The Oracle speaks

Microsoft chairman and CEO Bill Gates found himself fighting the battle over digital consumer electronics on two fronts at the Consumer Electronics show in Las Vegas earlier this month. While Gates and Scott McNealy, the chairman and CEO of Sun Microsystems, engaged in duelling keynotes during which both executives flaunted new deals for cable television giant Tele-Communications to use their software in set-top boxes, Larry Ellison was behind the scenes arguing that Microsoft's vision is wrong. The Oracle chairman and CEO held a lunch for industry executives at CES where he slammed the software giant, and then conducted a string of interviews where he further built his case against Gates.

Microsoft chairman and CEO Bill Gates found himself fighting the battle over digital consumer electronics on two fronts at the Consumer Electronics show in Las Vegas earlier this month.

While Gates and Scott McNealy, the chairman and CEO of Sun Microsystems, engaged in duelling keynotes during which both executives flaunted new deals for cable television giant Tele-Communications to use their software in set-top boxes, Larry Ellison was behind the scenes arguing that Microsoft’s vision is wrong. The Oracle chairman and CEO held a lunch for industry executives at CES where he slammed the software giant, and then conducted a string of interviews where he further built his case against Gates.

Ellison talked to IDG News Service correspondents Rob Guth and James Niccolai about how Oracle’s Network Computer (NCI) subsidiary is deepening its relationship with Intel and what Sun and Oracle see as Java’s role in a future of digital consumer devices. And, as expected, Ellison explained why he thinks Microsoft’s operating system should become “irrelevant” in the future world of digital consumer electronics.

IDGNS: It is interesting to see you, Bill Gates and Scott McNealy, at a show for the consumer electronics industry. Is this a time of major change for computer companies as they try to woo Windows CE hardware makers?

Ellison: I think we’re looking at a whole new generation of appliances that are going to be based on digital electronics and not analogue electronics. New telephones, new televisions, car navigation systems - you name it - everything is going to be digital. And you will have to write your applications in some environment. Microsoft would have you write those applications in the Windows CE environment. We think you should write it at a higher level that makes the operating system irrelevant. That’s why Microsoft is horrified by Java. That’s why they have “MS Java” - Java that works only with Windows.

If you build your application in Java, put a lot of your application on the server, not on the set-top or desktop, then the operating system again becomes totally irrelevant. We think that’s the way consumer electronics companies are going to go because they’ve had a glimpse of the computer industry. They don’t want to be controlled, manipulated and dominated by one company and one person.

IDGNS: Are companies like TCI calling the shots now?

Ellison: TCI is certainly one of them. I think it is very different in that you have a handful of key consumers of these technologies - the cable TV companies, the telephone companies - that can move tens of millions of boxes. The computer industry has always been dominated by volume - the low price, high volume suppliers have eventually won out. That’s how Microsoft did so well and Intel did so well. So if there are appliances that can be built at lower prices and higher volume than the personal computer - the people with the most now are the people who will lose the most.

We partner with Intel around our machine at NCI and Microsoft is pretty much going it alone by buying WebTV [Networks Inc.]

IDGNS: Is Intel hedging bets against Microsoft by working with you?

Ellison: I think they are more than hedging their bets, they have no play with Microsoft right now. Maybe they will in the future ... it wasn’t Intel that decided to hedge its bets, it was Microsoft [that backed non-Intel chips for Windows CE] ... Windows CE and WebTV don’t use Intel chips. Then there is the Win Terminal which is Intel-free. Microsoft came out with a series of products - the new generation of consumer electronics products - all of which bypassed Intel. I think Intel will very much wants to play in the next generation, low-cost digital arena and therefore it is working with us, we’re working with them. I would be surprised if Microsoft and Intel don’t find some way to work together in the future.

IDGNS: How will your relationship with Intel evolve in next six months? Will there be a tightening of ties between the two companies?

Ellison: We’re doing special things around the Intel 64-bit Merced chip. A lot of people were shocked that Intel and Sun are working together. It makes complete sense. If Microsoft is going off and exploring different chip suppliers, then it makes sense for Intel to go off and work with different software suppliers.

IDGNS: Talking about NCI specifically, what plans do you have for its relationship with Intel?

Ellison: We are working with Intel in a variety of areas - a variety of technology areas. We’re collaborating on a set-top box. We support Intercast [Intel’s technology for using unused TV signal bandwidth for adding Internet content]. We are working on new designs of NCs - Intel is doing reference designs and we’re doing new versions of software. We’re tuning our database for the Merced chip. So, we have a very broad and deepening relationship with Intel.

IDGNS: Intel’s recently announced specification for a thin client would appear to basically be an NC. How does that relate to your vision of network computers?

Ellison: A personal computer that runs only, say Netscape Navigator and nothing else, and all the applications go back into the server ... looks awfully like a network computer. We think thin client PCs where you just have an operating system - who cares what it is - and Netscape Navigator, for example ... looks an awful lot like an appliance. That’s the way our NC runs, by the way. If you buy a PC and run Netscape Navigator on it or you buy a corporate NC which runs Netscape Navigator you can’t tell the difference. They look exactly the same.

IDGNS: Is this the message you are taking to TCI and other cable companies?

Ellison: John Malone [TCI chairman and CEO] is a smart guy. [Time Warner Inc. Chairman and CEO] Gerry Levin is a smart guy. They don’t want to let anyone to get a chokepoint in their industries. Why not? Since Oracle and NCI and Sun and Microsoft so desperately want this business - why not use their financial resources, their technical resources, play them off against each other, and get a development environment that doesn’t tie you to us or them?

IDGNS: Is it important for Java to secure the support from the cable companies?

Ellison: Sure. The cable companies have two development environments ... one is HTML and the other is Java and Java does certain things that HTML doesn’t do ... It’s important for Java but it’s also important for cable companies ... The cable companies need Java, Java needs the cable companies.

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