Oracle demands information from Rimini Street

In connection with its suit against SAP, Oracle wants details about the third-party support provider's business model

Oracle wants Rimini Street, provider of third-party support for enterprise applications, to reveal the details of its business model in connection with Oracle's ongoing intellectual-property litigation against rival SAP, according to documents filed last week in U.S. District Court for the District of Nevada.

Oracle filed a lawsuit in March 2007 against SAP and its now-shuttered subsidiary TomorrowNow, which provided lower-cost support for Oracle's PeopleSoft, JD Edwards and Siebel applications.

Rimini Street was founded by former TomorrowNow executive Seth Ravin, who left the company after SAP purchased it in 2005. The Las Vegas company, which provides support for both Oracle and SAP applications, has made a regular stream of announcements touting its growth but could find its fortunes dimmed by the cost and distraction of a legal battle with Oracle.

It is one of the more visible players in the small but growing market for third-party support, which caters to customers who have stable legacy systems and no immediate desire to upgrade, and therefore find little value in paying for a full-price vendor maintenance contract. Rimini Street promises customers will save at least 50 percent on their current maintenance bills.

Companies like Oracle are fiercely protective of their maintenance revenue streams, given the extremely high profit margins and promise of continual income even amid slower sales for new software licenses.

In its most recent quarterly statement, Oracle reported US$3.05 billion in revenues for "license updates and product support," but just $293 million in operating expenses against that total, for a roughly 90 percent profit margin.

While Oracle acknowledges that third-party support is legal, it claims that SAP and TomorrowNow managed to provide discounted support through illegal acts, such as making thousands of unauthorized copies of Oracle's software, and conducting "routine, massive and indiscriminate downloading" of support-related materials on behalf of customers who weren't entitled to them, according to the motion to compel filed against Rimini Street on Aug. 21.

SAP has said that TomorrowNow workers were authorized to download materials from Oracle's site on behalf of TomorrowNow customers, but also that some "inappropriate downloads" had occurred. SAP has also said that Oracle's software remained in TomorrowNow's systems and has denied Oracle's allegations of a wider pattern of wrongdoing.

Meanwhile, after leaving TomorrowNow Ravin has "since touted the similarities between TomorrowNow's and Rimini's offering," according to Oracle's Aug. 21 filing.

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Chris Kanaracus

IDG News Service
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