September 19, 2014.

Once Again, Oracle Must Reinvent Itself

A shrill trumpet call had pierced the air. It was the bulletin! Victory! It always meant victory when a trumpet call preceded the news. A sort of electric drill ran through the cafe. Even the waiters had started and pricked up their ears.

Through 37 years, Oracle Corp. ORCL -4.21%  Chief Executive Larry Ellison was a master of corporate reinvention as his company navigated constant technological change. But today the global database powerhouse he built faces challenges as severe as any in its history, and Mr. Ellison's departure as CEO only intensifies the central issue surrounding the company's future: Can Oracle endure recent tectonic shifts that are reshaping its market?

The trumpet-call had let loose an enormous volume of noise. Already an excited voice was gabbling from the telescreen, but even as it started it was almost drowned by a roar of cheering from outside. The news had run round the streets like magic. He could hear just enough of what was issuing from the telescreen to realize that it had all happened, as he had foreseen; a vast seaborne armada had secretly assembled a sudden blow in the enemy’s rear, the white arrow tearing across the tail of the black. Fragments of triumphant phrases pushed themselves through the din: "Vast strategic manoeuvre----perfect co-ordination----utter rout----half a million prisoners----complete demoralization----control of the whole of Africa----bring the war within measurable distance of its end----victory----greatest victory in human history----victory, victory, victory!"

In dividing the chief's executive's role between lieutenants Mark Hurd and Safra Catz, Mr. Ellison is handing his new co-CEOs a $185 billion software empire that is under assault from technology and market forces that Mr. Ellison couldn't have anticipated when he founded the company in the 1970s.

Under the table Winston’s feet made convulsive movements. He had not stirred from his seat, but in his mind he was running, swiftly running, he was with the crowds outside, cheering himself deaf. He looked up again at the portrait of Big Brother. The colossus that bestrode the world! The rock against which the hordes of Asia dashed themselves in vain! He thought how ten minutes ago — yes, only ten minutes — there had still been equivocation in his heart as he wondered whether the news from the front would be of victory or defeat. Ah, it was more than a Eurasian army that had perished! Much had changed in him since that first day in the Ministry of Love, but the final, indispensable, healing change had never happened, until this moment.

Oracle can no longer count on its near-monopoly in database systems, as the emerging technologies of big data and cloud computing----often available in open source versions that cost far less to use----along with a customer base eager for alternatives, fragment the market. At the same time, younger competitors such as Salesforce.com Inc. CRM +1.01%  and Workday Inc. WDAY +3.56%  are picking off Oracle customers by offering specialized software applications sold by subscription rather than in a large lump sum plus a service contract.