL now, and IBM will gladly sell you some Netezza.

Truth be told, I think large vendors focus on their existing customer bases even more than they should — sometimes consciously, sometimes otherwise. But I’ll defer spelling out that argument until another time.

Comments

5 Responses to “Oracle and IBM — strategic context”

  1. Henrik Loeser on October 12th, 2012 3:44 am

    Existing customers spend quite some money on product support and service and tell IBM/Oracle what they want. Hence, there is quite some focus on existing customers.
    The sales process is also different for large enterprises and SMBs. For SMBs I would assume that rarely analysts are involved in the buying decision. It is more that SMBs work with (IBM) partners for consultancy, buying decisions, product purchase and support.

    BTW: The SQL compatibility feature in DB2 catered to many non-IBM customers. Re-using existing skills and cutting down migration time contributes to a lower TCO.

  2. Mark Montgomery on October 13th, 2012 10:35 am

    Well done, but entirely focused on cost.

    What is the cost of global commoditization and lack of differentiality, particularly in hyper-competitive clusters and organizations?

  3. Mitä tekee Oracle ja IBM, really? « Olipa kerran Bigdata on October 30th, 2012 6:31 am

    [...] Oracle and IBM — strategic context – Oracle ja IBM kilvoittelua [...]

  4. Terence on November 5th, 2012 3:03 pm

    >>It’s been ages since I talked with an enterprise considering a first-time purchase of Oracle or DB2 … or that I’ve advised an enterprise to make one. If you’re not already an Oracle or DB2 user, then you’re likely to find those products to be expensive and complicated>>

    That is a very US centric comment. Developing nations (Brazil, India, China, SE Asia etc) are providing many net new customers to the Oracles and IBMs of the world.

  5. Curt Monash on November 5th, 2012 4:57 pm

    A fair challenge.

    But I think it’s still a rather small fraction of overall business.

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