Gates Sounds Off On Oracle-Siebel Deal

Oracle's $5.85 billion acquisition of Siebel Systems

Gates shrugged off Oracle&s purchase of the CRM pioneer on Tuesday in an interview with CRN at Microsoft&s Professional Developers Conference in Los Angeles.

"Well, Larry predicted that the software industry would consolidate, and through billions of dollars in his spending, he's managed to make his prediction come true," Gates said, referring to longtime Microsoft rival Larry Ellison, Oracle&s CEO.

"These mergers really don't change all that much over night. I didn't expect Oracle to buy Siebel, but they did," Gates said.

Microsoft remains the vendor partner of choice for the channel, despite Oracle&s and IBM&s claims that they are more ISV-friendly than the Redmond, Wash.-based company, according to Gates.

"Historically, the main company we really competed for partners with was Novell. They had that as a huge asset, and because of some missteps in their software strategy, we've been a huge beneficiary,” he said. “They didn't generalize their platform soon enough. Numerically, there still may be more Novell partners than Oracle, IBM or SAP partners."

Gates reiterated Microsoft's stance that it doesn&t rely on its own consulting services as a huge part of its profit-and-loss statement, unlike IBM and Oracle. "Those vendors have to be willing to give up a substantial part of their revenue stream to generate money for partners,” he said. “They have quota-driven services P&L. It's a huge part of their business."

Though Microsoft Services aims to at least break even in terms of P&L, it focuses more on how quickly it can get into and out of partner engagements, Gates said.

"With IBM and Oracle, it's economic. They measure themselves by how long they can stay in. Keeping the customer as uneducated as possible works to their advantage,” he said. “You can see that in a deep way in product design. ... I dare you to name all the [IBM] WebSphere products."

Gates kicked off the Professional Developers Conference with the first public showing of new Office 12 interface perks and Windows Vista innovations.

Asked if Microsoft might revisit an earlier plan to buy SAP in reaction to the Oracle news, Gates said, "That hasn't come up."

As for enterprise CRM, Gates said Microsoft would continue to scale up its own CRM offering for "more demanding situations" and continue to work with Siebel and SAP.

On another competitive front, Gates said Microsoft remains committed to leading the world in search technology. Though Google leads now in Web search, "we think we can build it better," he said.

Microsoft is offering a software development kit for extending its MSN search. Gates also maintained that Microsoft already offers the "best-reviewed" desktop search.