PaaS is Oracle’s sweet spot for 2015
During Oracle’s Q2 2015 earnings conference call, Larry Ellison, Executive Chairman and CTO informed his audience of analysts about the importance of platform as a service, PaaS to Oracle’s strategy to grow its cloud business. Per Ellison, PaaS is the differentiator promising to elevate Oracle’s cloud business from the commodity-driven world of infrastructure as a service (IaaS) to something more attractive, meaning a product with more promising return on investment given Oracle’s commitment to product development, general and administrative (G&A) expenses, and sales and marketing.
So what is the core of Oracle’s PaaS offer? Per Ellison, PaaS for Oracle amounts to the combination of the Java software language and Oracle’s database product. Ellison did not mention hardware, but, Mark Hurd, one of the two co-Presidents of the company (Safra Catz is the other co-President) cited surprising strength in sales of Oracle’s SPARC super cluster, and the SPARC database appliance later in the call during an answer to a question.
Leaving aside the highly competitive tone of Ellison’s comments (he mentioned Salesforce.com and Workday as direct competitors at numerous points), his PaaS claim is, in my opinion, credible. Oracle has demonstrated a clear commitment to defend the proprietary nature of its Java language, so it should be safe to assume customers will have to pay a price should they opt to use the language to customize solutions, build tools, etc. There was absolutely no specific mention of individual database products throughout the conference call, so it is also likely safe to assume management is confident in the attractiveness of Oracle’s traditional RDBMS products for its new found customer base for cloud offers. Of course, coming quarterly reports should be carefully reviewed to see if any mention of database product mix pops up. I was eager to hear some mention about the condition of Oracle’s own NoSQL database, but there was no mention of it. The only references to “big data” came up when Ellison spoke about Oracle’s Exalogic and Exadata servers.
The lengthy list of prominent larger businesses already committed to Oracle’s cloud offers, which Mark Hurd referred to as a list of “icons” is impressive, and, further, is also indicative of why a company like Oracle (much has been the case, I would argue, for Microsoft, as well) truly can benefit from expanding the volume of its cloud activity — and get paid for it. After all, each of the companies behind these icons is probably hosting one, or more of Oracle’s on-premises solutions. Oracle, Microsoft, IBM, SAP and EMC each stand to benefit from robust customer interest in hybrid computing scenarios as the result of large installed bases of on-premises computing systems.
In contract, Salesforce.com, Amazon, Google, Workday cannot leverage proprietary on-premises systems to achieve the same advantage.
Ira Michael Blonder
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