Legalities Outweigh PaaS For Oracle
Maxwell is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The battle between Oracle (NASDAQ: ORCL) and Google (NASDAQ: GOOG) wages on. For those of you unfamiliar with the case, Oracle owns Java, and Google has used some Java scripts in its Android phones. Now, a legal battle is being fought between the two companies as courts try to decide whether or not Oracle can actually hold the patent for the Java technology.
Oracle does not really have a case. The company claims that it holds the patent and copyright of all aspects of Java, including the APIs (application programming interfaces) that allow Java to be used with other programs. I do not think they can do this, since you cannot copyright a programming language, just as you cannot copyright a human language. Java is open-source and freely available to whomever wants to use it. The idea that Oracle can copyright certain parts of Java is just ridiculous. This is a court case that makes me feel uncertain about Oracle stock, as the company seems to be chasing after ghosts for who knows what reason.
I think that Google is still quite safe. Throughout the case, the evidence has been leaning in favor of Google rather than Oracle. In fact, as things stand, courts have ruled that Google did not infringe on Oracle patents. The jury did find that Oracle could copyright Java, but it also found that Oracle could not decide whether or not Google could fairly use Java in its smartphones. This is a huge blow for the company, as we all know that court cases can be expensive. On top of that, they give the company a bad image, even when it is on the "right" side of the case. The court has placed an "indefinite hold on Oracle's quest for damages." Suggestions of a retrial seem questionable, and Oracle will have to wait a while before pushing forward with more charges.
This could have vast effects on Oracle stock. For one thing, it makes the company appear to be wasting money on court cases it cannot hope to win. This is far from comforting for stockholders. In addition, the company now looks bad to the general public as well. Hopefully, Oracle was not relying on the payouts it would have received from this case. If this was indeed its strategy, I guess it will have to think of another strategy now.
One has to question Oracle's attempts to wage lawsuits against stronger companies. In addition, Oracle is facing other legal troubles, as it will soon begin a lawsuit where Hewlett-Packard (NYSE: HPQ) is suing Oracle for breaking an agreement related to the Itanium microprocessor. The legal struggles keep finding Oracle and will likely have a negative impact on the stock.
On a lighter note, Oracle will soon enter the PaaS (platform as a service) market. This could happen as early as next week, which may help keep the stock from dropping with the legal problems. Towards the end of last year, the company announced its plans for the Oracle Public Cloud. This will include "Oracle applications delivered as SaaS (software as a service) as well as PaaS features, including the Java Cloud Service and Database Cloud Service".
This is a significant step forward for the company, technologically speaking. Oracle does not expect to generate huge amounts of revenue from this introduction though. The main idea is to keep the competition from looking more attractive. Regardless, the company will face a lot of competition as it enters the PaaS market. Companies such as Microsoft (MSFT) are already well established in the market, and as a result, these companies present a significant challenge to the slightly less powerful Oracle. That being said, the "tipping point" of PaaS services will not be reached any time soon, so now is a good time to get involved.
In the news for competitors, it seems that there is a fairly good chance that any day now, Facebook (NASDAQ: FB) will make the decision to purchase either Nokia (NYSE: NOK) or Research In Motion (RIMM). I feel that this a good move on Facebook's part. Entering the smartphone arena is relatively necessary if you want to be a successful tech stock in the current market. Experts believe that Facebook is leaning towards a purchase of Nokia at the moment. Nokia has a hardware-operating system partnership with Microsoft. This will certainly work in the best interests of Facebook, as it will be able to make use of Windows software if it does indeed decide to purchase the mobile phone company. Nokia, which supplies traffic data for Microsoft's Bing Maps and other programs, will also benefit, as it will be able to join forces with Facebook. The trio of companies could become a very powerful force indeed. Although Bing is not yet at the same level as Google, it is not that far behind either. One of these days, it will start eating into Google's market share. Facebook is still struggling to recover after its horrid NASDAQ debut, however, so this may not be enough to keep Facebook stock from continuing to drop.
In other news, Microsoft has finally made the Amazon Instant Video app available on the Xbox 360. This will allow Xbox users to view Amazon videos with greater ease. Xbox users have been waiting a long time for this to become available, and it finally is. Hopefully, this will make the splash that Microsoft hopes it will make. New innovations from tech companies are what we need to see in this day and age, and I feel that Microsoft has the right idea. As a result of this improvement, the stock will likely see slight increases in the near future.
Oracle does have potential in its near future, especially as it enters the PaaS market. At the moment though, the court cases will likely overshadow this and prevent the stock from doing very well in a more short-term sense. As the news currently stands, I would suggest investing in companies like Google or Microsoft, but Oracle does not seem to be doomed in any way by its legal difficulties. I believe the stock will only face slight decreases as a result of them.
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