Oracle vs. HP: the sniping continues

March 25, 2011: 11:40 AM ET

Oracle and Hewlett-Packard rarely miss an opportunity to diss each other. The latest round of press releases and quarterly earnings calls are no exception.

Oracle's Safra Catz led the company's latest charge against HP

Oracle's Safra Catz led the company's latest charge against HP

Earlier this week Oracle (ORCL) issued an oddly-worded announcement saying it would halt all development on software compatible with Intel's (INTC) Itanium microprocessor, and took the opportunity to point out that HP (HPQ) CEO Leo Apotheker did not mention his plans for Itanium in a recent presentation on his company's roadmap. HP responded with its own news release, stating that it remains committed to Itanium-based server platforms and that Oracle's announcement was a "shameless gambit to limit fair competition." Oracle answered with yet another statement claiming HP is "knowingly withholding" information from its Itanium customers.

The sparring continued on Thursday, during Oracle's quarterly earnings conference call with analysts. (Speaking of earnings, Oracle had another strong quarter--profit surged 78% and sales rose 37%). CEO Larry Ellison wasn't on the call because he was serving on jury duty, so president Safra Catz delivered this quarter's official jab at HP. Catz said Oracle's hardware margins were strong and that the company's purchase of Sun Microsystems would deliver a $1.5 billion profit in the first fiscal year. By contrast, she implied that HP paid too much for 3PAR, a data storage provider it bought in 2010. "And had we paid for Sun based on the HP 3PAR multiple, it would've cost us nearly $140 billion," Catz told analysts. "Don't worry, we wouldn't do that."

HP and Oracle's tit-for-tat makes for entertaining fodder for those of us who cover (and follow) tech news. But what's behind this latest war of words?

It all started last year, when Oracle bought Sun Microsystems for $7.4 billion. The acquisition gave software giant Oracle a considerable hardware business. It also meant increasing competition with the likes of HP.

Of course, the animosity only intensified when HP pushed out former CEO Mark Hurd last summer and Oracle's Ellison (also Hurd's tennis buddy) appointed him co-president at Oracle. Ellison publicly described HP's decision as the "worst personnel decision since the idiots on the Apple (AAPL) board fired Steve Jobs many years ago." And that's not all. Shortly after, HP named former head of SAP (SAP) Leo Apotheker as its new CEO. At the time, Oracle and SAP were in the midst of a tense copyright suit, and Ellison demanded that Apotheker be called to court as a witness (Apotheker never appeared in court but Oracle eventually won a $1.3 billion settlement from SAP).

Now, the tech giants are back to duking it out over processors and servers. Oracle's latest announcement to stop software development on Itanium processors could end up hurting HP and its line of Itanium-based servers. Oracle claims its decision makes sense given that Intel's Itanium is nearing the end of its life, and that companies like Microsoft (MSFT) and Red Hat (RHT) have already stopped developing software for Itanium. But HP says Oracle is just trying to take out competitors in hopes of pushing its own line of servers and processors, which it inherited from Sun.

"Oracle continues to show a pattern of anti-customer behavior as they move to shore up their failing Sun server business," Dave Donatelli, an executive vice president at HP said in a press release. "We are shocked that Oracle would put enterprises and governments at risk while costing them hundreds of millions of dollars in lost productivity in a shameless gambit to limit fair competition."

Do those sound like fighting words? Definitely. And I wouldn't expect either company to cry "uncle" anytime soon.

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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