Several years ago, Oracle's (NASDAQ: ORCL) CEO, Larry Ellison, was clear about his vision: the enterprise software market was in desperate need of consolidation.It was actually controversial. But, in the end, it was prescient.
Basically, he has struck a variety of small and large M&A deals -- making Oracle a tough competitor for rival SAP (NYSE: SAP).
True, Ellison will say that consolidation is good for customers; that is, it allows for more efficiency (hey, it's easier to deal with a single vendor, right)?
Although, Ellison can be crafty. No doubt, he has a big-time agenda: lowering competitive forces. For example, last month Oracle raised prices on its software offerings.
Something else: SAP has raised prices on its maintenance contracts (this is according to a recent piece in the Wall Street Journal, which is a paid publication).
All in all, such things are smart. In other words, what choice do customers really have? If you have made huge investments in a platform, it's extremely tough to make a switch (especially for mission-critical software).
However, for investors, this is something to note. The price increases should be highly profitable -- because of the high margins.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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