Oracle targets SMEs for future growth

Oracle is taking a two-prong approach to battling the competition, focusing on its Fusion Middleware and growing its presence in the niche applications arena that targets specific industries, said Charles Phillips, the company's co-president.

Oracle has been on an acquisition spree, buying niche players such as logistics and transportation software maker G-Log and retail software vendor Retek. The focus on niche applications, or vertical silos, comes as the enterprise resource planning market has matured and customers say they are more concerned with the actual applications that run the critical segments of their business, said Phillips, who made the remarks on Monday during a New York luncheon address to Wall Street analysts.

"This is where the game will be played and the battles will be fought," he said.

While Oracle has the capability to take on yet another large merger beyond its pending multibillion-dollar deal with Siebel, Phillips said his company envisions more deals with SMEs.

At the same time, Oracle is also concentrating on its Fusion Middleware, comprised of several Java and Web services components that allow applications to interoperate. These components range from a Java application server to a Web portal. Fusion Middleware is designed to enable customers to share information with non-Oracle-based systems and to modify Oracle programs.

Oracle's middleware revenues grew to $853m (£481m) in the past four years. The last three quarters posted the largest year-over-year gains, said Phillips, who previously noted that some people inside Oracle predicted middleware sales may one day surpass the company's core database business.

Oracle, which recently announced a partnership with IBM to run its packaged applications on WebSphere middleware, is relying on its "hot pluggable" middleware technology to compete with BEA and SAP.

"Oracle's Fusion Middleware is our fastest growing business and it's a great business for us," Phillips said. "Our entire middleware suite is hot and pluggable... the fact that it's a lower price [than competitors] and doesn't require you to rip everything out has helped our sales."

Oracle currently has more than 27,000 Fusion Middleware customers and has landed more than 3,000 deals per quarter, he added.