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As Oracle’s OpenWorld approaches and deck chairs shuffle, has Oracle finally figured out the cloud?

Oracle’s OpenWorld is right around the corner and you can almost feel the collective frustration of the thousands in attendance who will more than likely be caught in horrible Bay Area traffic. But beyond the expectations of massive car pileups, I’m curious to see how Oracle attempts to position itself in the tech world as it continues to push its version of cloud computing, something it has been doing for the past couple of years to mixed results.

Last week’s surprise announcement that Oracle’s legendary co-founder Larry Ellison was transitioning from the role of CEO to CTO caused a stir when the news first came out, but for the most part, that’s not going to affect too much of Oracle’s technology direction, considering Ellison oversees over a quarter of the company’s shares and all of its engineers will continue to report to him.

Still, some [company]Oracle[/company] observers are saying that with Ellison out of the CEO helm, that’s one less obstacle for the company to overcome when it comes to building out a cloud business that looks attractive. In the past, Ellison hasn’t been one to get too excited over what he sees as a not-that-interesting technology; keep in mind, this was before the advent of mobile really made cloud computing bloom.

Oracle CEO Larry Ellison delivers a keynote address during the 2012 Oracle Open World conference on September 30, 2012 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)
Oracle CEO Larry Ellison delivers a keynote address during the 2012 Oracle Open World conference on September 30, 2012 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)

With Safra Catz and Mark Hurd now acting as CEO, maybe now’s the time people will believe Oracle means business when it talks cloud.

Oracle’s carrot-on-a-stick

Hurd recently told the New York Times that Ellison will be announcing a new platform-as-a-service (PaaS) that will supposedly be a strong point for the company as it attempts to gain a foothold in the cloud wars. It should be noted that last year Ellison was scheduled to lead an OpenWorld keynote session detailing Oracle’s cloud platform (including its database-as-a-service and Java-as-a-service) but he instead bailed so he could watch the America’s Cup, which sort of goes to tell you how he still feels about the cloud.

As for the new PaaS, it’s hard to tell just how different it’s going to be from the PaaS the company already details on its own website. Hurd offered few details in that interview (and it’s not clear if he was asked to elaborate), only to say that “Java and the database will be offered to customers with a chance to build cloud applications.”

While Oracle’s PaaS may not be totally new for the company, it is an important development for Oracle as it pertains to keeping its clients from leaving its services to others; Oracle needs to please its large Java development community, explained Holger Mueller, a principal analyst and vice president of Constellation Research.

“I think they are playing a more defensive mode,” said Mueller. “I don’t see them going aggressive on everything.”

The PaaS push isn’t necessarily tailored to attract outsiders to Oracle as it is a sort of carrot-on-a-stick in that, if it is easy to operate, it could potentially attract its current customers to go all in and use Oracle for every aspect of maintaining their companies, said Mueller. The question is how easy will it be for customers to run their existing Oracle applications on the new cloud infrastructure, something that hasn’t been really tested out a whole lot, he added.

And while the perception of Oracle as being late to cloud technology persists in Silicon Valley, the company “has made rapid strides at least in terms of what has been introduced in the last year or so,” said TechAlphaPartners co-founder and Gigaom analyst George Gilbert regarding Oracle’s Database 12c for the cloud.

Oracle co-presidents Safra Catz (L) and Mark Hurd talk as Oracle CEO Larry Ellison delivers a keynote address during the 2010 Oracle Open World conference. It was announced today that the pair have been promoted to CEO. (Photo by Justin Sullivan/Getty Images)
Oracle co-presidents Safra Catz (L) and Mark Hurd talk as Oracle CEO Larry Ellison delivers a keynote address during the 2010 Oracle Open World conference. It was announced today that the pair have been promoted to CEO. (Photo by Justin Sullivan/Getty Images)

The idea that Oracle isn’t scalable and couldn’t be used to run a Facebook-like infrastructure is not entirely true, said Gilbert. The problem is that if one were to tie together all the Oracle Exadata machines (running Oracle’s Database 12c) required to drive such a massive operation, the “cost would be astronomical.”

Oracle needs new customers

Therein lies the Oracle dilemma; it’s still perceived to be very, very expensive. And with startups unveiling their own powerful and cheaper databases and cloud service providers attempting to outdo each other with how low they can go on pricing, it’s hard to see where Oracle fits in. Each new move it does seems to be just another attempt to plead with its customers to hang in there a little longer.

But there’s one thing we can all count on at OpenWorld if Ellison ends up skipping his keynote session again for some reason or decides to cut back on talking now that he is no longer CEO: it’s going to be a much more stale experience for attendees who will miss the man’s off-the-cuff comments, like the time he took a shot at Salesforce by saying “You can check in, but you can’t check out. I like to think of it as the roach motel of clouds.”

Despite how much Oracle wants to spin things, it’s clear that cloud-delivered enterprise software is the way of the future. The problem Oracle faces is that new startups, the ones poised to become the next Google or Facebook, aren’t turning to Oracle to be their primary database provider, and they’re especially skeptical of its cloud services. Longtime enterprise software observer and founder of RedMonk Stephen O’Grady recently noted that Oracle’s software revenue from new licenses is on a downward trend.

Oracle software revenue - chart by RedMonk
Oracle software revenue – chart by RedMonk

Oracle needs to do something big to attract attention from outsiders to its platform, because it’s not sustainable for a company to continue milking its existing customers without generating new revenue from new clients. So, all eyes will be on Oracle this coming week to see if its flirtation with the cloud is something that will make both its current customers and possible new ones excited, rather than simply shrugging their shoulders as they hear Oracle say its same old spiel.