Larry Ellison, CTO Oracle used his opening keynote at Oracle OpenWorld 2014 to dazzle the audience with numbers but his real intent seemed to be about laying down the foundation for what the company sees as the next real battlefront.
Absent of a term upon which anyone can agree, I’ll call it the ‘complete cloud foundation’ which in Oracle’s world means infrastructure, platform and applications, all supported by the Oracle database.
There was nary a word about on-premises applications and database. This was all about cloud from start to finish and Ellison’s vision for how Oracle dominates, even if it doesn’t today. Not that minor detail prevents Oracle from pounding out mind boggling numbers to justify its position of being the biggest in pretty much anything they can define as ‘cloud’ related
Ellison got off to a slow burn start, making the argument that this has been a long process, but justifying the time it has taken Oracle to get with the cloud meme by arguing the company has had to remain true to “the promise we made customers more than 30 years ago.”
Quite what that promise was meant to be was never articulated in straightforward fashion. Instead, Ellison preferred to give us his version of database and applications computing history.
He did however make one clever remark: “Our cloud strategy has been about building and buying.” OK – so that explains the hodge podge of applications the company is trying to forklift into any cloud environment it chooses to define while building out the leadership position Ellison believes Oracle owns.
Leadership in this context seemed to hinge on offering slides packed with application product names and counting pretty much anything upon which Oracle attaches a price tag. That’s all very well in this setting but when you look more closely at the apps, there’s a heck of a lot of ‘stuff’ in there I’d re-arrange around a sub-text of features rather than applications. But then there is always room for argument on this point and in any event, I’m not sure it matters right now.
Rather, Ellison’s insistence upon leadership ‘by far’ in every category he choose to illustrate with a slide starts to get overwhelming after a while, especially when it is not supported by the numbers. This is where the Oracle reality distortion field gets a little shaky.
But as Ellison’s narrative unfolded, he made some startling statements that in isolation sound very un-Oracle like but which suggest a genuine shifting in strategy. For example, he said on several occasions:
“We’ve got to have the same pricing as Amazon…Microsoft…Google.”
By any measure you’ve got to step back, draw breath and ask yourself – is this a sea change in thinking around Oracle pricing which traditionally has been at Dom Perignon levels? My guess is ‘yes.’ Here’s why.
Oracle’s competitive vision
Ellison’s vision of competing at all layers of the computing stack needs to support the database which, by Ellison’s reckoning, will be the biggest piece of the puzzle. Hold that thought.
He acknowledges the commodity and utility models which most impact the infrastructure layer right now in the shape of Amazon’s continually aggressive pricing. Ellison looks to take on EMC for enterprise storage, an area where EMC is vulnerable. But – in enterprise land, security matters. This was a topic to which Ellison kept returning and where he believes Oracle can differentiate.
So, when you add this infrastructure play to the notion of a platform that can be run pretty much anywhere the customer wants AND applications, then what he is really saying goes something like this:
My customers want one throat to choke. We’re that throat and oh by the way, we have proven over successive decades that we will do the hard work so you don’t have to. We’ll make sure the infrastructure is secure, reliable and wicked fast. And it will be cheap. You’ll have the database you all know and love and want to use now and into the future. We are/will deliver modern applications and you can run them anywhere you want ‘at the push of a button.’
Compelling? On its face – most certainly for many of Oracle’s customers that have bought into the whole ‘red stack’ story but do want to get into the cloud for operational cost reasons.
Ellison for his part is banking on this differentiated story so that he can trade price for volume. That’s an argument I totally get, even if colleagues will tell me I’m mad. What it then does is put the applications story into much sharper focus because that’s where the money will be. Along with all those database subscription licenses Oracle hopes to monetize.
Whether that works in the real world is another matter because as we have been finding out in recent months, just about every enterprise customer we speak with is shifting focus away from the back office ERP to what they believe are critical business applications, almost none of which are being run on Oracle, Microsoft or IBM for that matter. At least none that we can find. But then it is hard to argue against Ellison’s logic that ‘we’re just starting.’ Like competitors, he sees plenty of runway ahead.
All of this is a bit woolly right now and we will learn more as Oracle OpenWorld unfolds. There are some gotchas.
The Intel angle
The appearance of Renée J James, president of Intel was an awkward if revealing keynote. I say awkward because at times, she seemed to struggle with some of the arcane product names and complex technologies involved. She also made what sounded like a decidedly off script comment:
“Private cloud, public cloud – I think we can use these terms interchangeably”
Wow – the purists in the cloud camp will have a field day with that one. Estaban Kolsky was ready to tear them a new one with this Tweet:
@dahowlett will have to go back to the recording… completely clueless and retrograde; cave man mentality (ORCL for letting it be said?)
— Esteban Kolsky (@ekolsky) September 29, 2014
Even so, the concentration of attention was on ‘photonic silicon,’ a way of cramming more transistors onto chips that operate at much higher speeds in large scale clustered environments than is possible today. Here, the story centered around the work Intel and Oracle have been doing, a topic to which Ellison alluded in his remarks around performance. But performance for what? A relational database that Oracle will have to successfully position alongside many emerging low cost and real time performant databases if it wants to be part of webscale applications.
Back to the numbers
On the customer front, Ellison was more precise. This from Chris Kanaracus report on the event:
In the past 12 months, Oracle picked up 2,181 total new SaaS customers, according to one slide. More than 1,000 of those bought customer experience applications, while another 959 invested in HCM (human capital management) and 263 in ERP (enterprise resource planning).
Oracle also added 725 customers for Fusion Applications, the homegrown suite it developed at great time and cost. The company is keen to show growth in Fusion continues even as it acquires SaaS vendors and releases new cloud applications.
Impressive? Kind of. We keep hearing about relatively low numbers of live customers and if the revenue numbers are anything to go by, there isn’t much sign of the big bucks Workday is able to draw from HCM customers. More digging later in the week.
‘It’s rude but it’s true’
As Ellison warmed to his theme, he could not resist going off piste, regaling the audience with his brand of rhetoric, accompanied by an infectious giggle that’s hard to resist.
That included taking swipes at every cloud vendor, including NetSuite, a company in which he has a deep interest. He went after Salesforce.com, acknowledging they have a platform ‘of sorts’ but arguing it is built upon Oracle. Workday took a swipe:
The other guys, who, Workday? They don’t have a platform. Missing in action.
But he saved his most biting comments for SAP when he said:
I’m going to try and be nice – I can’t…HANA….it’s rude but it’s true…HANA powers the cloud: what cloud, where?
He then listed recent SAP acquisitions Ariba, SuccessFactors and Concur:
They all run on Oracle.
That might be true today, but not longer term as SAP has repeatedly declared its intent to have all acquired solutions running on HANA. That is an ongoing process.
But then this is Larry Ellison. It’s what he does. No-one does it better than him. And that’s why we all love to hate him and then love him in equal measure. It gets the cognoscenti chattering, speculating, correcting, re-correcting and generally arguing among themselves. Which, of course, is the ultimate deception and one I guess gives Lawrence J Ellison a certain impish satisfaction.
There’s more to come – watch this space.
Disclosure: Oracle, SAP, NetSuite, Salesforce and Workday are all premier partners at time of writing. Oracle covered part of my travel costs to attend OpenWorld.