In the late 1990s, Oracle co-founder Larry Ellison came up with an outlandish sounding idea that would eventually become something we view as perfectly ordinary today: paying monthly for software that lives somewhere else.
According to a piece in the August 31, 1998 issue of NetworkWorld, as Oracle prepared new server software, Ellison hinted at a different business model.
He told reporters the company would soon begin leasing its Oracle Applications Release 11 suite instead of selling it in the usual way. The plan was to charge companies a monthly fee while Oracle ran and maintained the software itself.
No client software on the desktop
The service, called Oracle Business Online, would deliver financial, manufacturing, and human resources applications via a web browser. That meant no client software on the desktop, which was a bold approach in the late twentieth century.
Some observers saw the idea as a logical return to older computing models.
“It’s hard to pin Larry down about the details,” said Ernie Martinez, president of Global Software Consultants. “At first the service sounded like a time-sharing deal — you’d buy time, for example, on Oracle Financials. But then he backpedaled and seemed to be saying, ‘No, you still buy the applications, but you don’t have to buy the servers or hire the people to maintain them.’”
Martinez agreed with Ellison’s thinking. “Look at any company. They’re in the business of doing what they do, and MIS shops [Management Information Systems, essentially a company’s internal IT department] are a necessary evil. If Oracle can make the cost reasonable, then leasing is a wonderful idea,” he said.
Ellison also tied the approach directly to Oracle’s bottom line. “It’s cheaper for you and more profitable for us,” he said about the proposed application outsourcing service.
At the time, others in the industry were already experimenting with similar ideas.
“Oracle is doing just what we’re doing,” said James Pennington, then co-founder of Learningstation.com. “I can take very high-end applications, such as a $65,000 manufacturing suite, and by spreading this cost over multiple users and multiple years, I can bring this cost down to a point that end users can’t reach themselves.
“Once the pioneering work has been done here, I think you’ll see software vendors flooding to this leasing or subscription model,” Pennington said, and he wasn’t wrong.
Watch On
People are taking their apps off PCs
The thinking tracks with Oracle’s broader push for thin clients and server-centric computing. At the time, much of the industry still revolved around fat desktop applications and local installations.
Ellison wanted the opposite: lightweight devices, with the real work done on central servers.
Two years later, he was still pushing the same argument, this time more bluntly. Speaking at Comdex in 2000, as reported by ZDNet, Ellison dismissed the idea full desktop applications would remain the center of computing.
“People are taking their apps off PCs and putting them on servers,” he said, pointing to companies like PeopleSoft, Siebel, SAP, and Intuit. “The only things left on PCs are Office and games.”
He took the argument further, suggesting the move was already obvious. “You’re considered a dead company if you write applications for the PC,” he said.
That view also shaped his reaction to Microsoft’s tablet concepts, declaring “pen computing kind of irrelevant,” adding, “does anyone want to do email with a pen?”
Moving to the web
At the time, Ellison’s claims sounded unlikely. The network computer idea, which Oracle promoted heavily in the late 1990s, became a punchline when cheap PCs and faster processors kept improving. Thin clients never took over the desktop in the way Ellison predicted.
That underlying logic didn’t disappear, however, it just moved to the web.
By the mid-2000s, Salesforce was building its business around browser-based CRM. Google Docs showed that office software could live online. Microsoft eventually turned Office into a subscription service, and even Windows gained cloud-centric features.
In 2026, many businesses don’t buy software at all. They rent it. Monthly subscriptions for everything from accounting to design tools are standard practice. Enterprise systems often run entirely in the cloud, accessed through browsers or thin clients that look suspiciously like the machines Ellison once described.
Even consumer devices reflect the same move online. Streaming services replaced boxed software and physical media. Chromebooks, which rely heavily on web apps, are common in schools and offices.
Ellison’s timing, as usual, was complicated. He was early on the business model, but wrong about how quickly it would arrive and what it would look like. Instead of dedicated network computers, the world kept its PCs, then added smartphones and tablets on top.
Still, his central idea held up: applications would move off the desktop, onto servers, and into subscription plans.
In 1998, the idea of leasing software over the web sounded like something doomed to fail. By 2000, Ellison was declaring the desktop application era effectively over.
In 2026, the industry runs on subscriptions, cloud platforms, and browser-based tools.
The network computer may never have taken over the world, but the subscription model Ellison talked about decades ago quietly did.
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