Q&A: Oracle's President Charles PhillipsQ&A: Oracle's President Charles Phillips

information: Is this acquisition strategy Larry Ellison's vision that you were tapped to carry out, or is this your vision that you convinced Larry to support?

Phillips: This has been a team effort. We all play a role and make each other smarter. It's about winning.

information: SAP is planning something called A1S, an on-demand service for small and midsize companies. What's Oracle's position on software as a service (SaaS) and its response to A1S?

Phillips: They're nine years behind us on SaaS, and they don't know what they don't know. We have everything they're trying to build in SaaS. This will divert their resources and focus from their core product, mySap, while they walk up the learning curve. They now have at least four code bases: A1S, All in One, BusinessOne, and mySAP. And they still have to maintain R/3. By our count, they're using seven different development tools and five data models within mySap alone. In fact, given that many of the product groups in mySAP have separate schemas, separate installation processes, and significant integration gaps, I'd argue they have different product lines even under the mySAP umbrella, which can happen if you build a monster with 270 million lines of code. It has a life of its own and represents the very definition of complexity. That's why SAP had to start over for the small-business market.

So we both have multiple product lines, but we have critical mass on all of ours and a standard integration platform, BPEL orchestration layer, and object model -- all in AIA -- across all of our products. SAP does not. In fact, there are more SAP customers using Oracle Fusion middleware to integrate SAP applications than those using Netweaver. Netweaver appears to be directionless, as their Palo Alto people head for the exits with all the internal struggles with Waldorf.

information: How will you keep Oracle database competitive with the rising threat from Microsoft?

Phillips: This question has been asked for the last five years, during which time we've expanded our database market share, delivered the only enterprise grid computing platform that works, and innovated with an entire family of options around the database for security, partioning, and performance. At the same time, we've gone down market and made our products much easier to use and install. We have cheaper entry-level pricing than Microsoft, and we also have a free version, so you can't get much cheaper than that.

The key change over the last few years is that we've added Ingram Micro, Tech Data, CDW, Arrow, and Dell as distributors. We didn't have the low-end distribution in the past. But with the packaging and pricing changes, those distributors are asking for our product because our brand name has grown so strong. Plus, they all need an answer for Linux, which is growing on the low end, and we have an 80% share on the Linux platform and built the clustered file system in Linux.

They also need an alternative to Microsoft, and it's all upside for us. We run well on Linux and Windows so customers, distributors, and resellers now have a choice. Our low-end database business has been exploding as a result. Our numbers are real sales and not allocated revenue from client access licenses. We now have a dedicated SMB business unit led by Tony Kender, focusing on this market. Dell is bundling our database pre-installed on servers with other hardware partners signing up shortly.

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Oracle's Secret Weapon: Charles Phillips