While it’s become fashionable in the wake of Oracle’s explosive cloud-infrastructure growth to dismiss the company’s commitment to its $15 billion cloud-applications business, Larry Ellison blew that absurd analysis away earlier this week by picking OCI chief Clay Magouyrk and industry-apps chief Mike Sicilia as co-CEOs.
In fact, Ellison’s choice of Magouyrk and Sicilia to replace Safra Catz, who’s moving to executive vice-chairman, is an unmistakably clear sign that Oracle fully intends to use its surging growth in Oracle Cloud Infrastructure (OCI) to enhance and accelerate Oracle’s entire cloud-applications portfolio, spanning both industry apps and its Fusion LOB apps.
The roots of this strategy go back 16 years to Ellison’s decision to get into the hardware business by acquiring Sun Microsystems in 2009 at a time when many other tech companies were bailing out of the hardware business as fast as humanly possible.
But, as has been the case so often across his legendary career, Ellison took a totally different stance: instead of looking at hardware as a commodity category with largely undifferentiated products and rapidly evaporating profit margins, Ellison looked into the future and understood that a world becoming increasingly dependent on data would require an entirely new type of system in which hardware and software would be engineered together for optimal performance, rather than being designed separately and then glommed together by customers.
That was the birth of “hardware and software engineered to work together,” as Ellison put it in what became Oracle’s tagline for several years. And out of that innovative approach came the Exadata systems that have become utterly indispensable to Oracle’s success in the cloud infrastructure and in cloud databases and, more and more, cloud applications.
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Taking ‘Hardware and Software Engineered Together” to New Levels
Oracle has long insisted that its ability to offer cloud infrastructure and cloud databases and cloud LOB applications and cloud industry-specific applications creates more business value for customers because all of those pieces, when applied together, are optimized for outcomes no other tech vendor can match.
And that is the vision of the future that inspired Ellison and Safra Catz to bundle the OCI expertise of Magouyrk with the deep industry knowledge — and deep-tech chops — of Sicilia as the co-CEOs of Oracle’s future.
To understand Oracle’s strategic intentions and where it’s headed, it’s essential to view the pairing of Magouyrk and Sicilia not as some assurance that both hardware and software are represented at the top of the company, but rather that Ellison wants Magouryk and Sicilia to advance and fulfill his vision from 16 years ago of fusing those formerly separate components into a unified and vastly more powerful system.
The AI Revolution has made that imperative absolutely essential, and Ellison framed it out elegantly in the Sept. 22 announcement of the new CEOs.
Larry Ellison, Oracle’s Chairman of the Board and Chief Technology Officer, stated, “Humanity is investing enormous resources in the race to advance Artificial Intelligence. Oracle Cloud Infrastructure is playing a major part in that effort. Clay’s years of experience leading Oracle’s large, fast-growing Cloud Infrastructure business has demonstrated his readiness for a CEO role. Mike has spent the last several years modernizing Oracle’s Industry applications businesses—including Oracle Health—by completely rebuilding those applications using the latest AI technologies. A few years ago, Clay and Mike committed Oracle’s Infrastructure and Applications businesses to AI—it’s paying off. They are both proven leaders, and I am looking forward to spending the coming years working side-by-side with them. Oracle’s future is bright.”
Sicilia and Magouyrk expanded on Ellison’s remark in that same press release.
Together, CEOs Magouyrk and Sicilia will continue to collaborate on building complete industry suites of AI applications on top of Oracle’s rapidly evolving AI Database and Cloud Infrastructure (emphasis added). “We are excited to lead Oracle into the AI era, where technological innovation leads to extraordinary business opportunity and hyper-growth,” said Magouyrk and Sicilia in a joint statement. “Our combined strengths in AI, cloud infrastructure, horizontal applications and industry applications, will enable Oracle to deliver the latest AI capabilities to our customers.”
I Generally Dislike the Co-CEO Model, But…
On many occasions, I’ve stated that I’m not a fan of the co-CEO model because, if it truly were the right approach, then many more companies would adopt it — instead, it’s an exceptionally rare arrangement. But in this case, I think it’s the right way to go for a number of reasons:
- Magouyrk and Sicilia have the tough job of taking the place of Safra Catz, who has amassed an extraordinary record as Oracle CEO since taking that spot in 2019. Taking over as CEO of a company whose market cap is approaching $1 trillion would be a daunting challenge for any executive, including a highly seasoned CEO. But neither Magouyrk nor Sicilia has been a CEO before, and the shared responsibilities will help each of them get fully up to speed more quickly.
- Oracle’s technological ambitions are incredibly ambitious and vast. From unbelievably large Stargate AI data centers to full suites of industry applications, from the possible stewardship of TikTok’s data assets to multi-cloud partnerships with its primary competitors, Larry Ellison’s vision will continue to push Oracle’s ambitions well beyond those of almost any other tech company. For at least the next few years, it’s probably best to have the combined capabilities of Sicilia and Magouyrk at the helm.
- Filling — and fulfilling — a $500-billion pipeline. For the quarter ended Aug. 31, Oracle’s RPO reached $455 billion, and Catz has said it is very likely going to top $500 billion in the near future. No single CEO well, other than Catz — has ever had to manage that type of responsibility, so again I think it makes great sense for both Sicilia and Magouyrk to share that burden — that wonderful burden — as they evolve into their new roles.
Final Thought
As Oracle’s new co-CEOs begin to tackle their weighty responsibilities and pursue the company’s blazing ambitions, it must be comforting to both Magouyrk and Sicilia to know that both Ellison and Catz aren’t going anywhere.
In fact, Ellison offered a long-term view of his own role in Oracle’s new leadership team when he said this in announcing their new roles (emphasis added):
“They are both proven leaders, and I am looking forward to spending the coming years working side-by-side with them. Oracle’s future is bright.”
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