Battle of the Heavyweights

What is the future of the software industry? If you ask the industry's two most powerful players you will get two very different answers. Bill Gates, Chairman and CEO of Microsoft Corp., holds the lion's share of the software industry but faces a challenger in Larry Ellison, President and CEO of Oracle Corp. Both men are considered visionaries and are proven successes, each heading a company whose net worth can be measured in billions of dollars. But when it comes to the future of their industry, these two rivals hold very different opinions.

Ask Bill Gates and he will tell you that "the key theme is the idea of the PC as communication tool."3 With the explosive success of the internet, the focus of the software industry has shifted to communication.

"You'll find that the PC will take on new forms," said Gates, "you'll see kiosk PCs and portable PCs that will all be hooked up into a unified network that provides a rich set of applications."3

Larry Ellison agrees that the future is in communications and sees the shift from a desk-top centered approach to a network-centered approach as his chance to take the industry reins from Bill Gates. He is proposing a "network computer" which will render the PC obsolete thus giving Oracle Corp. a means of overtaking Microsoft Corp.7

"A PC is a ridiculous device; the idea is so complicated and expensive," said Ellison.3 "What the world really wants is to plug into a wall to get electronic power and plug in to get data."

Oracle, the market leader in relational databases, would be poised to make a killing if PCs became outmodeled. Not surprizingly, Bill Gates is critical of Ellison's "network computer" or NC.

"You'll still need a way of storing the applications that you download from the network, and your personal data," said Gates, who maintains that PCs will not turn into "dumb" terminals.3

Ellison has rallied support for his NC, also known as a Web PC, from companies such as Sun, IBM, and Netscape who are wary of Microsoft's near monopoly. Several companies including Olivetti, Nokia, Uniden, and Acorn Computer have even announced plans to build NCs. Despite a large amount of sKepticism among industry analysts, Ellison remains confident.7

"Everyone thinks that Microsoft's dominance is an inevitability," said Ellison. "Of, course, everyone thought that IBM's dominance was an inevitability too."7

Is Bill Gates worried? It doesn't appear so when listening to talk from the Microsoft camp. Jim Allchin, the director in charge of high-end server software at Microsoft points out that "a large chunck of Microsoft's $2.1 billion in R&D spending is going to our server business." Bill Gates also appears confident of meeting the challenge.7

"We win because we hire the smartest people," said Gates. "We improve our products based on feedback, until they're the best. We have retreats each year where we think about where the world is heading."5

Is Ellison up to the task of dethroning Bill Gates and becoming the king of software? He certainly thinks so.

"We're very ambitious," said Ellison, "we want to be the No. 1 software company in the world."2

Larry Ellison Bio

Bill Gates Bio

References cited and other links

Back to the top Megan Katovich
last revised Dec. 3, 1997
Copyright Megan Katovich