Lawsuit may signal era of Oracle, Google tensions


Reuters | Aug 14, 2010 | 12:42pm IST

Leading Web search provider Google Inc and No.2 business software maker Oracle Corp are not usually viewed as business rivals. But a patent dispute between the two technology companies suggests they see each other as exactly that. Oracle, led by its brash Chief Executive Larry Ellison, filed a lawsuit on Thursday that accuses Google’s increasingly popular Android mobile technology of violating patents that protect Oracle’s Java software. Oracle bought the Java programming language through its acquisition of Sun Microsystems in January, gaining exposure to the fast-growing mobile phone industry, where Google’s Android mobile software is growing market share. And Google, led by former Sun chief technology officer Eric Schmidt, is gradually gaining momentum in the enterprise computing market, where Oracle currently dominates.

Over the past five years, Schmidt has pushed Google to aggressively develop cloud-computing products for businesses, at a time when Oracle was treading more cautiously into the new space. Cloud computing systems process information over the Internet, storing data at remote facilities instead of local computer systems. “Google is entering the enterprise market in a very subtle way,” said Global Equities Research analyst Trip Chowdhry. “You cannot underestimate Google, though, because they are a new generation company and their cost structure is a lot more efficient than Oracle’s.”

THE NEXT BATTLE: PHONES

The two emerging rivals are also jostling to expand sales of their technology to the consumer electronics market. Schmidt has his engineers hard at work cranking out new versions of the Android and Chrome operating systems for mobile devices and personal computers. Ellison has said he wants to see Oracle develop more Java applications for mobile phones and netbooks. IDC analyst Al Hilwa said the Java Micro Edition technology, which Oracle licenses to handset makers including Nokia and Motorola, gives it an important role in the mobile phone market.

James Gosling, the creator of Java, told Reuters in an interview that Oracle’s lawsuit was filed only after the failure of protracted technology licensing negotiations with Google that began long before Sun sold itself to Oracle for $5.6 billion in January. A Google spokesman said the suit was baseless, but declined to comment on any discussions with Sun or Oracle. The outspoken Ellison is described within the industry as a micromanager who has no patience for unprofitable projects, or workers who don’t perform to his standards. He may have balked at the thought of letting Google get by without paying for the technology when others like Nokia and Research in Motion pay for rights to use Java. Apple Inc does not use Java in the iPhone.

“At the bottom line I think it’s a sensible business move for Oracle to mine its newly acquired patent portfolio and try and get some money out of it,” said Jean-Louis Gassee, a partner at venture capital firm Allegis Capital and a former Apple executive. The more measured Schmidt, who once led Java development, regularly invests in ventures that do not offer immediate returns, in an effort to better understand the marketplace and find the next hit products. “We don’t know if (Oracle is) trying to take on Google over Android because they perceive Android as a long term strategic threat or if they’re just trying to monetize their IP,” said Gartner analyst Anne Lapkin.

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