THE PRINCE OF SAN MATEO

By JOSHUA COOPER RAMO AND DAVID S. JACKSON

One thing you've got to say about Larry Ellison: when he made a billion dollars, he decided to enjoy it. Why should he listen to anyone else telling him what to do? Why should he worry? "It seems like a fruitless activity. I observe and I plan and I think and I strategize," he says. He can do anything he wants. He can go anywhere, say anything, buy anything. He's got a billion, right?

Seven billion, actually. And the mercurial software baron--who owes his success to a database-management program most Americans have never heard of--has taken full advantage of the fortune. For starters, Ellison could be a poster boy for Billionaire Chic. He drives expensive cars, loves beautiful women and jets off to exotic locations to sail his yacht. In Silicon Valley, where every day is casual Friday, the chairman of Oracle, based in San Mateo, Calif., dresses like the Prince of Wales. He shows up at industry functions in double-breasted suits, French cuffs and knuckle-size cuff links. He not only lives in a mansion designed like a traditional Japanese home, he's also spending $40 million to build a bigger one. While most Valley manses conform to California's earthquake code, Ellison's meets a more stringent requirement: it is being built, from the wood pegs up, in the manner of a 16th century imperial Japanese residence.

Ellison's social life is no less impressive. The 6-ft.-tall, thrice-divorced bachelor hobnobs with the President (Bill Clinton is unlikely to turn down his calls since Ellison was one of his top individual donors in last year's election) and is friends with Jack Kemp, who once sat on his board of directors. Jeff Berg, the Hollywood power agent who represents clients like Julia Roberts and Mel Gibson, is a buddy. Michael Milken, the reclusive financier, is an intimate adviser. Ellison, friends will remind you, is the richest man in California.

He is also a mass of contradictions. A close associate once asked him what it was like to have $1 billion, and he replied that it was "a very surrealistic experience." But he added implausibly, "It has very little effect on the way I live." Or consider the way he competes. "People ascribe all sorts of motivations to my behavior," he told TIME last week, "but in general what I'm trying to do are things that serve the best interests of Oracle, its shareholders and society at large, because that's what makes me happy." He preaches the virtues of simplicity and compatibility--at least in terms of using technology--yet he conducts his business like a Ninja warrior. "In every private conversation I've had with Larry over the past 15 or 20 years," says an industry figure, "the metaphors when he's speaking of competitors are always violent. He'll say, 'This is the quarter we put a knife in their chest,' or, 'The life will be choked out of them.' The metaphors don't come from chess, and they don't come from the Bible. He sees this as personal combat."

The corporate manifestation of that warrior spirit is Oracle, the software-and-consulting giant Ellison has built over the past 20 years. Oracle enjoys a virtual hammerlock in the immensely profitable business of organizing and storing information in electronic databases. In the past fiscal year the firm squeezed more than $600 million in profits from revenues of $4.2 billion by helping firms like Pacific Bell and American Airlines track billing records and airline reservations. The company's market value is $28 billion--more than that of Time Warner or H.J. Heinz--and it has enjoyed better than a 30% annual growth for a decade. Customers love Oracle because the software, though it costs millions, saves them even more. Shareholders adore the rich returns: $10,000 invested in Oracle five years ago would be worth $127,000 today. In the past year Ellison has signed deals with British Telecom, Intel and even Kellogg. With the help of Ray Lane--the president and coo who saved Oracle from fiscal shipwreck in 1991--Ellison has built one of the Valley's most reliable profit players.

Now he has begun to look toward posterity. For the better part of 18 months he flirted with the idea of buying troubled Apple Computer, a deal that fizzled last week when Ellison said he was backing off, at least for now. Instead, Valley insiders say Oracle, with close to $1 billion in cash on hand, is considering a rich joint venture with Korean conglomerate LG Electronics. Both are ambitious deals, carefully calibrated to morph Oracle from a corporate-software provider into a consumer-electronics powerhouse. Says Evan Bauer, a vice president at GIGA Information Group, a Connecticut consulting firm: "Larry is an eccentric, but he's not stupid."

