The Big Fight: Oracle vs. Microsoft

By Richard Morochove

First published November 21, 1996

SAN FRANCISCO -- In this corner is challenger Oracle CEO Larry Ellison and the NC (Network Computer). In the opposite corner is reigning champion Microsoft CEO Bill Gates and the NetPC. The low-cost computing fight has begun. The only sure winner is the computer consumer who will pay less for simple computing devices hooked up to networks, including the Internet.

The NC was the star of Oracle OpenWorld, a conference and trade show held here at the same time and just a few hundred miles north of Microsoft’s Professional Developers Conference in Long Beach. Oracle is the world’s second-largest independent software company with annual revenues of just over $4 billion U.S., about half the size of Microsoft.

NCs won’t replace all PCs according to Ellison, “because they would take up a lot of room in dumpsters.” More seriously, he conceded that NCs won’t be suitable for everyone, but they will serve the needs of those who use PCs for e-mail, word processing, accounting data entry and other simple applications.

Bill Gates and Intel CEO Andy Grove have been solidly against the concept of the NC. After all, a device that doesn’t require Windows and a Pentium processor can’t be any good. Any good for the interests of Microsoft and Intel, that is.

Yet after months of railing against the NC, a few weeks ago Microsoft hastily announced a design for the NetPC, a competing device. It looks a lot like an NC with Windows that sells for about twice the price.

Microsoft says the NetPC will appeal only in the corporate environment, while Oracle says the NC will also be enormously popular in homes. Cutting through the hype, the difference between the two positions comes down to a question of transmission bandwidth.

Microsoft believes the 28.8Kbps speed delivered by today’s modems is too slow for the effective use of these devices. Corporations can achieve higher speeds by hooking up to their own networks, while consumers don’t have that option.

Oracle believes its lean and efficient software can operate effectively at today’s modem speeds. Faster speeds on the horizon, from the Wave service of cable TV providers and ADSL from telephone companies, should make much higher speeds readily available to most homes.

This fight between Ellison and Gates isn’t solely about low-cost computing. It also concerns who’s in charge of the computer industry and mixes in the personal animosity between the two software rivals. Referring to Microsoft, Ellison said, “The idea the world could be controlled by one company is shocking and unacceptable.”

Ellison isn’t ready to take on the entire computing establishment at once. He’s concentrating his attack on Gates, while holding out an olive branch to Intel’s Andy Grove. The NC will use either one of two processors, one from ARM (Advanced RISC Machines) and a Pentium from Intel.

Since the ARM chip costs about $25, it will be the processor of choice in cost-sensitive NCs, such as those designed for the home. The Pentium-based NC will be more expensive, but Ellison believes corporations will pay more for a device with Intel inside.

Oracle has developed a mini-operating system for the NC and a suite of applications it calls Hat Trick. Key applications will include e-mail and personalized information retrieval. Although a Web browser is included, Oracle doesn’t believe the World Wide Web will be used by the average consumer. The company believes the most attractive application will be the automatic delivery of information keyed to business and hobby interests.

One of the key elements in the system will be NC SmartCards. You’ll identify yourself by slipping the card inside the SmartCard reader in the NC. In addition to a security function, necessary to support online shopping, the SmartCard will also recall your configuration preferences from the central server. You’ll be presented with a familiar desktop interface each time you sign-on, even if you are using a different NC at another location.

Thomson Consumer Electronics, which markets TVs and VCRs under the RCA, ProScan and GE brand names, announced at OpenWorld a TV set-top device based on Oracle’s NC. The device is smaller than a VCR and designed to connect to a standard color TV. It should reach consumer electronics dealers by the spring of 1997 and sell for about $400.

Ellison predicts more than 40 million NCs a year will be sold by 2001. By that time he believes NC functions will cost less than $100 and be integrated into many common devices such as TVs and telephones. CW