In today’s Cloud Wars Minute, I explore the paradigm shift potentially happening at Cloud Wars Top 10 company Oracle.
Highlights
00:28 — A philosopher of science, Thomas Kuhn, wrote a book that talked about how the paradigm shift affected scientific revolutions. I think we are seeing a pretty deep paradigm shift at Oracle. I believe, by the end of next year, or perhaps early into 2025, Oracle’s fast-growing cloud infrastructure business will be larger than its software-as-a-service (SaaS) business.
01:17 — Oracle has been an archetype of a big modern enterprise software company for almost half a century. But in the near future, I believe the biggest, fastest-growing part of this business is going to be the cloud infrastructure business, which is more or significantly about hardware, not just software.
02:06 — In Q1, its SaaS business was up 17% to $3.1 billion. That’s a significant slowdown in the growth rate of its SaaS business. But the cloud infrastructure business was up 66% to $1.5 billion. Its infrastructure business has now grown almost four times faster than its overall apps business.
03:37 — Ellison focused a lot of his earnings call comments on how the largest artificial intelligence (AI) companies in the world, as well as startups, are picking Oracle’s Gen 2 Cloud Infrastructure to do training and inferencing of their data. He talked about the inextricable pairing of data and AI which he says puts Oracle in a great spot for more of this.
04:43 — A couple of details of where all this growth is coming from in infrastructure. Overall consumption revenue for OCI was up 91%; Exadata Cloud Services up 46%; and Autonomous Database revenue, up 42%.
05:08 — Of course, Ellison and Katz would say that the infrastructure is going to pull along a lot of the software. They’re optimized to work together perfectly. We’ll keep an eye on this to see how it goes. Here is, if not a scientific revolution, certainly a huge overhaul in one of the iconic companies in the tech business and certainly in the Cloud Wars.
