Larry Ellison’s Miracle: Oracle Becomes Big-Time Cloud Infrastructure Player

Back in 2013, Larry Ellison’s Team USA was on the brink of elimination in the America’s Cup sailing competition. Team New Zealand, up 8-1, needed just one more win to seize the cup.

On the afternoon before the next race, I happened to be in a meeting at Oracle HQ that Ellison attended. When he walked in, someone gloomily asked how the team was doing as the inevitable approached.

With a smile and a look of utter calm, Ellison replied, “Oh, they’re fine. We’ve looked at the data, made some adjustments, and we now have the faster boat. And since we have the best team and now we have the faster boat, we’ll win. 

“So they’re fine.”

And Team USA reeled off 8 straight victories to win the Cup, 9-8, completing one of the greatest and most-astonishing comebacks in the history of sports.

Can Oracle win in Iaas, or at least place?

Right now, in the IaaS Cloud Wars, both Amazon and Microsoft are leading Oracle by the equivalent of more than 8-1; Oracle’s IaaS revenue would represent barely a rounding error for that of either Amazon or Microsoft.

But the big difference is that this isn’t a close-ended race to 9 victories like in the America’s Cup—this is an open-market competition that will play itself out over the next 5 years.

And while both Amazon and Microsoft have IaaS revenue—not their total cloud revenues; just their IaaS revenues—that’s probably 50x higher than Oracle’s IaaS revenue at this time, Oracle’s got the databases that hold and manage most of the world’s critical business information.

Oracle’s also got the world’s first and only autonomous cloud-native database that can optimize the journey to the cloud for the hundreds of thousands of on-premises databases business customers are using.

And now, Oracle is offering that cloud-native Autonomous Database not only in the cloud, but also on-premises, right smack-dab in the customer’s data center and behind the customer’s firewall.

Amazon and Microsoft don’t have anything like that.

Amazon and Microsoft’s leads vs. Oracle’s fast boat

So Larry Ellison has the right to convey that he believes he once more has the best team and the fastest boat, with the boat this time taking the shape of his Autonomous Database, Oracle’s Gen2 IaaS, its large and fast-growing suite of SaaS apps and its Autonomous Linux. And in an online presentation yesterday, Ellison did just that. (After all, he’s a true believer: 10 Reasons Larry Ellison Believes Oracle Can Beat Amazon and Microsoft.)

In the cloud-infrastructure wars, where Amazon and Microsoft and Google are so far ahead that Oracle barely registers a blip on the market-share charts, could it be possible that Larry Ellison does indeed now have the best team and the fastest boat?

And that, as was the case in the 2013 America’s Cup, the fastest boat always wins?

Let’s look at both sides of the argument. 

First, the “hell no” side.

1. Microsoft has built an end-to-end cloud juggernaut that customer CEOs are embracing as the best path to digital transformation. True, it doesn’t have the Oracle Database in all its variations—but it does have some new and modern databases and data-management tools that Microsoft believes can take the wind out of Oracle’s sails (sorry for the sailing cliche, but it seemed almost appropriate!). You can read all about that in my recent analysis called Hey Larry Ellison: Microsoft’s #1 Priority Is Replacing Oracle Database.
2. Amazon has built such a powerful brand in public-cloud infrastructure, and has such loyalty among developers and IT leaders, that even if Oracle gains significant momentum in IaaS, it still can’t come close to catching Amazon.
3. Google Cloud CEO Thomas Kurian is, like former mentor and boss Ellison, rewriting the rules of the cloud to align with the unique capabilities of his company. Kurian is betting that Google Cloud can be not only a cloud-infrastructure behemoth but also a cloud-software innovator that can soar up the stack with AI- and ML-driven solutions. With that unique combination of next-gen industry-specific solutions, data-management expertise, and powerful IaaS, Kurian believes Google Cloud will remain the fastest-growing vendor in the Cloud Wars Top 10. 

And now, the argument for “the fastest boat always wins—and we have the fastest boat.”

1. Ellison is intensely and intimately focused on reinventing Oracle as an IaaS heavyweight as demonstrated by:

• his unique decision to reposition Autonomous Database in the IaaS category instead of the traditional PaaS category;
• his bold proclamations that one year from today Oracle will have far more cloud regions around the world than Amazon; and 
• his personal stewardship of “autonomous” as the defining breakthrough technology in the cloud. 

2. Winning the IaaS wars will require, of course, much more than the Oracle Database franchise. The new cloud-native Autonomous Database is a huge step forward for Oracle, and if a majority of Oracle customers decide it’s their best path to the cloud, Ellison will have scored a massive achievement.
3. Oracle has greatly expanded the addressable market for Autonomous Database by making it available in an on-premises version via its “Cloud@Customer” program. Many big customers want to live in both the cloud and on-premises world, and by packaging Autonomous Database in an on-prem version, Oracle is giving customers a huge additional incentive to say yes to Oracle.
4. Ellison yesterday unveiled a very cool—and very unprecedented—cloud service that is, unfortunately, saddled with a name that only marketing-averse deep-code engineer could love: “Oracle Dedicated Region Cloud@Customer.” That clunker of a name aside, the premise is this: for $500,000 per month, Oracle will install within your own data center an exact replica of its entire massive portfolio of cloud offerings: Autonomous Database, Fusion apps, Gen2 infrastructure and everything else. Even if that end-to-end approach isn’t exactly what most customers are looking for, it will surely open a lot of fresh conversations about what’s possible. And again, for a competitor coming from dead-last as Oracle is, that’s a huge win.
5. In Oracle’s fiscal Q4 ended May 31, revenue for Oracle’s Gen2 public cloud rose 140% over the year-earlier quarter. No doubt that’s off a very small base, but 140% is a big step in the right direction—can Oracle keep that growth rate up there as the base gets bigger?
6. In the same context, Autonomous Database revenue grew 70% in Q4, Ellison said. Again, 70% is lovely—even off an admittedly small base—but in my opinion, that number does not match up to the enormous hype Ellison and Oracle have given to Autonomous DB. Either that number needs to go up in future quarters, or Ellison has to explain very clearly why this revolutionary product is delivering relatively pedestrian results.

Closing thought

Clearly, Ellison and Oracle have much, much more to be achieve. But this is a bracing and exciting opportunity for Oracle and for Ellison, the master of the long game.

Oracle might never come close to matching Amazon, Microsoft or Google in IaaS revenue, but Ellison is making damn sure that Oracle’s in the race and forcing the competition to be very, very aware of his presence.

Disclosure: at the time of this writing, Oracle, Microsoft and Google Cloud were among the many clients of Cloud Wars Media LLC and/or Evans Strategic Communications LLC.

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