) are two very different companies, with one thing in common: They
both have a long history of over-serving their customers - of
selling comprehensive, high-performance products that almost never
get used to their full potential. It's a business model that made
sense during the fast-moving days of the dot-com boom, when new
technology became obsolete almost overnight, and what seemed like
overkill today turned out to be essential tomorrow.
These days, however, the over-serving model isn't always
affordable. With the rise of mobile computing - first commodity
laptops, then smartphones and tablets - battery life has become too
precious to waste on features that may or may not become necessary.
Fifteen years ago, corporate IT departments were flush with cash as
businesses positioned themselves for the New Economy. But in the
wake of the financial crisis, large firms cut costs, while smaller
enterprises found themselves without easy access to credit.
) diminutive, low-powered processors, and the cloud's
buy-what-you-need, when-you-need-it approach to distribution.
They're part of a larger movement away from over-serving, and their
success owes less to technological innovation than it does to a
simple - and timely - change in business strategy.
Oracle sells a range of enterprise products, and has traditionally
taken a bells-and-whistles approach. For instance, the company
describes its human capital management software as a "complete and
integrated suite," its financial management product as "the most
complete and integrated," and its customer relationship management
software as "the world's most complete." The message isn't subtle.
Web 2.0 competitors like
) have built their businesses on flexibility, rather than on
breadth. They operate through the cloud, and this means that
customers can buy what they need and avoid what they don't - a
solution that would have been impractical in the days of packaged
software. Small, low-needs clients can save a lot of money, whereas
larger customers might prefer the bells-and-whistles of Oracle's
The cloud offers trade-offs rather than advantages. Instead of
buying, you're renting the product. Software is updated
continuously, which means that customers are paying, one way or
another, for an update they might not have needed or wanted. Costs
are generally lower, but then cloud software providers are almost
all losing money, and these savings might be overstated. Although
the cloud possesses the aura of technological freshness, in many
it's a throwback
to the days of mainframes, when computing was so expensive that
sharing it was necessary. Today, the great recession has once
against brought expense to the forefront, and raised difficulties
for the old over-serving approach.
Intel has a similar problem. For years, it struggled with
(IBM) for control of the processor market, and this was a war
fought in megahertz. Ultimately, Intel won; a telling moment came
in 2005, when
(AAPL) Macintosh line abandoned IBM for Intel chipsets. However,
the iPod was already four years old by that point, and with the
iPhone's introduction in 2007, it was clear that we were entering a
new paradigm, where size and battery life mattered at least as much
This new market was a good fit for ARM's architecture and
processors designed by partners like
(QCOM). Simpler and smaller than Intel's chipsets, they tend to be
more efficient when performing light work. On the other hand,
studies have generally given
an edge in efficiency
when it comes to heavier workloads.
This, too, is a trade-off rather than a clear advantage, and an old
technology rather than a new one. The debate over RISC vs. CISC
processors has been ongoing since the '80s, with the fundamental
difference between these two architectures being that, generally
speaking, one of them over-serves and the other one doesn't. Thus
far, mobile computing has strongly favored ARM, but as battery life
becomes a non-issue for smartphones and tablets, and as the mobile
software market matures and becomes more demanding, things could
If there's one area where the over-serving approach is doing well
today, it's Big Data. Huge amounts of digital information are being
collected, and storage has gotten cheaper. Oracle is on the wrong
side of this equation, too; its database management business has
come under attack from new entrants, most notably
Like Salesforce.com, Workday is a cloud company, but there's a much
larger difference between it and Oracle. Businesses typically store
their data in "relational" databases, in which each piece of
information is organized according to its relationship with other
pieces -- think of a spreadsheet.
(SAP) and Oracle sell solutions for setting up, storing, and
manipulating this type of database.
The problem is that customers are dealing with more data these
days, and a large portion of it is ambiguous. What's the
relationship of one Tweet to another? Workday addresses the problem
by using so-called object databases, in which the data is less
structured but more flexible - think of a deck of cards. This
information is being saved for a day when it might be better
understood, or more useful. As it happens, object databases have
been around since the '80s. You might be sensing a pattern here.
Competition plays out in technology just as it does in business,
and oftentimes it's circumstances that decide between two
alternative ways of doing things. Intel and Oracle represent an
approach that, for many customers, is still the better approach --
and if experience tells us anything, it's that circumstances
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