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Oracle’s Larry Ellison Steps Down as CEO

Note: This article is hosted here for archival purposes only. It does not necessarily represent the values of the Iron Warrior or Waterloo Engineering Society in the present day.

After an impressive 38 year run as CEO, Larry Ellison has stepped down from his position at Oracle, making way for another to take his place—the first time this has ever happened. He hands the job to his two capable co-presidents, Mark Hurd and Safra Catz. Ellison leaves behind an impressive legacy; after founding the company in 1977, he turned Oracle into the world’s biggest maker of business software, second only to Microsoft in overall software manufacturing. Forbes, the biweekly business magazine, named him as the 5th richest man in the world in 2011, with an estimated worth of $51.4 billion.

Despite all of his accomplishments, Ellison isn’t quite ready to take his retirement yet. Instead of retreating to his private Hawaiian island (though, to be fair, there are still about 3000 other residents living there from when he bought it), the 70 year-old tycoon will stay on as a full time employee, working on more technical parts of the company such as product engineering. And thus, the career which The Guardian calls “one of the most profitable runs for a leader in business history” continues. Perhaps he is unsatisfied with owning the 6th largest Hawaiian island, and is interested in in getting a majority share of the land rights in the state.

Oracle itself remains an incredibly successful corporation, with annual revenues of $38 billion and a divinely high operating margin of 47%. Both of these tremendous figures are due, in no small part, to the particular software which Oracle specializes in: business. Most of the big companies in the world use Oracle’s software to handle all of their big data, and there simply isn’t any incentive to switch. Oracle dominates the business software market, and can set the prices as it pleases. Even if competition did arise, the inevitable hiccups and issues which would occur during a major database restructuring means that ostensibly cheaper options simply aren’t worth it.

Oracle does its part to keep the area free of competition too, snapping up potential competitors in billion dollar deals, such as hotel-software company MICRO for $5.3 billion. However, the ever-changing technology industry is starting to field new threats. For instance, Oracle can keep its prices high because it has a firm but mutually beneficial grasp on many well-established companies, but has difficulty attracting new businesses which have the luxury of choosing a cheaper option for their new, non-legacy databases and files. Similarly, the increasing popularity of cloud software, such as Office360, is quite contrary to Oracle’s model of selling software outright and then making more sales by selling those same customers the newest version of the software in a few years. Cloud software, by comparison, is a subscription service, charging for online access to the application and allowing for much easier upgrade; when the new version comes out, cancel your current service and start on the new one.

Oracle has been responding to these new challenges. For instance, they released a freeware version of their world-class SQL database software, MySQL. This keeps the technology workforce familiar with SQL databases, which in turn encourages companies to buy the software their labour pool is familiar with. As well, they have launched their first foray into the strange new world of cloud computing, deriving 4% of their revenue from various cloud services.

So as Larry Ellison takes a back seat at Oracle, it’s time for some new stars to step up and take the lead. He has definitely built up his company to a dizzying height. It remains to be seen if it can tilt with the shifting sands of the technology landscape, but for now it appears to be weathering the challenge well.

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