I was flying back from San Francisco last week… I feel like I spent a month in California—not that I’m complaining—I’m very fortunate to be part of what’s happening in this industry and the innovations that we’re building around live TV. The latest journey started at VMworld 2010 on the last days of August into early September. Later that month we decided to drop in the Cube at Oracle OpenWorld and this past week we hit the Hitachi Information Forum in Santa Clara.

VMware as IT Economy

VMworld was like Woodstock. Everyone was open, happy, collaborative – it was awesome. Paul Maritz and Tod Nielsen and the rest of the VMware management team talked incessantly about the ecosystem and how for every dollar spent on VMware licenses, fifteen dollars are spent within the ecosystem. Large established companies like IBM, HP, Microsoft, Dell, Verizon, EMC and NetApp came on the Cube along with smaller firms such as Fusion-io, Falconstor, Isilon, Terremark and many others. They all struck a similar theme – VMware is the engine that is driving the IT economy and if they add value beyond the hypervisor they can solve customer problems and make more money.

To those VMware skeptics out there, I get it. VMware has huge ambitions and is profit-driven. It is majority owned by EMC and three EMC-ers, Joe Tucci, Jack Egan and David Goulden sit on the board and are also on the Mergers and Acquisitions Committee. Paul Maritz, a former Microsoft legend and his management team – which comprise the likes of Tod Nielsen, another former Microsoft exec – are ambitious, valuation-driven people. They want to win and they are happy to gobble up more and more of the stack through a combination of R&D and acquisition.

Open Ecosystem = Win-Win

VMware realizes its path to profits is paved with support of an open ecosystem that is supportive and collaborative. By fostering open cooperation VMware can solve more problems for customers and raise the tide for all ships, including the mother ship. The partners all have similar but different strategies. Everyone strives to be the best at VMware integration. But there are differences. IBM will blanket cover any big trend to tip the scales in its services-oriented favor. HP will out-supply chain most other guys and compete on meeting its promises and delivering great service at competitive prices. EMC will keep betting hard on VMware and it understands that to mess with the balance of the ecosystem would be idiotic – and EMC management isn’t foolish. Smaller firms see VMware as a disruptive force they can leverage.

The VMworld 2010 tone reminded me of Comdex in the 1980’s with grownups in attendance (and no slot machines). There seem to be endless opportunities, tons of innovation, startups galore and an overall good feeling. Make no mistake – If it plays out VMware will profit more than any company in the ecosystem and I guess that’s the benefit of being innovative.

How Does Oracle Compare?

Contrast that with Oracle OpenWorld. The name itself says it all. Oracle is so confident of its position that it has the audacity to call its premier event “Open.” OpenWorld is anything but in my opinion. It should be called Oracle ClosedWorld. Or OracleMy-Way-or-the-Highway-World.

To be clear – Oracle and its CEO are very impressive. Its resources are vast; its M&A moves are among the best in the industry, if not the best and the company is ruthlessly competitive. So much so that I believe one of its tactics is to suck “partners” into its big event to support Oracle, bring in their customers and then throw the partners under the bus and try to steal those prospects. For every fifteen dollars spent within Oracle’s ecosystem it looks to me like Oracle would like to capture at least 50% of the opportunity for itself – maybe more.

The case in point was Larry Ellison’s keynote on Wednesday at OpenWorld. Earlier in the show, ‘partner’ Michael Dell was on stage talking about Dell and how it adds value and partners with Oracle. To thank Dell for its support, later in the week, Ellison skewered Dell by insulting Saleforce.com’s Mark Benioff saying that if he really wanted to do cloud computing he’d get rid of those one thousand five hundred Dell servers running Salesforce software and replace them with 300-400 Oracle boxes. Ellison that night hammered other partners too including RedHat, EMC, NetApp; and of course IBM—comparing its products to the competition by re-writing facts and skewing data points to make Oracle look dominant.

As one customer on the floor said – “I don’t like buying software from Oracle, why would I buy servers and storage from the company?” Good question. SiliconAngle’s John Furrier on the Cube likened Oracle to an old line telco– A big profitable monopoly extracting rents from customers. Don’t think Oracle is a monopoly? Consider how Oracle approaches licensing in VMware shops.

More than one customer talked to me about how Oracle puts the screws to them when they want to use VMware to virtualize Oracle software. Here’s a summary of the conversations that were relayed to me.

Customer: VMware is a strategic initiative for us. We’re putting a lot of effort into VMware and we want to virtualize our Oracle apps.

Oracle: Why would you want to do that?

Customer: Because we’re saving tons of money with VMWare and its simplifying our lives. It’s allowing us to do more with less and our CIO is 100% behind this.

Oracle: Well you’re not going to save money on Oracle if you move to VMware.

Customer: Huh?

Oracle: Yeah – you go to VMware and we’re going to change your licensing and start charging you per VM.

Customer: But that will kill us. Our CIO is going to be pissed – he’s going to go ballistic.

Oracle: Yeah. So you’d be much better off looking at OVM.

Customer: You can’t do this – we don’t want to use OVM, OVM sucks compared to VMware.

Oracle: We can do this and we will – I promise. But don’t worry, OVM is getting better – trust me.

What’s the customer’s option? Move to DB2? Sybase? Good luck migrating.

Defining insanity

What’s that old saying about doing things over and over and getting the same result? Partners and customers need to wake up and realize that Oracle is at war with the world. It used to be anything software-related Oracle wanted to own. Now that it has Sun, nothing hardware is safe. Customers: Oracle is out to squeeze you for every penny possible to maximize its profits and increase its power. Vendors: Oracle either wants to destroy you or buy you.

What can you do? Don’t get locked into Oracle. Negotiate with Oracle by reducing your reliance on the company’s products wherever possible. You must be willing to walk away from Oracle (or at least make Oracle think you’re willing to walk)—they won’t cave if they think you will.

Treat Oracle negotiations like a project. Coordinate all Oracle buying efforts, force a single point of sales contact for all purchases and negotiate hard. Bring your best lawyers to the table, move to open systems, only do business with Oracle where you absolutely have to or where you don’t care if you’re spending way too much. Call IBM, call SAP, call VMware, call Salesforce.com, call NetApp…bring them to the table and learn from them.

And support open source initiatives like Hadoop and pray that Oracle doesn’t buy out that movement too.

The IT industry doesn’t need more monopolies and neither does your business.