Ellison's dealmaking is aimed at forcing a revolution onto the PC industry. Today's software, he argues, is too complicated and loaded with gizmos no one ever uses. Worse, at several thousand dollars a pop, personal computers are anything but personal. Instead, he says, "PCs should be more like pencils," by which he means cheap, user-friendly and above all ubiquitous.

As an alternative, Ellison has been pushing hard--not that he could do it any other way--for a new generation of inexpensive, easy-to-use network computers, the so-called NCs. The idea is simple enough: build an inexpensive box (under $500) that combines the best of a PC (some processing smarts, a screen, a modem) with the best of the Net (tons of information, most of it free). Behind the scenes, database software (Oracle's, of course) will make all this goodness transparently simple to navigate. On the front end, in Ellison's vision, might be Apple's famously friendly user interface, returning, Lazarus-like, with a cute little beep, to drive a stake through the heart of Microsoft.

It would be sweet revenge not only for Apple but also for Ellison, who feels about Microsoft--and most particularly about its CEO Bill Gates--the way Patton felt about Rommel. Gates' stock holdings, worth around $32 billion, dwarf Ellison's estimated $7 billion. Ellison, however, insists the fight isn't personal. "I'm more interested in beating Microsoft than I am in beating Bill Gates," he says. "I obsess on the personal computer and the industry, and I would love to see the age of proprietary computers end."

Gates is not as enthusiastic about that particular idea. Though he tucks his ambition behind wire-framed glasses and a mop haircut, he is intent on moving in on Oracle's database business. After all, it's hard to imagine a task more important to the information future than data management. Microsoft has hired away some of Ellison's brightest engineers, though the impact on Oracle's business has been negligible.

Still, the threat has sharpened Ellison and hardened Oracle's martial culture even further. In the past six months the firm has stood down a Kamikaze charge from its main challenger in the database business, Informix. The Menlo Park, Calif., company blindsided Oracle with a series of hip-sounding, well-marketed database programs it claimed were faster and better at scrounging through terrabytes of data--the grunt work where databases make their fortunes. Oracle stock took a quick dip, but Ellison's slash-and-burn sales force and espresso-fueled programmers quickly unplugged the challenge. "Informix did tons of things wrong," says Ellison. "They started writing checks instead of software." Last week Informix announced a $140 million quarterly loss and the ritual sacrifice of its cfo, who resigned. It was the kind of victory Ellison likes best: bloody. "Second place," he tells friends, "is still losing."

Winning, though, will probably mean becoming a team player, since it's unlikely that Oracle can unseat Microsoft alone. That will be a new role for a man who cherishes his lone-warrior reputation as much as his collection of Samurai helmets. Yet the scope of his ambition for network computing--as well as some mellowing that has come with age--appears to have left Ellison ready to cooperate. Already Oracle has begun to form an anti-Microsoft axis with Silicon Valley neighbors Sun Microsystems and Netscape, which Ellison says may have the perfect NC interface with its browser. Inside the firm, coo Lane now runs day-to-day operations, leaving Ellison free to think big, strategic thoughts. The calculus is simple, according to Bobby Cameron of Forrester Research: "Ray Lane has his chair on the ground."

Ellison has taken his appetite for teamwork outside Oracle, most prominently in a partnership with Milken to develop educational software. Knowledge Universe, a company the two started in 1996, will use computers to help kids (and their parents) learn faster and better. Together, Milken, Ellison and Apple co-founder Steve Jobs make up something of a billionaire boys' club, gathering to talk about Japanese gardening, molecular biology and their favorite flicks over sushi or macrobiotic soup.

Friendship, however, does little to distract Ellison from every billionaire's primary preoccupation: the man in the mirror. Just as Oracle reflects Ellison's warrior spirit, the company's future will mirror his dreams about where technology is headed. And his wonderment on that subject seems livelier than ever. "I'm endlessly curious as to how far I can push technology and how much technology can change our society," he says, an urgent note creeping into his voice. "All sorts of interesting questions need to be asked. Can Oracle become a more important company than Microsoft? I'm curious." So is the rest of the world.

--With reporting by Daniel Eisenberg/New York

With reporting by DANIEL EISENBERG/NEW YORK