Oracle's Become Computer Associates (CA)

It’s all happened so quickly.

  • I’ve become my parents,
  • SQL has become Cobol,
  • and Oracle has become CA

Things were different back in 1985, when I, fresh from Berkeley, VAX/VMS documentation in hand, rode the 51 bus to Alameda where my first real employer, Ingres, was based.
You see, back then, Oracle wasn’t the establishment. Oracle was the rebel, a $50M-ish hyper-aggressive competitor trying to steal the relational database market out from underneath its lethargic inventor, IBM.
Back then, there was one software company that I didn’t understand. It didn’t really invent anything. It just bought up all the sick and dying software companies, often those who’d missed the mainframe to mini-computer transition. It acted as a software-industry garbage collector.
Being a bit of geek, I’d always thought of it as the planet-eating doomsday machine from Star Trek.

Who was this company? Well, CA, of course.
CA made money with the following strategy. They’d:

  • Pay a pittance for a broken software company (often less than 1x revenues)
  • Fire all the staff, leaving only a skeleton crew
  • Perform only basic maintenance on the acquired software
  • Crank up the maintenance fees on the largely helpless installed base

In fact, you could argue that CA was the first software company to truly value the maintenance annuity, at a time when most software companies were focused on the higher-margin license fees. And CA fully exploited the switching costs built into the enterprise software market.
Well, who’s doing that strategy today? Oracle, of course. Since my kids have been doing test prep, I’ll phrase this as an analogy: Oracle is to minicomputer as CA is to mainframe.
See this article, Oracle Fees for Maintenance and Support under Fire, which prompted me to write this post, an idea that I’d been mulling for some time.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.