Oracle on SaaS and the SMB Market

There has been a lot of chatter "Larry Ellison Saying No to SaaS" in the blogosphere based on a post on Information Week.  It has been picked up on ZDNet and Intelligent Enterprise blogs as well.  Here is part of the transcript from Oracle's most recent earnings call.  You be the judge:

"It’s very different than SAP’s strategy which is to go after small companies; small companies with their new Business ByDesign, formerly known as A1S product. Now, we see the problem in that because we’ve looked at going down market. We’ve looked very closely at it, and we think it’s very hard to make money because there is no synergy. To go down market you need a new product and new product development teams. You spend a lot of money developing a whole new product for the low end. But you also need an all new sales force because we don’t call on those customers. We don’t call on small businesses, and it’s very expensive to call on small businesses. It’s very expensive to do ERP implementations in small businesses. The cost of sales is high. The cost of implementation is high. There are virtually no synergies in sales, marketing, and product development and support.

So while we think it’s an interesting market — the small market — because it’s large, we just haven’t figured out a way to make a substantial profit in that market. We think it’s hard to make money. Our strategy: add more value, go upstream, sell industry-specific software to our existing customers, and we’ll watch and see how SAP does going after small companies. Especially with in Software as a Service which we think is very interesting, but so far no one has figured out how to make any money at it."

Does this sound like that he is "saying no to SaaS"?  What do you think? 

Comments

[Romuald]

Well, I wouldn't say he is saying no to SaaS. I understand it more like "no to the small market" as he is calling it.
I still disagree though with some of his comments on SaaS ("so far no one has figured out how to make any money at it."). Knowing how he is involved with NetSuite, my guess is that he means "no one has figured out how to make huuuge amount of money"