Expanding Section: How Oracle’s Application and Database Business Reinforce Each Other

In each case, Oracle combines account control with the strategy of pushing the broadest number of software products into their enormous customer base.

  1. Gaining Database Growth: When Oracle acquires an application, it begins to sell it into its account base, but more than this, Oracle requires an Oracle database license to be sold with the application. Customers can use a different database other than Oracle, but they still need to pay for the Oracle license. As a consequence, this naturally drives Oracle database sales. In effect, Oracle takes away the database choice from customers when they acquire an application.
  2. Comprehensive Software BOMs: By owning so many applications, Oracle can sell very large BOMs to companies, and this allows it to discount some products in the BOM when facing off against a point solution. Even when that point solution is preferred by the business, Oracle’s pricing flexibility can make the acquisition of a point solution look like an extravagance.

Oracle’s application acquisition strategy is designed to give it more account control over its customers and allows it to defend almost any software category against another vendor. This is a very effective short to medium term strategy but runs into complications due to the longer term limitations in forward development of the acquired Oracle applications.