Three things were striking about Larry Ellison’s kickoff keynote at Oracle OpenWorld last night
a) he was at his late night host best – I must have been a sight as I burst out in humor every few minutes
b) he must have spent the week reading all the press releases Oracle issues during this event. My friend Holger Mueller said he counted at least 18 new product announcements during the 2 hour talk
c) Amazon Web Services got a lot of attention.
It’s not a bad strategy to be associated with a market leader like AWS (and Larry also invoked Workday and Salesforce as leaders in applications), but to me the opportunity for both the “lift and shift” and “private cloud” strategies Larry talked about, is far bigger than what Amazon is targeting
Look at hosting in Oracle’s customer base. Those running PeopleSoft, JDE, EBS and countless other packages in the Oracle family use some form of internal data center or external hosting with IBM, HP and many others. That’s a captive market for Oracle IaaS to explore. Even more promising are SAP, Infor and countless other legacy customer bases who are today mostly using AWS or MS Azure in dev/test mode or as “burst” capacity.
Oracle, however, faces several challenges as it pushes deeper into the IaaS space
a) Be prepared for massive CapEx investments. When I interviewed Microsoft in 2010 about their Azure data centers, they had already invested several billion in their infrastructure. 6 years ago! Amazon, Google, even Facebook have made similar large CapEx investments
b) Expand its team of data center experts. If you look at how the DC design science has evolved in the last decade, its been about resiliency at scale, next-gen thermodynamics, global site selection expertise to optimize latency, tax benefits, energy economics, physical and information security. Oracle will have to up its game
c) Rethink business models. Would Oracle have – voluntarily – shared 50+ price cuts over a decade with its customers like AWS has? May be, if you ask its Sun customers, but not so if you ask its enterprise software customers. Will Oracle step up to much more stringent SLAs? Sure it can, but it will need a significant organizational culture shift.
I think the opportunity for Oracle around IaaS is huge – but so are the challenges.