Oracle Cloud Changes Everything – Just ask Larry Ellison
At Oracle OpenWorld last week, the company proudly proclaimed: “We will lead cloud SaaS, PaaS and now IaaS”. According to Larry Ellison, the #1 objective for Oracle is to be the lowest cost IaaS provider with the highest margin. As you may have guessed, their new target for leadership is IaaS and Amazon.
You’ve got to admire Larry Ellison; he goes all in. Whether he is buying an island, taking on the World in sailing, or leading Oracle – Larry doesn’t do anything halfway. Now he is mobilizing Oracle to win in the cloud. And you know what? I think the company has a great plan!
Here’s Why I Think Oracle Could Dominate Cloud:
Ellison has made winning in cloud a corporate imperative – not a division of the company and not a sideline objective. Oracle is cloud. In contrast, consider IBM or Dell, each with cloud divisions. Neither is taking a “Cloud changes everything” approach. By contrast, Oracle is walking their talk.
The company will extend leadership from its #1 Software as a Service (SaaS) and #1 Platform as a Service (PaaS) positions to a leading position in Infrastructure as a Service (IaaS). Software and Cloud industry analyst Walter Pritchard of Citi, just released a report on Oracle stating that the company has reached the crossover point where SaaS (and soon PaaS) revenue growth exceeds the decline in conventional software licensing revenue for the company. That is a big story! Having a growing SaaS and PaaS business base is a great foundation from which to build the IaaS offering and business. It is no coincidence the only other company playing in SaaS, PaaS and IaaS is Microsoft. These two companies are now the fastest growing players in the cloud market
Ellison understands coexistence – how on premises solutions will live with cloud offerings for the next 10 years and Oracle has a play all along the way. Oracle has managed transitions before; mainframe/mini to client/server to Internet, and now to cloud. The company understands how to change business models and how to prosper amid transformation. Oracle, uniquely, can provide consistency of service and architecture across all consumption channels.
Oracle is building from (i) on premises to (ii) Oracle@Customer and to (iii) Oracle Cloud. This is a change in consumption model. And, Oracle is already succeeding in capturing the marketplace where IT is built out in hyperscale data centers (cloud) and consumed as a utility. Oracle’s objective – to lead across SaaS, PaaS and IaaS makes sense as they are one supplier who can supply, build and support all channels in the progression.
Ellison outlined six criteria to explain how Oracle will compete in cloud.
A closer look at each helps explain how Oracle can emerge as a leader in IaaS.
Cost/Price – Oracle plans to deliver the lowest acquisition price (and TCO) in the industry. Ellison committed to running the most cost effective IaaS offering for customers, and he promised Wall Street it will be the highest margin IaaS business. That means Oracle must be the low cost provider and incorporate data reduction technologies. The good news is our VDO for (Linux) Cloud is the perfect solution for the Oracle Cloud architected on Oracle Linux. With VDO, Oracle can improve on the 20% pricing advantage they currently enjoy vs. AWS.
Performance – Thomas Kurian committed to achieving, “the fastest performance for all apps, databases, middleware and analytics”. Currently, the company claims 2-4.5X the performance of AWS.
Standards Based – the Oracle cloud is built on Oracle Linux. By adhering to standards and open source technologies (such as Ruby, SQL and Hadoop), Oracle bakes agility into the Oracle cloud offerings and leverages the tailwind of Linux and open source adoption.
Compatibility – common architecture and bare metal means apps can move from cloud to on premise and back. Agility, coexistence and manageability are built in from the ground up.
Reliable – fault tolerance is built into the offerings, and Oracle’s world-wide support organization already supports the largest organization in the world.
Secure – Who can do defense better than Oracle?
The Bottom Line
Oracle will be formidable in all three cloud business segments – SaaS, PaaS and IaaS. They have the focus, the strong business foundation, and the $60B in cash required to make this happen. By becoming the low cost provider, and succeeding in the cloud, Oracle can seize or share leadership with Microsoft in the overall cloud market and SaaS segment, Workday in the PaaS segment, and Amazon in IaaS.