The tiny firm Oracle hatesNovember 29, 2010: 11:05 AM ET
In the wake of the Oracle's $1.3 billion legal victory over SAP, the software giant is turning its guns towards another business trying steal away its lucrative customers.
It was clear from the beginning of its recently concluded trial against SAP that Oracle wasn't in it just for the money. It got that, though. A federal jury awarded Oracle $1.3 billion in damages stemming from SAP's (SAP) acknowledged copyright infringement of Oracle's (ORCL) software. Still, Oracle really was sending a message about the $16-billion-a-year maintenance and support business associated with servicing its applications. Oracle makes a bundle maintaining its own software on behalf of clients, and it isn't about to give up the fight easily against those, like the shuttered SAP subsidiary TomorrowNow, that aim to siphon away that business.
So who's next in Oracle's sights? That would be a Las Vegas-based startup called Rimini Street that offers Oracle's customers a 50% discount on support contracts and claims to have 350 clients, big and small. "Once we take their customers we provide them with everything they need, including our updates, sometimes ahead of Oracle," brags Seth Ravin, Rimini's founder and CEO.
Predictably, Oracle is suing Rimini, which has countersued Oracle. Rimini is still small: 2010 revenues will hit $25 million. (Bookings that because of conservative accounting policies will be recognized in future years total $180 million, Ravin says.) But the market opportunity is massive. That's why Oracle is paying attention. (The Wall Street Journal last week looked at a handful of third-party maintenance firms.)
It's also well aware that Rimini Street's Ravin has had a front-row seat to the larger dispute. He was president of TomorrowNow when it sold to SAP, where he remained for three months after the acquisition. He says he oversaw sales and marketing at TomorrowNow, not service delivery. He also emphasizes that Rimini Street writes its own maintenance programs for Oracle applications. Its current lineup includes maintenance for PeopleSoft, JD Edwards and Siebel, all products Oracle acquired, as well as certain SAP applications. Next year it plans to begin servicing Oracle's E-Business Suite applications.
If Rimini Street is cowed by Oracle's litigiousness, it's not letting on. "We will not be intimidated out of legal competition," Ravin wrote in an email following Oracle's jury verdict. "Unlike SAP who, for the own reasons, chose a terrible legal strategy trying to "skip" the fact arguments and just focus on capitulation and found out the perils of such a strategy, Rimini Street will challenge Oracle on every claim it has made. And then we will seek to hold them accountable for their anticompetitive actions."
So far Oracle has succeeded brilliantly in its Goliath versus Goliath strategy. We'll see now how it does against a feisty David.
An abbreviated version of this article appeared in the Dec. 6, 2010 issue of Fortune Magazine.