Ellison Steps Aside as Oracle's CEO

Larry Ellison, the driving force behind Oracle since cofounding the company in 1977, is stepping down as CEO, effective immediately. Company presidents Mark Hurd and Safra Catz will lead the company, while Ellison will continue to serve Oracle as executive chairman of the board and chief technology officer.

All manufacturing, finance, and legal functions will continue to report to Catz. All sales, service, and business units will continue to report to Hurd. All software and hardware engineering functions will continue to report to Ellison.

"Safra and Mark will now report to the Oracle board rather than to me," Ellison, who turned 70 last month, said in a statement. "All the other reporting relationships will remain unchanged. The three of us have been working well together for the last several years, and we plan to continue working together for the foreseeable future. Keeping this management team in place has always been a top priority of mine."

"Larry has made it very clear that he wants to keep working full time and focus his energy on product engineering, technology development, and strategy," said Michael Boskin, presiding officer of Oracle's board, in a statement. "Safra and Mark are exceptional executives who have repeatedly demonstrated their ability to lead, manage, and grow the company. The directors are thrilled that the best senior executive team in the industry will continue to move the company forward into a bright future."

Ray Wang, founder and principal analyst at Constellation Research, says, "It's important to know that Larry's stepping down as CEO and moving up to the chairman role. What this means is he's getting out of the hands-on style he's always had, from choosing product names to approving hires. This mean he trusts Mark Hurd on sales, alliances, and external stuff, and he's always had Safra as his number two."

"Now, each executive will do what they do best—Ellison on products, Hurd on go to market, and Catz on the rest. It should free up time for Ellison on product, as he is not directly supervising Catz and Hurd," Holger Mueller, an analyst at Constellation Research, says. "The question is why now. Oracle has missed six out of the last eight quarters, and usually executives don't get promoted, but in this case it is a well worked-in team."

Catz has been with Oracle since 1999 and has served as executive vice president, senior vice president, chief financial officer, and a member of the board of directors. She has been president of Oracle since January 2004.

Hurd joined Oracle in 2010. Previously, he had served as chairman of the board, CEO, and president of HP. He left that post after a sexual harassment investigation. Though the company concluded that Hurd had not violated its sexual harassment policy, it strained his relationship with the company's board. Prior to that, he spent 25 years at NCR, where he held a variety of management, operations, sales, and marketing roles before signing on as its president and CEO.

Denis Pombriant, founder and managing principal at Beagle Research, calls Ellison "unarguably a giant of the tech era," and says he "deserves kudos for not just innovating the [relational database management system] but for his vision and understanding that he had to continuously reinvent himself and his company over the years to remain current."

Still, expectations are mixed as to the company's new leadership structure.

"I do not feel that [Ellison] is leaving the company in particularly good hands," Pombriant says. "While Safra Catz and Mark Hurd are able and adept at their positions, I fear that the CEO arrangement is a recipe for reverting to the mean, for stasis at a time when more innovation is needed."

And, as is often the case with the giants of the software world, comparisons are already being made to when Bill Gates stepped down as head of Microsoft in January 2000.

"We don't expect to see [Ellison] disappear like Gates did when leaving Microsoft," says Rebecca Wettemann, a vice president at Nucleus Research. "Ellison's passion for tech will continue. The past few OpenWorld keynotes from him have shown his true colors—a real passion for the technology."

Pombriant is a little more concerned. "When Gates left, [his successor, Steve Balmer] merely continued the old Microsoft recipe for success. Microsoft needed innovation, but Balmer gave it the status quo, continuing to rewrite the operating system every few years and selling shrink-wrapped boxes rather than looking at new models," he states. "I hope Oracle doesn't do that. They've worked hard to get out front, and it would be a shame if the new arrangement let the competition catch up."

But for all of the buzz around the move, the expectation is that little will probably change at Oracle in the immediate future.

"This is business as usual at Oracle," Wettemann says. "No real reporting relationships are changing."

"Ellison's decision to remain as executive chairman keeps him in the driver's seat, and for that reason, you have to wonder what's really going to change," Pombriant adds.