Oracle Corporation

Date Founded: 1977

Industry: Business software, cloud computing

Corporate Headquarters: Austin, Texas

Type: Public

Oracle is one of the largest and most successful companies in the business software industry. From its beginnings as Software Development Laboratories, Oracle focused on business software, and its premier product was the Oracle relational database which eventually gave the company its name. Although the company may lack the brand recognition of Microsoft and other competitors in the software industry, Oracle posted $40.5 billion in revenue in 2021 and, by May of the following year, had 143,000 employees. In 2022, Oracle’s annual revenue had increased to $42.44 billion. The company is one of the world's largest software suppliers and a leading supplier of cloud-based software services, an increasingly large and competitive market.

Oracle has largely focused on serving businesses rather than consumers, providing services across a number of industries—from banks and insurance companies to defense contractors and automakers, drug companies and high-tech firms, and governments and universities. By the end of the 2010s, it had also become one of the world's leading suppliers of databases, data warehousing, business analytics, and enterprise-level performance management systems, among several other software types. It is also a leading supplier of middleware, software that communicates among other programs running on the same machine or network.

While the company moved its corporate headquarters to Austin, Texas, in 2020, it maintains a campus in Redwood City, California, making Oracle part of the Silicon Valley concentration of high-tech and software companies. The name Oracle comes from the code name of a project its three founders worked on for the CIA while employed by Ampex.

History

Oracle’s origins can be traced to Ampex, where cofounders Bob Miner, Larry Ellison, and Ed Oates met. In 1977 they formed Software Development Laboratories, seeking contracts for producing software. Then Ellison read an article about a relational database management system, and the three sensed a business opportunity. Relational databases, which store information in related chunks, promised users great flexibility in accessing and recombining data. The three, along with Bob Scott, produced the first saleable version of a relational database in 1979, calling it Oracle. Information could be accessed through structured query language (SQL), making the program usable by workers not trained in computer programming.

The developers found a customer in the US Air Force and renamed the company Relational Software Inc. Sales quickly soared, and the company was renamed Oracle in 1982. By the mid-1980s, it was the leading supplier of database software in the world, boosted by a strategy of developing its software for a full range of computing platforms. In 1986 Oracle went public (the same year as Microsoft, Sun Microsystems, and Adobe). A few years later, sales reached $500 million, and in 1989 the company moved to its Redwood City headquarters.

With executives sensing the growing appeal of Internet business, Oracle began offering online processing of transactions in 1989. It also began to market versions of its software aimed at network settings.

In the late 1990s, Oracle tried to gain entry into the hardware field—and simultaneously reduce the clout of rival Microsoft—by promoting the NC, or network computer. These stripped-down, low-cost machines lacked a disk and were meant to connect to network machines that would provide programs and storage capacity. Oracle formed a subsidiary, Network Computer Inc., to make and market the machines. Oracle also campaigned for other companies to join in the new standard. In the end, however, the NC never took off because microcomputers filled the function of network stations. After investing $175 million in the project, Oracle abandoned the idea in 1999.

Oracle continued to grow, however, in part because of acquisitions. The company purchased PeopleSoft in 2005, giving it software used by human resource managers, governments, and universities. This acquisition first had to clear US government antitrust hurdles. The next year, Oracle bought Siebel, which had customer service software. Two years later, in 2008, it purchased BEA Systems, Inc., which developed middleware. Finally, in 2010, Oracle purchased Sun Microsystems, a major supplier of network workstations and owner of the Java programming language.

Throughout the 2010s and into the 2020s, Oracle focused its growth on developing and promoting its cloud computing services. As part of this strategy, Oracle purchased NetSuite, an early leader in the cloud computing industry, in 2016. This strategy helped the company remain competitive into the 2020s and played a role in the company's consistent growth during these years, evident from its increased annual revenue in most years between 2010 and 2022.

Impact

With its broad reach into businesses in all industries and of many sizes, Oracle has had a major impact on how companies work. Even the failed NC had an influence. Many companies were enthusiastic about the idea, which may have suffered by being ahead of its time—cloud data storage and cloud-based software took hold during the second decade of the twenty-first century. The threat that the NC posed to personal computers also led to dramatic price cutting in the PC industry in the late 1990s. The company also became a leader in the cloud computing industry by the end of the 2010s.

Along with success has come criticism. Longtime CEO Larry Ellison, in particular, was the target of complaints about a high-handed leadership style that produced insecurity among the executive staff and often resulted in the dismissal of anyone who gained power and influence within the company. Beginning in 2010, Ellison and the board drew fire for another reason. Shareholder votes rejected the size of the compensation package for the executive team, including Ellison, although most of his compensation was stock options. The board rejected the votes and authorized the compensation. In 2014 the board did vote to reduce Ellison’s stock options from the seven million shares given for many years to three million shares. That fall, he stepped down as CEO, though he remained involved in the company.

In the early years of the twenty-first century, Oracle also came under fire for its business tactics and other controversies. For instance, it conducted audits to ensure that customers complied with the terms and conditions of software licenses. Although it was not alone among software companies in this practice, Oracle was, in the middle of the second decade, charged with using discoveries of violations as a vehicle for pushing customers into buying its cloud-computing services in return for forgiveness. After Oracle sued the state of Oregon for breach of contract in the company’s work to develop the state’s Obamacare health care website, the state countersued, charging the company with poor-quality work and overcharges.

In 2017, Oracle constructed a building on its main corporate campus in California to house a publicly funded charter school, Design Tech High School, that had outgrown its previous location. The school focuses primarily on teaching students coding and digital design, and its location on the Oracle campus is intended to provide the opportunity for students to be mentored by those currently working in the field. Some praised this contribution to the local community, while others expressed concern regarding the influence Oracle would have over the students, arguing that it might be grooming students to be future employees or using the school to promote its products.

Starting in 2020, Oracle also became involved in efforts by the US government to crack down on Chinese social media company TikTok. In August 2020, US President Donald Trump signed executive orders intended to ban TikTok in the US if its Chinese parent company, ByteDance, did not sell its US-based TikTok operations within a certain window of time; Trump cited security concerns over the company's alleged failure to protect the data of its US users. While an initial deal to sell part of TikTok to Oracle and other US businesses had failed by the end of 2020, in June 2022, TikTok announced that it would transfer all data from its American users to Oracle's servers in an attempt to prevent the possible exposure of the personal information of these users to the Chinese government. Pressure to ban TikTok, however, continued under President Joe Biden in 2023, and a new agreement was proposed that would see Oracle and Walmart take partial ownership of TikTok’s American business.

Dale Anderson

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