Oracle, the King of Cloud? Maybe in Ellison's world

Oracle's executive team spent most of its second-quarter earnings conference call on Wednesday talking about its cloud business – which made sense, since that was the only part of the business that showed significant growth. As in last quarter's call, the trio of Safra Catz, Larry Ellison, and Mark Hurd chirped away about the …

[Otto is a bear.]

Grow the cloud, ignore the rest

You can see the logic for Oracle, Microsoft and the rest, get people into your cloud, and you have their revenue for the very long term. More or less, once you are in, it's very difficult and expensive to get out, and that's not just the direct migration costs.

So what if your software is uncompetitive in the retail market, you can make it very competitive in your cloud, and you have a much lower cost support environment and larger profits. Afterall, who cares about the private clouds, they should be in vendor clouds, and they will represent a very small percentage of the remaining market. Ching.

In the long ran IaaS, PaaS and SaaS will be an inhibitor of technology, because demand will shift towards large hosting companies with risk averse cultures, sure competition will drive it a bit, but will switching your cloud vendor give you much of a business advantage.

You can look forwards to retail sales dropping and becoming more expensive as the market contracts. I'd say the the number of new hosting vendors will drop away, if it hasn't already, because of the high startup costs. Only very large organisations will be able to afford on site IT, the rest will use, what were they called, oh yes Bureaus, comeback Centrefile, the 1960/70s business model returns, without the Mainframes.

[DaLo]

Re: Grow the cloud, ignore the rest

Yes, not only is it more difficult to get out but at least with an onsite system you can create your own tool to migrate data. You can also do this where your cloud acts just as a data store. However once your only access to the application is a web front end you may find that it is impossible to retrieve the underlying data (some of which you may be required to retain for x years for compliance purposes).

Therefore you may find that legally it is impossible to stop using your cloud service and the only way to get out of it is to phoenix the company and start again - quite a dramatic move.

[Anonymous Coward]

Re: Grow the cloud, ignore the rest

"says Oracle is on track to be "the leader in cloud," "

Presumably he really means the leader in obscuring your vision with large boat anchors...

Or perhaps he means they have been doing well on Azure?

[amanfromMars 1]

Is VaaS on Offer from Larry and Co. for Support and Sustaining of Hype in the Oracle Business?

Beware and take great care if you dare with IT to win win ....... Vapourware as a Service is not a business to be in partnership with less than Stellar Trading Principled Principals ..... or be a Principal in, with less than Stellar Trading Principled Partners.

[Joe 35]

Revenues are not profit

"Amazon doesn't break out the financials of its Amazon Web Services cloud business in any detail, but the business unit under which it reports earned revenues of $1.34bn in its most recent quarter alone."

And didnt Amazon make about $20 profit or some such?

[Anonymous Coward]

Re: Revenues are not profit

That's what they told the various tax authorities, anyway.

[Anonymous Coward]

The evolution of the cloud market is a little more complex than this article suggests. As someone else has already stated, revenue is not profit; the fact that Amazon can sell IaaS at a loss by undercutting everyone else doesn't make for a long term business model.

Another analysis on this site looks at the long term trend where IT spend is shifting back to the lines of business and away from IT (http://forums.theregister.co.uk/forum/latest/2014/12/15/cios_grip_on_budgets_loosened_by_shadow_it_says_survey/)

It may be a generalisation, but lines of business want to buy the fully managed solutions offerred by SaaS, not the toolkit offerred by SaaS. IaaS is here to stay for certain classes of applications, but for mainstream corporate IT, it simply doesn't make sense. Business execs want ERP, HR, marketing and many similar core applications to be low cost, and need minimal capital investment. IaaS may reduce hardware cost (although hardware is dirt cheap these days compared to either software or services) but the capital investment required for build your own software, and the operational costs of operating low level IaaS just doesn't stack up.

For sure IT loves IaaS - it supports their headcount - but IT will find it hard to compete with SaaS companies offering CRM for £45 per seat and where those sales are being made direct to non-IT C level execs.

There is huge potential growth in cloud for enterprises to shift from old, creaking and often under-supported (because of the inevitable IT cuts) to modern, fully supported and managed SaaS services. This migration is only just starting. There are, of course, many barriers along the way (e.g. data privacy, data security etc) but this migration of apps to cloud looks pretty inevitable.

[Anonymous Coward]

Please give generously to the Larry Ellison benevolent fund as his yacht isn't big enough so needs to buy a new one, preferably a Nimitz-class aircraft carrier.