How Oracle Is Becoming a Cloud Powerhouse: Larry Ellison’s All-In Bet on Autonomous Database

When Oracle’s stock hit an all-time high Wednesday, a major driver behind the company’s impressive fiscal fourth-quarter results and subsequent share-price surge was its revolutionary “self-driving” Autonomous Database.

And along with that revelation come some essential questions:

• Why is this product, which has a decidedly unusual name and as of right now exactly zero competitors, so important to not just Oracle but to the tens of thousands of mid-sized and large Oracle database customers in every industry and every region of the world?
• Why has Larry Ellison said on a few occasions that Autonomous Database is one of the primary products that will determine the future of the company?
• Why has Ellison gone so far as to say that Autonomous Database “is the most important thing the company’s ever done”?
• And most important of all, why should business customers care?

To offer some perspective on this, let me go back to a piece I wrote 3 months ago called Oracle Autonomous Database: Overhyped or Tech-Industry Game-Changer? right after the company posted fiscal third-quarter earnings. During that call, Ellison expounded on the unique and high-value attributes of Autonomous Database, and some of his comments from that article are worth reviewing in light of the strong revenue numbers Oracle reported for its Q4.

For more on the Oracle Autonomous Database and the Oracle Cloud, please check out:

Then, after those excerpts from 3 months ago, we’ll look at some more-recent perspectives Ellison shared during the Q4 earnings call on two days ago.

First, here’s Ellison from that March 20 article:

• “Oracle’s future rests on two strategic businesses, Cloud Applications and Cloud Infrastructure… The introduction of our Gen2 highly secure infrastructure, featuring the Oracle Autonomous Database has been very well received. During Q3, we had nearly 1,000 paying Autonomous Database customers and over 4,000 active trials… The Oracle Autonomous Database is the only database that can respond to a security threat by automatically patching itself, while it’s still running your application. No downtime is required. No other database has this capability.” 
• “Some of our customers were stunned that they can get a database up and running in five minutes. So we’ve been collecting references and studying the 1,000 customers and the 4,000 trials and what they find encouraging about the Autonomous Database. Certainly, we’ll call it productivity improvements. The fact that they can go from not having a database, not having hardware, literally log onto our cloud, create an instance, get move their data, and be up and running, and doing useful things in five minutes is proving to be a shock to a lot of our customers.”
• “We’ve got one customer who’s done a series of tests. They were an AWS user, and I know we have these ads that promise cut your AWS bill in half. They found that we were running 11.5 times faster than they were running on AWS and they cut their bill by 80%. These are university researchers. So they’re very, very cost sensitive and they felt it was worthwhile making the move just because we were much less expensive. Autonomous Database was way less expensive than Redshift or Aurora at Amazon….”
• “The researchers that I mentioned earlier that are moving from AWS for big cost savings, they’re doing a combination of machine learning and computer vision to look at tissue samples and detect anomalous cells, using computers to diagnose cancer. And that’s a combination of machine learning and the Autonomous Database, and that’s an all new application. So there are several people that are coming in with all-new applications in the cloud, especially the ones moving from AWS.”
• “There are customers that are moving… test and development into the cloud. Again, the general reaction there is they’re much, much more productive getting running, it’s much cheaper to do test and development, much more responsive, much more productive to move test and development from their on-premise infrastructure to the cloud infrastructure. So online transaction processing, lifting and shifting applications, data warehousing lifting and shifting, test and development, moving from AWS—there are lots of different use cases.” 

Flash Forward: Oracle Q4 Earnings Announcement

During this week’s call, CEO Safra Catz said large numbers of customers are moving from the traditional Oracle Database to Autonomous Database, which resulted in a 19% revenue jump for licenses of the company’s products that include databases. On top of that, Catz said, revenue for related add-on options required to run Autonomous Database grew by 21%.

Combined, she said, those results are “making it abundantly clear that customers are investing in the Oracle platform.” Catz added, “I cannot stress enough the stability and growth of our base of customers.”

In that context, Ellison used this week’s earnings calls to drive home two points about the growing adoption of Autonomous Database. First, that early usage patterns among customers indicate even greater future demand than what the Oracle sales organization is forecasting. And second, that as the number of users of Autonomous Database continues to grow, Oracle’s huge network of developers will flock to the platform and create additional applications, extensions and other valuable add-ons for the new database.

Asked to give some insight on recent adoption of the Autonomous Database, Ellison said, “Let me give you what I think is maybe the most interesting thing we can say about this. We have two ways of forecasting our Autonomous Database business. One is the traditional way, where the field comes out with quarterly forecasts, we put together annual plans, and that’s in fact what we relied upon for years, in terms of giving you guidance.

“But now that we’re in the cloud business, we have some interesting additional data. Not around field sales, if you will, like bookings, for selling our cloud services and our technology. But rather, we have real data about consumption inside of our cloud and we started collecting the consumption data because, to add capacity to the cloud, as Safra said, depending on bookings, we might have to spend more money.”

And what did that consumption data reveal? Ellison continued:

“Right now, we’re getting signals from our usage in our Gen2 Cloud that is signaling much faster Autonomous Database growth than we’re seeing from our sales forecast. It’s just kind of interesting—but encouraging.”

As for developers, Ellison said, they’ve always been “the foundation of our business. We have over 1 million developers in our ecosystem already, and most ISVs, most of the current ISVs in the cloud use the Oracle Database. I mean, everything Salesforce.com runs pretty much is running on the Oracle Database.”

And Oracle is taking steps to enhance and tighten those relationships, Ellison said.

“Yesterday we were putting the finishing touches on a program we’re going to be announcing to developers at Oracle OpenWorld, which is basically free services to developers. So developers in college and entrepreneurs can tap into – this free service that will let the developers start on the Oracle Cloud, build their applications and graduate from being a – maybe a sole entrepreneur someplace in a dorm in MIT to eventually being an entrepreneur starting a company and then becoming an ISV,” said Ellison.

“That’s the cycle: we want to sign up people early, and we have all sorts of cloud programs we’re putting in place to be able to do that.”

Disclosure: at the time of this writing, Oracle was a client of Evans Strategic Communications LLC.

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