Update: Oracle buys RightNow for roughly $1.5 billion

The move will give Oracle cloud-based customer service software, in yet another move against rival Salesforce.com

Oracle is buying RightNow Technologies for about $1.5 billion in order to boost its recently announced Public Cloud with customer-service software, the companies announced Monday. The deal is expected to close late this year or in early 2012.

While RightNow has sold cloud-based CRM (customer relationship management) applications, Oracle already has such offerings. But of late, RightNow has repositioned itself as a "customer experience management" provider, focused more on helping companies improve customer support in call centers, social media sites and the web, rather than just tracking sales cycles.

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To that end, Oracle's move is a direct hit against rival Salesforce.com, which added customer-service capabilities with the 2008 acquisition of Instranet as well as the recent purchase of Assistly, and has embarked on a broad strategy centered on tying enterprises to the social web.

In a presentation released Monday, Oracle described how RightNow's products will work as part of a continuum involving its Siebel marketing software, ATG Commerce e-commerce platform, supply-chain applications and Endeca unstructured data search technology, the last of which is part of a pending acquisition announced only last week.

All told, the combination will help companies gain new customers and keep them longer while lowering operational costs, Oracle said in a statement.

The presentation provided some examples of the benefits RightNow customers have gained. Some 40 percent of RealNetworks' customers now resolve issues online, without dealing with a service representative, while call-handling times for Overstock.com have fallen 25 percent, it states.

"This is a shrewd purchase by Oracle because it brings a lot of current thinking about customers and designing the customer experience into Oracle," said analyst Denis Pombriant, founder of Beagle Research. "RightNow has carved out a very explicit niche for itself in multi-channel contact centers and seems to be doing quite well in that space."

RightNow reported $185.5 million in revenue during its fiscal 2010 and has about 2,000 customers, including Yahoo, Toshiba and T-Mobile.

Other potential acquisition targets in the customer-experience market include Amdocs as well as startups such as Stone Cobra, which sells a "system of engagement" that layers on top of CRM applications, knowledge bases and other software.

Along with Salesforce.com, Oracle will compete in the customer-experience market with the likes of Adobe and IBM, both of which have made various acquisitions to support such a strategy.

Meanwhile, Oracle will probably leave RightNow's core CRM applications alone since they mostly serve smaller companies and therefore don't overlap with the likes of Siebel or Fusion CRM, according to analyst Ray Wang, CEO of Constellation Research.

Besides, RightNow's true focus and Oracle's reasons for buying the company lie elsewhere, Wang added.

"At the fundamental heart of RightNow, it's a customer-service company," he said.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's email address is Chris_Kanaracus@idg.com.

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