SENSEX NIFTY
Aug 14, 2010, 03.52 PM IST | Source: Reuters

Lawsuit may signal era of Oracle, Google tensions

Leading Web search provider Google Inc and No 2 business software maker Oracle Corp are not usually viewed as business rivals. But a patent dispute between the two technology companies suggests they see each other as exactly that.

Lawsuit may signal era of Oracle, Google tensions

Leading Web search provider Google Inc and No 2 business software maker Oracle Corp are not usually viewed as business rivals. But a patent dispute between the two technology companies suggests they see each other as exactly that.

Oracle, led by its brash Chief Executive Larry Ellison, filed a lawsuit on Thursday that accuses Google's increasingly popular Android mobile technology of violating patents that protect Oracle's Java software.

The move pits two of Silicon Valley's most successful companies against each other, as they expand beyond their traditional turfs in search of new growth opportunities.

Oracle bought the Java programming language through its acquisition of Sun Microsystems in January, gaining exposure to the fast-growing mobile phone industry, where Google's Android mobile software is growing market share.

And Google, led by former Sun chief technology officer Eric Schmidt, is gradually gaining momentum in the enterprise computing market, where Oracle currently dominates.

"There is a battle emerging," said ITIC analyst Laura DiDio. "If this were a hockey game, the lawsuit would be the face off to determine who will control the puck."

Over the past five years, Schmidt has pushed Google to aggressively develop cloud-computing products for businesses, at a time when Oracle was treading more cautiously into the new space. Cloud computing systems process information over the Internet, storing data at remote facilities instead of local computer systems.

"Google is entering the enterprise market in a very subtle way," said Global Equities Research analyst Trip Chowdhry. "You cannot underestimate Google, though, because they are a new generation company and their cost structure is a lot more efficient than Oracle's."

THE NEXT BATTLE: PHONES

The two emerging rivals are also jostling to expand sales of their technology to the consumer electronics market.

Schmidt has his engineers hard at work cranking out new versions of the Android and Chrome operating systems for mobile devices and personal computers.

Ellison has said he wants to see Oracle develop more Java applications for mobile phones and netbooks.

IDC analyst Al Hilwa said the Java Micro Edition technology, which Oracle licenses to handset makers including Nokia and Motorola, gives it an important role in the mobile phone market.

Most of the Java ME licenses are for low-end phones, rather than smartphones, Hilwa said.

As smartphones become increasingly prevalent, however, Oracle risks losing its place at the mobile party "if they don't own some asset or leverage some asset," he said.

James Gosling, the creator of Java, told Reuters in an interview that Oracle's lawsuit was filed only after the failure of protracted technology licensing negotiations with Google that began long before Sun sold itself to Oracle for USD 5.6 billion in January.

"This is an ongoing game between Oracle and Google," said Gosling, who resigned from Oracle in April. "The acrimony does nobody any good."

A Google spokesman said the suit was baseless, but declined to comment on any discussions with Sun or Oracle.

Some analysts said they were surprised by the lawsuit as the cost of licensing the technology was likely relatively low for Google, perhaps lower than the legal fees it will incur.

They speculated the two companies may have had trouble resolving the disagreement due to striking differences in the way they approach problems.

The outspoken Ellison is described within the industry as a micromanager who has no patience for unprofitable projects, or workers who don't perform to his standards.

He may have balked at the thought of letting Google get by without paying for the technology when others like Nokia and Research in Motion (RIM) pay for rights to use Java. Apple Inc does not use Java in the iPhone.

"At the bottom line I think it's a sensible business move for Oracle to mine its newly acquired patent portfolio and try and get some money out of it," said Jean-Louis Gassee, a partner at venture capital firm Allegis Capital and a former Apple executive.

The more measured Schmidt, who once led Java development, regularly invests in ventures that do not offer immediate returns, in an effort to better understand the marketplace and find the next hit products.

"We don't know if (Oracle is) trying to take on Google over Android because they perceive Android as a long term strategic threat or if they're just trying to monetize their IP," said Gartner analyst Anne Lapkin.

ADS BY GOOGLE

video of the day

Explore Moneycontrol

Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.