Oracle Prods Partners in Billion-Dollar NC Push

Oracle Prods Partners in Billion-Dollar NC Push

By Neil Munro
Staff Writer

To promote use of their new network computer technology, Oracle Corp. executives are trying to raise $1 billion in donations from a loose partnership of industry allies.

Rival Microsoft Corp. and its founder, Bill Gates, plan to boost giveaways to more than $100 million per year.

Oracle has already launched its own project, dubbed "Oracle's Promise," which is distributing $100 million in cash and products to U.S. schools. The company's executives are now trying to raise another $900 million from "any other big companies that we deal with," said Jack Pellicci, who heads Oracle's worldwide government sales unit. Potential donors include IBM Corp., Armonk, N.Y., and Sun Microsystems Inc., Mountain View, Calif., Pellicci said.

Oracle's push for increased giving matches its aggressive promoting of its network computer - dubbed NC - architecture, which threatens to undermine the desktop computer technology promoted by Microsoft.

Oracle's NC technology is backed by its allies, IBM, Sun, Netscape Communications Corp., Mountain View, Calif., and Novell Inc., Provo, Utah.

To promote the NC, these five companies are cooperating on technology development and marketing plans. As a child, "I always did better in fights when my five brothers were with me," said Netscape's CEO, James Barksdale. If free distribution of early versions of its Navigator software could be counted, Netscape has already given away software worth up to $1 billion if sold over the counter, he said.

Although it spends millions of dollars on donations, given mostly to schools, IBM has not joined Oracle's program, said IBM spokeswoman Kendra Collins. IBM is one of several hardware vendors building NCs.

NC computers rely on high-quality, low-cost communications networks and Sun's Java computer language to share software and data. By sharing software and data over a network, the NC computers can be manufactured and maintained for less than the desktop computers demanded by Microsoft's Windows operating system, argues Larry Ellison, Oracle's chief executive officer.

In response, Microsoft has tried to cut the purchase and annual operating costs of its software and has proposed NC-like devices, which it calls the NetPC. Microsoft and Sun are also fighting a legal battle over Sun's ability to rate Microsoft software's compatibility with the Java computer language, while Sun and Netscape are backing the Justice department's charge that Microsoft violated an antitrust agreement.

Although charitable giving helps companies burnish their public image, it also helps them sell their products, said Audris Tillman, a research analyst with the Conference Board Inc., a nonprofit research center based in New York. A donation "increases awareness of companies' products. ... That's really what it is all about these days," she said.

In 1995, IBM donated $65 million worth of hardware and software, mostly to schools and colleges, while Sun's donations are likely to be roughly $2 million in 1997. However, Sun officials may soon give away hundreds of so-called Java desktops, one element of the NC technology family, which are high-powered computers that use the Java computer language, said Andrea Gooden, who is a program manager for donations at Sun's corporate affairs office. "To the extent that we can seed a market [for Sun's products], good," said Gooden.

In the 12 months up to June 1996, Microsoft donated $62.1 million in software and $11.1 million in cash to local and national charities. In the 12 months up to June 30, 1997, Microsoft donated $45 million in software and $14 million in cash. Also, Microsoft chief Bill Gates pledged to give $200 million in cash to libraries over the next five years.

Additional gifts were made by the companies' marketing units, said Barbara Dingfield, Microsoft's director of community affairs. For example, Microsoft's Skills 2000 program, which donates Microsoft technology to education centers, "is clearly there to get our platform out to colleges," she said.

Dingfield said the company does not track giveaways by its marketing divisions. "It is almost impossible," she said. Her deputy, Sarah Meyer, said Microsoft hopes to develop an international strategy by the end of 1998 to guide future donations worldwide.

Oracle's giveaways may make sense because it is difficult to compete against Microsoft's dominance of the desktop operating system, said Jamie Love, director of the Washington-based Consumer Project on Technology, headed by consumer advocate Ralph Nader. Customers are reluctant to change software suppliers, partly because they also have to re-invest in related software, training and hardware, said Love.

"It is very difficult to break in. ... People tend to buy things that people they know have had experience with," he said.

Last month, Love helped organize a summit on Microsoft's business strategy. The summit, which featured Microsoft's business rivals, was dismissed as an "ambush" by Microsoft officials, who declined to attend. Summit organizers particularly targeted Microsoft's giveaways of its Internet Explorer browser software, which is fast gaining market share from Netscape's Navigator software.

The importance of donations also is seen in Asia, touted by many high-tech executives as an enormous market after 2000. Thus, many high-tech companies are giving away millions of dollars worth of products in the hopes that they can establish themselves early.

For example, IBM Corp. donated computers and software worth up to $62 million to four Chinese universities, said Robert Timpson, president of IBM's Asia Pacific business unit, based in Tokyo. "The payoff is way down the road," he added.

In the Philippines, Oracle Corp. announced Nov. 20 that it would allow a Philippine school into its worldwide Oracle Academic Initiative. Up to $50 million is to be spent installing Oracle-backed technology in 50 schools worldwide under the program. Oracle is already working with the government-backed telephone company, the Philippine Long Distance Telephone Company, to build a network of NCs for education. "We intend to do this all over the world," said Ellison.

On Nov. 21, Microsoft CEO Bill Gates gave Philippine President Fidel Ramos a license worth up to$1 million for Microsoft software already in use by the Philippine government.

Throughout Asia, Microsoft is also giving away its software, said IBM and Oracle executives. "They are all over the place giving away the software," said Pellicci. In China, Microsoft is giving away its software to university administrators and professors, he said, while Oracle only donates its networking and database software to university faculty, while selling it to university administrators.

Microsoft's software is already widely used in many Asian countries, partly because of widespread piracy. One advantage of this piracy for Microsoft is that millions of Chinese computer-users are already familiar with the company's software and so will likely buy products and services backed by Microsoft.

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