Customers at the whim of public software company

Thomas Wailgum, writing about Oracle’s 2009 1st quarter results, makes some telling comments.

it becomes clear that Oracle is trapped in the age of foolishness and epoch belief that shareholders are more important than customers, while those customers are in the worst of times and full of incredulity.

Oracle’s profits rose by 4 percent year-over-year to $1.12 billion, but revenue fell by 5 percent to $5.1 billion … New software license sales fell 17 percent … A neat trick, did Oracle pull: Increasing year-over-year profits while revenues fell … Oracle’s enterprise software maintenance- and support-related revenues grew 11 percent to $3.1

In effect, Oracle is telling its customers that they, the source of the company’s revenue, are not as important as the shareholders. The way Oracle has increase revenue is by increasing software maintenance that its customers pay.

The question those customers should be asking is “what value are they getting from increased maintenance.” In other markets, a supplier would lose customers if it treated them in the same way.

Of course, there are alternatives. Privately-held software companies are not accountable to external shareholders and have a long-term perspective, rather than the short-term one that drives public companies who rely on stock markets for approval.


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