Google seems to have adopted an “up-front” approach for developing the Android platform based on the Java Virtual Machine, which is owned by Oracle. The initial offer from Oracle to purchase and license the technology was denied and instead Google developed their own version of the virtual machine for the Android platform, while potentially utilizing patented material from the Java Virtual Machine. Even though the recent ruling by Judge William Alsup on July 21st is represented as a victory for Google, the details of the ruling strongly point to a potential win for Oracle in this case. For those who remember the so called “up-front” sales strategy from Oracle, it almost caused Oracle to go bankrupt in 1990 and lead Ellison to call it an “incredible business mistake”. Essentially this strategy required sales people to book as much software license sales as possible up-front. This caused an increase in share value, but later lead to problems when the booked sales did not manifest. Google developed the Android platform without considering the Java Virtual Machine licensing and now may have a hard time proving their case that the Android VM is not a reverse engineered edition of the Java VM. According to Computerworld, Oracle was ordered to lower the damage claim. However the judge also agreed that the advertising revenue that is generated on the Android phones or any other Android device is contributing to the value of the platform and is therefore part of the damage scenario.
Since Alsup asked Oracle to lower the claim, the only reasonable outcome would be that Oracle will receive a percentage of the overall generated advertising income by Google. In essence Oracle would partially own the Android platform and receive royalty licenses for the use.
Based on the ruling Oracle is allowed to grill Google CEO for 2 hours about the patent infringement and the value of Android. If Oracle proves that Google was willing to enter a project like Android without licensing the required Java Virtial Machine patents then Oracle may gain a per unit income as royalties on each click.
It seems that the Android platform is in trouble when you add that the key mobile phone vendor HTC is sued by Apple for patent infringement also. The Apple patents in question are the key elements of the HTC devices on the Android platform.
Even on a smaller scale pirates copy content and use it without considering royalties. For example the book SAP Business ONE Implementation Guide, was copied and publicly available for download on the web within hours of publishing. All the pirated sites can easily be found using the Google search engine. Do I have a case here? Google “The enablement platform for copyright pirates”.
It is hard to comprehend that a company like Google would copy a key element of their mobile platform from a competitor. Technically it should be possible to identify source code cross referencing and reverse engineered components when analyzing the product. That’s why Oracle is doomed to win this case. With this scenario in mind, there may be a new leader on the mobile arena – Hewlett Packard. Their new IOS based devices have a stronger patent backing than HTC. However it is interesting to note that the key developer of the HP mobile platform was actually a former Apple developer. Jon Rubinstein is considered a key creator of the iPod. He then moved to Palm inc, which was taken over by HP. There is at least the potential for a legal battle.
The new SAP ByDesign solution is marginally affected by the current patent dispute between Oracle and Google. However SAP made the decision to elect for the Microsoft Silverlight platform as the GUI for ByDesign. It is interesting that the new generation of ERP will be running on a platform similar to Flash. SAP consequently limits the availability of ByDesign to Microsoft and compabitble platforms at least in theory, because Silverlight is available as a plugin for most platforms as it is sort of a virtual machine for browsers. Silverlight is the Microsoft version of Flash and is closed source. Running silverlight and SAP ByDesign on Apple platforms could be problematic in the future. Indeed the past releases of ByDesign had issues when running dashboards on the Apple iPad. Please note that Flash particularly was closed out by Apple. With this in mind the Silverlight platform can be considered risky at least for the Apple arena of products.
SAPs closest competitor in the SaaS ERP section for upper mid-sized companies is Netsuite. Netsuite is a company based on California that has gained major momentum in the Saas market. With many years of experience in this market they had a chance to fine-tune their offerings and set the standard for SaaS ERP platforms. SAP as the market leader in traditional ERP solutions is largely ignoring the competitor and taking its own time and pace to move forward with ByDesign. At the same time Netsuite is moving towards expanding their offering into the home market of SAP by obtaining official certification for SaaS ERP in Germany. Interesting Note: The key shareholder of NetSuite is Larry Ellison from Oracle.
In a response to the Netsuite challenge SAP has expanded their partner infrastructure and is implementing ByDesign for partners. This is increasing the ByDesign footprint, but may be considered to be an “up-front” strategy by some. Only when their partners are adopting SAP ByDesign as their own ERP system, can the solution compete efficiently.
NIEFERT has experience in adding value to SAP solutions. The N2ONE Portal solution was initially designed to overcome the shortcomings of SAP Business ONE. The SAP Business ONE solution from SAP has no competitive web eCommerce solution. The only fully integrated concept is provided by the N2ONE Portal with integrated Credit Card Processing and tools for marketing. With this concept a valid competitor to Netsuite is available with SAP as a backend.
What’s the purpose of reviewing the above trends about Oracle, Google, Apple, Microsoft, SAP and NIEFERT? Read on and review our industry predictions.
3 Industry Predictions:
Prediction 1: Oracle will get a license income from all Android Systems and Advertising income.
Prediction 2: Oracle will expand its footprint into key mobile markets and will further expand with SaaS solutions based on Netsuite.
Prediction 3: Apple remains the true leader of mobile world. HP may experience a strong entry in the mobile market, but may run into legal battle with Apple.
Trend: Oracle and Apple are leading the growing markets. SAP ByDesign must prove its position with actual customer success stories and partner adoption.
Merger Potentials based on the above scenarios: Oracle merges with Apple. SAP merges with Microsoft. (Note: These are scenarios based on the industry predictions)
Links with more information
Source Code Cross Referencing
eWeek Oracle Google Ruling
cNet: HTV versus Apple
Oracle Up-Front Bankruptcy
HP and Rubinstein
NetSuite Certification in Germany
N2ONE Portal competing with NetSuite
Patent Infringement News
SAP and Microsoft Merger
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