REDWOOD SHORES, California — Oracle executive chairman Larry Ellison told his shareholders that cloud computing will cause Oracle “to
be a much larger company, growing double-digits and more profitably than we were before.”
Ellison made the remarks Wednesday during Oracle’s annual shareholder’s meeting at the company’s headquarters in Redwood Shores, California.
Specifically, Ellison said (emphasis ours):
As more and more people are choosing to rent, rather than buy, overall, after several years, we actually get more money but in the very beginning of the transition from selling to renting, it looks like our business is slowing down or getting smaller. It’s not the case.
So it looks like our hardware business is slowing down, when in fact, it’s really not. We’re just going from selling hardware to renting hardware, and getting more money rateably over a long period of time. The business of selling hardware, that should stay flat-ish or get smaller as people move to the cloud. Software, that should stay flat-ish or get smaller as people move to the cloud. But our overall business, especially once we get through this transition, our overall business will grow very rapidly. And we’re going to be a much larger company, growing double-digits and more profitably than we were before.
That is certainly what Oracle hopes will happen, and the vision it has for its shareholders. The truth is, such growth is far from a given, particularly for the hardware business.
Oracle is doing well selling cloud versions of its software. It’s particularly proud of selling cloud enterprise resource management software (ERP) competing with Workday.
A whole different animal
But its competition with Amazon for the hardware business is a whole different animal. While it’s true that Oracle has a massive number of database customers and that these customers will likely evaluate Oracle’s cloud, Amazon is far and away the bigger player, in every way. It already has more cloud revenue and more features in its cloud than any other player.
And as Amazon’s scale grows, it’s able to continually cut prices. Just this week, Amazon cut prices again (its
53rd price reduction.) Every time it cuts prices, it forces all the other players to follow suit, regardless if they have the scale to absorb the price cuts or not.
Every time that Amazon wins an enterprise customer to its cloud, it’s got a chance to knock Oracle out of that customer’s life. Amazon offers its own database, and a tool that lets a company move from an Oracle database to an Amazon database.
Ellison is quick to point out that Amazon’s databases aren’t as fast and as powerful as Oracle’s. That’s probably true. But one company Business Insider recently talked to told us that what Amazon is offering is often good enough.
“It’s not impossible to move to a different database. We are doing it, using AWS for some of that, instead of Oracle,” a CIO of a large midwestern tech company told us. While this company isn’t ditching Oracle for Amazon completely yet, it postponed upgrading some of its software specifically to test out Amazon’s database as an alternative.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.