Oracle's (ORCL) strategy is increasingly becoming clear. Through its two recent announced acquisitions (Acme Packet (APKT) and, today, Tekelec), Oracle is squarely focused on increasing its dominance within the carrier space. Few will argue that APKT and Tekelec are positioned well for the coming transition from the SS7 to IMS. Few will also argue that Sun Microsystems and Oracle had a dominant position within the core telecom database infrastructures. But what will be argued will be what these two acquisitions mean for Oracle's thoughts on its enterprise business.
It is becoming clear to me that the SaaS acquisitions that Oracle has done to date (highlighting two; Taleo and Rightnow) have not proven to be successful. The lack of growth within Oracle's licensing line and the rapid growth shown by the various SaaS players, as well as its commentary from the earnings calls suggests that Oracle's existing customer base has become a plentiful source for these SaaS companies' offerings. And Oracle has not figured out how to defend against them.
Instead of continuing his earlier path of buying SaaS product lines, Larry appears to be diverting his capital to acquiring in areas that will diversify his dependence on the enterprise space.
I suspect that the focus on carriers is due, in part, to that specific endmarket allowing for ORCL to retain its current sales model (of high end and highly paid sales people) as it is one of the few areas that will still do very large, very service intensive, very customized deals. We are seeing daily that the enterprise software industry is moving to lower upfront deals, subscription deals, etc. that can no longer be economically served with the dedicated field sales force that Oracle has prided itself over the years. This is causing Ellison to focus on those industries where large customized applications are still required. It also indicates that he thinks that in order to make the deals large enough to be economical, he needs to sell hardware appliances rather than just the software.
From my viewpoint, the game in the enterprise software space has changed and Larry has not figured out how to win the game. So what does he do? He goes and plays a different game.