I was a bit distracted from the Apple (NASDAQ:AAPL) iPad news due to the marathon Oracle (NYSE:ORCL) conference Wednesday on its shiny new Sun Microsystems acquisition.
But the more I thought about it, the more these two companies are extremely well positioned to actually fulfill what other powerful companies tried to do and failed. Apple and Oracle may be unstoppable in their burgeoning power to dominate the collection of profits across vast and essential markets for decades.
Apple is well on the way to dominating the way that multimedia content is priced and distributed, perhaps unlike any company since Hearst in its 1920s heyday. Apple is not killing the old to usher in the new, as Google (NASDAQ:GOOG) is. Apple is rescuing the old media models with a viable online direct payment model. Then it will take all the real dough.
The iPad is a red herring, almost certainly a loss leader, like Apple TV. The real business is brokering a critical mass of music, spoken word, movies, TV, books, magazines, and newspapers. All the digital content that's fit to access. The iPad simply helps convince the producers and consumers to take the iTunes and App Store model into the domain of the formerly printed word. It should work, too.
Oracle is off to becoming the one-stop shop for mission-critical enterprise IT ... as a service. IT can come as an Oracle-provided service, from soup to nuts, applications to silicon. The "service" is that you only need go to Oracle, and that the stuff actually works well. Just leave the driving to Oracle. It should work, too.
This is a mighty attractive bid right now to a lot of corporations. The in-house suppliers of raw compute infrastructure resources are caught in a huge, decades-in-the-making vice -- of needing to cut costs, manage energy, reduce risk and back off of complexity. Can't do that under the status quo.
In doing complete IT package gig, Oracle has signaled the end of the best-of-breed, heterogeneous, and perhaps open source components era of IT. In the new IT era, services are king. The way you actually serve or acquire them is far less of a concern. Enterprises focus on the business and the IT comes, well, like electricity.
This is why "cloud" makes no sense to Oracle's CEO Larry Ellison. He'd rather we take out the word "cloud" from cloud computing and replace it with "Oracle." Now that makes sense!
All the necessary ingredients
Oracle has all the major parts and smarts it needs to do this, by the way. Oracle may need an acquisition or two more for better management and perhaps hosting. But that's about it.
Like Apple, Oracle is not killing the old IT era to usher in the new. Oracle is rescuing the old IT models with a viable complete IT acquisition model. Then it too will take all the real dough.
Incidentally, IBM tried to, and came quite close to a similar variety of enterprise IT domination. That was more than 30 years ago. IBM was an era or two too early. Microsoft tried, and came moderately close -- at least in vision -- to the same thing, moving from the desktop backward into the data center. But, alas, Microsoft was also an era too early.
Both Sun and IBM were seduced over the past 15 years by the interchangeable parts version of IT. It's what Java is all about. Microsoft hated Java, never veered from their all-us-or-nothing mantle, which is now passing to Oracle. But Microsoft never had the heft in the core enterprise data center to pull it off. Oracle does.
Yes, Apple and Oracle have clearly learned well from their brethren. And the timing has never been better, the recession a god-send.
So now as consumers, we have some big choices .... er, actually maybe we have a big buy-in, yes, but maybe not too much in the way of choices. As any mainstream consumer and producer of media, I will really need to do business with Apple. Not too much choice. Convenience across the content supply chain has become the killer app. And I love it all the way.
I want my MTV, my New York Times, my Mahler and my Madmen. Apple gets it to me as I wish at an acceptable price. Case closed. The end device is not so important any more, be it big, medium or small, be it Mac or PC. Because of my full-bore consumer seduction, the producers of the content need to follow the gold Apple ring. Same for consumer applications and games, though they are all fundamentally content.
As an IT services buyer, Oracle is making a similar offer. Convenience is killer for IT managers too. Oracle, through its appliances, integrated stack, data ecosystem, tuned high-end hardware, business applications, business intelligence, and sales account heft, leaves me breathless. And taking a next breath will probably have an Oracle SLA attached. Whew!
Critical mass in the accounts that matter
Oracle is already irreplaceable in all -- and I mean all -- the major enterprise accounts. Oracle can substantially now reduce complexity across the IT infrastructure front, while seemingly cutting costs, apparently reducing risk. But a huge portion of the total savings goes into Oracle's pockets, making it stronger in more ways and in more accounts for 20 years. Now they can take the lion's share of the profits in the IT as a service era. I call that dominance.
So let's hear it for the balancing acts still standing. Go IBM! Go Microsoft! Go Google! Go HP (NYSE:HPQ)! Go SAP! How about Cisco (NASDAQ:CSCO) and EMC? You all go for as long as you can, please. Or at least as long as it takes for the next IT and media eras to arrive.
These handful of companies are about the only insurance policies against Apple and Oracle being able to price with impunity across vast markets that deeply affect us all.
Disclosure: HP is a sponsor of BriefingsDirect podcasts.