Oracle and NetSuite: Longtime 'sweethearts' united at last

'What took Oracle so long?' one analyst wonders as software giant announces acquisition

Oracle's US$9.3 billion purchase of NetSuite may be the most anticipated acquisition in the history of enterprise software.

"It’s like the high school sweethearts you always knew would get married but they had to get through four years of college first," said analyst Frank Scavo, president of Strativa.

There's no denying the two companies share a long history. Not only was Oracle chairman and chief technology officer Larry Ellison an early backer of NetSuite, but both NetSuite founder Evan Goldberg and CEO Zach Nelson spent time at Oracle.

"There's a lot of Oracle DNA in the company," Nelson admitted in an interview late last year.

"The only question in my mind is what took Oracle so long?" Scavo said.

Oracle might have gotten a cheaper price than the $9.3 billion it's paying if it had made its bid back in February, when NetSuite's shares were trading below $60, Scavo said.

But there's little doubt the investment could pay off handsomely. In terms of sheer numbers, Oracle will now have the largest installed base of pure-cloud ERP customers, Scavo said, and "many of these are smaller businesses, where Oracle has not had a strong presence."

NetSuite brings Oracle almost $800 million in revenue as well as an expanded market share, agreed Ray Wang, founder and principal analyst with Constellation Research. The purchase also keeps NetSuite "in the family" and prevents competitors from encroaching on Oracle's market.

Perhaps even more important, the acquisition will help fill in gaps in Oracle's cloud offerings -- an area where it's been struggling to catch up after a late start.

"NetSuite's core has been strong in manufacturing, retail, commerce, and professional services," Wang said. "While Oracle addresses these products in an on-premises model, NetSuite's cloud approach fills holes in Oracle’s cloud strategy in key verticals."

Oracle's cloud reputation is still weak, so by buying NetSuite, it gets not just cloud assets and skills, but "a firm with a reputation of being very good at 'things cloud,'” said Rob Enderle, principal analyst with Enderle Group. "It should result in Oracle being considered a far stronger cloud player."

In general, existing NetSuite customers needn't worry, Wang said.

"Oracle has had a good history with post-merger integration," he said. "NetSuite will be able to take advantage of many of Oracle’s technical assets and customers can expect to benefit from the synergies."

One thing customers should try to do soon is renew contracts with more favorable terms before Oracle takes over, he suggested.

"Companies making acquisitions often raise prices to pay for them," he explained. "We always tell companies to renegotiate their contract if they like their current terms -- you want to lock in what you have."

Partners, meanwhile, can expect some changes. NetSuite's partner program is "friendlier" than Oracle's is, Wang said, so it would be in NetSuite partners' interest to lobby Oracle to keep those programs separate.

Oracle declined to comment for this story. NetSuite did not respond to a request for comment.

NetSuite on Thursday also announced financial results for its second quarter, including revenue of $230.8 million, up 30 percent over the same period last year. The California-based company has offices in Australia, Canada, the Czech Republic, Hong Kong, Japan, the Netherlands, Singapore, Spain, Thailand, the Philippines, Uruguay and the U.K.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Katherine Noyes

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Jack Jeffries

MSI GS75

As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr

MSI PS63

The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?