Monday, May 30, 2011

Competitor Analysis of Oracle Corporation

Today, I would like to introduce the strategy of Oracle Corporation in connection with the article, “Competitor Analysis”. In 1977[i], Lawrence Joseph Ellison founded Oracle Corporation as a database management software company.

In 1980s, DB2, the program product of IBM, dominated the mainframe database market. At that time, IBM was too large to compete. Oracle decided to avoid the competition with IBM, and they started to develop the database for distributed systems. The major players were Sybase and Informix in this market[ii]. Thus, the target market and competitors were determined. At the end of fierce battle, Oracle survived and dominated the database market for distributed systems in 1990s.

In the beginning of 2000s, new competitors appeared. IBM customized DB2 for the distributed systems and merged Informix. At the same time, Microsoft bought the license of Sybase on Windows platform and expanded its shares in the database market on Windows platform. Oracle had to competes with these two titans in IT industry.

In 2004[iii], Oracle decided to change the market and strategy to compete with rivals. They started expanding their business area from database products to application area in order to scale up the size of the corporation. This strategy was essential to compete with IBM and Microsoft. In order to grow faster, Oracle took the merge and acquisition strategy. Oracle merged PeopleSoft, Siebel, BEA and so on. At last, the scale of the corporation became large enough to compete with IBM and Microsoft.

In 2010, Oracle completed the acquisition of Sun. In my opinion, there are three advantages. First is the scale up effect of the corporation. Not only the size of the corporation, but also the acquisition of superior software and engineers seemed to be one of core incentives. Second is the improvement of the total solution service using hardware of Sun. Final is the preparation for expanding its market into the cloud computing area. Cloud computing will be widely used in near future all over the world. Oracle completed to collect key parts to compete in the market of cloud computing.

Thus, Oracle defined target markets and competitors through the history of success. We can learn from their strategy.


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