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The ugly truth about coopetition

Nasty word, necessary evil

Quocirca's changing channels There is an ugly word used to describe the fact the rivals in business some times have to find a way to work together – coopetition. In the ICT industry everyone knows that, on occasions, competitors have to hold their noses and talk to each other. But this distasteful process can be avoided to a greater or lesser extent, depending on the vendors involved, if the process is handled through third parties like VARs and integrators. In short, channel organisations can act as coopetition brokers.

For certain pairings, coopetition has been a reality for many years – Microsoft has always had to support a wide range of third-party software products running on its operating systems, despite many of them being competitive with its own. Privatised national telephone companies like BT have to share their local-loop access to the homes and businesses with competitors, albeit under some pressure from regulators (so much so that BT announced a new independent company last week – Openreach – to operate its local-loop).

All this said, two of the ICT industry’s largest vendors of software have pretty much managed to keep each other at arms length to date – Oracle and IBM. These two have been fierce competitors in the database and application server business for many years. True, Oracle supports its infrastructure products on IBM hardware when required, but this would often be using a third-party operating system like Linux or Windows rather than IBM’s own. However, Oracle’s recent spate of acquisitions which have made it the world’s second largest vendor of business applications have upped the ante for both vendors, and this has been intensified by Oracle’s most recent acquisition – Siebel Systems.

IBM has had a partnership with Siebel since an agreement was first inked in 1999. Most recently it has been selling Siebel OnDemand, a hosted CRM application as a service via its Global Services division. IBM has been careful to position this as a service so that there is no perceived conflict of its policy of not competing with vendors of business applications which run on the IBM platform. These include Siebel’s standard product, but also many of the other business applications Oracle has recently purchased, including those of Peoplesoft.

After Oracle acquired PeopleSoft and announced “Project Fusion” to pull all the different business applications together, it seemed this was viewed as an opportunity to transition newly acquired customers to Oracle’s own application server (OAS). However, last week Oracle announced that Project Fusion would now support IBM’s WebSphere application server as an alternative. In effect, this is recognition by Oracle of IBM’s domination in the enterprise application server market and preserves a pre-acquisition agreement reached in 2004 between IBM and PeopleSoft. The announcement is also face saving for IBM – this new level of coopetition means there is no hurry for it to review selling Siebel OnDemand.

Still, it is unlikely that Oracle and IBM are going to be seen walking down the street holding hands. The actually process of making Oracle’s newly acquired diverse range of business applications work on IBM’s application server will fall to third parties. The announcements is not just good news for customers who do not want change forced upon them, but for the VARs and integrators who will end up making it all work on the ground. Plenty of work for the coopetition brokers then.

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