Special Report: Can that guy in Ironman 2 whip IBM in real life?

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Special Report: Can that guy in Ironman 2 whip IBM in real life?

BOSTON (Reuters) — In the movie Iron Man 2, Larry Ellison makes a cameo appearance as a billionaire, playboy software magnate. It is a role he knows well. He is playing himself — chief executive of Oracle, one of Silicon Valley’s most enduring, successful and flamboyant figures.

At age 65, he is undertaking one of the biggest challenges of his career, and it’s not playing Hamlet on Broadway. Oracle, the company Ellison founded three decades ago and built into dominant force in the software industry, is making a go at hardware with the acquisition of money-losing Sun Microsystems.

This is not entirely unlike MIT deciding to field a competitive football team, but Ellison being Ellison, he could not be less worried. “We have a wealth of technology to package into systems,” said Ellison, who won the America’s Cup in February. “I see no reason why we can’t get this to where Sun under Oracle should be larger than Sun ever was.”

In a rare interview, he discussed his turnaround efforts at Sun so far, revealed plans to purchase additional hardware companies and detailed new products that will launch in the near future. And he did so with his usual in-your-face style — heaping all manner of abuse, for example, on Sun’s previous managers.

During the 1990s, Sun prospered by selling high-end computers at top dollar to large corporations and dot-com start-ups. Its business peaked in 2001, then slid with the collapse of the Internet boom and never recovered, though the company is still widely respected for its technological prowess and the brain power of its engineering staff.

Sun came into play in November 2008 after IBM CEO Sam Palmisano made an overture to buy it. Oracle, which had been strictly a software maker, unexpectedly jumped in to outbid IBM by just 10 cents a share, paying a total of $5.6 billion in cash.

Now Ellison says he is going to rebuild Sun’s hardware business by using a strategy that helped IBM prosper in the 1960s: Selling computer systems built with standardized bundles of hardware and software.

Plenty of skeptics doubt Ellison can pull it off. Sun lost $2.2 billion in its last fiscal year as an independent company. Conventional wisdom holds that he will end up divesting the company’s hardware business.

Ellison has a pretty good track record when it comes to predicting where the industry is headed. Besides innovating the wildly lucrative relational database that bears Oracle’s name, Ellison was quicker than most in creating software that works with both internet technology and the widely used Linux operating system.

He also started buying up smaller software makers in 2003 when critics said his consolidation strategy was doomed to fail. It hasn’t. “People have lost a lot of money second guessing Larry about IT strategy,” said Dave Roux, co-founder of Silver Lake, the world’s biggest private equity firm focused on technology, in which Ellison was an original investor.

“He’s a very thoughtful and reasoned observer of the big tectonic forces that kind of go rippling through the industry,” said Roux, who worked for Oracle before setting up Silver Lake.



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