Larry Ellison: Cloud, SaaS All Gibberish
By Daya Baran at September 28, 2008 6 Comments|
Larry Ellison, Chairman, Founder and CEO of Oracle shared Oracles vision and opened the floor to questions. The first one question was: What is Oracle doing about cloud computing? Ellison smirked and then belted out his thoughts on cloud computing. Here’s a slightly edited excerpt as reported by the Wall Street Journal and Reuters. “What the hell is cloud computing? We’ve redefined ‘cloud computing’ to include everything we currently do. So it has already achieved dominance in the industry. I can’t think of anything that isn’t cloud computing. These people who are writing this crap are out there. They are insane. I mean it is the stupidest. Is it – ‘Oh, I am going to access data on a server on the Internet.’ That is cloud computing? We’ll make cloud computing announcements because if orange is the new pink, we’ll make orange… Okay fine, we’ll do some cloud. The computer industry is the only industry that is more fashion-driven than women’s fashion. I remember I was reading Wand I read that orange is the new pink. And cloud is the new SaaS. (Software as a Service) Or cloud is the new virtualization. It is the most nonsensical. I mean I read these articles … I have no idea what anybody is talking about. I mean it is really just complete gibberish. When is this idiocy going to stop? And Maybe we’ll do an ad. I don’t know what we’ll do differently in light of cloud computing other than change the wording on some of our ads. It’s crazy. So that’s my view. On SaaSWe’ve been in the on-demand business for almost a decade and we’re the second-largest on-demand provider in terms of sales behind Salesforce.com. I’ll say that Q4 was the first quarter we actually made money in the on-demand business. If you look at the on-demand business overall — again, we’re enthusiastic about it. We continue to get better at it and grow the business. As you point out, it’s not really growing any faster than our overall business. It’s staying at a constant small percentage. We think that’s going to change over time. But the entire on-demand industry has to get better at making money in selling on-demand software. If you look at the leader, Salesforce.com, they don’t make very much money and they’ve been at it for almost ten years. It’s hard to point to any software as a service provider that’s doing a good job of improving their profitability. I think that’s what we are focused on before we scale the business. The last thing we want to do is have a very large business that is not terribly profitable and drags our margins down. So we’ve used, if you will, our first 10 years to figure out how to do this profitability and now that we are profitable in on-demand, hopefully we will grow it at a faster rate than the business as a whole. Responding to Brent Thill of Citigroup on Oracle’s SaaS Strategy, June 2008, Oracle Corporation
|
Last week in San Francisco, Orcale unveiled the company’s 
Oracle To Buy Sun: A Stroke Of Genius
Tags:
cloud computing, oracle, saas
6 Comments
Ellison has been around to long to put up with BS. Maybe offering an erp application on the internet that allows a company it’s own application space is slightly useful. Beyond that many people make their internal applications available to employees and vendors over the internet, many companies offer their services completely on the internet. And Cloud erp applications are not new, tymnet and ask were doing cloud without the internet 20+ years ago. Saleforce’s “Platform”? There are 100+ tools that allow you to write an Internet application nowadays. Is saleforce’s infrastructure better, cheaper, faster than those 100 alternatives? I doubt it.
I rarely agree with Larry Ellison, but I do feel the “fashion” comment fits like a glove. Look back over the past 35 years or so of computing technology and marketing hype. The trade rags all flock to the latest buzz-words and we all have to retool our vocabularies to match the current slang.
My concern regarding SaaS is what will we all do when the SaaS industry gets as big as AIG and Morgan Stanley and goes belly-up. I’m not willing to pull those guys inside my risk envelope. I care too much about the long term value of my company to my shareholders. Security, stability and a greater control over my IT destiny is worth a small premium.
Here is Geva Perry’s response.
To answer Larry’s question, here are three things Oracle can do differently:
1. Offer their middleware and database customers a pay-per-use pricing model on cloud environments such as EC2, Joyent, GoGrid and Flexiscale. Charge by the hour and only for cpu/hours actually used.
2. Offer all of their application software on a SaaS/on-demand subscription basis
3. Develop products that are suitable for virtualized highly-distributed environments, and therefore, or are not highly dependent on centralized components such as their database
Oracle won’t do this. Why? http://gevaperry.typepad.com/main/2008/09/larry-ellisons-anti-cloud-computing-rant.html
I always felt that Larry Ellison was kind of a jerk. But he’s MY kind of jerk.
I’ve been in the industry for 16 years. In all that time I’ve noticed one thing. Whenever there’s a new buzzword or, more generically, “term”, it means different things to different people. You could throw out a term to a group of industry people and you’d get 5 different responses to what they think it means, and every single definition would be completely different. That’s why when I see a new term being thrown around, my first thought is “Geez, people, you’re KILLING me!”.
Also, I really believe that things like “Cloud” and “SaaS” are features, and not products. This has been a problem in the industry for a while. People seize on one thing and try to make a whole product out of it, instead of taking a more balanced approach and making it a part of a whole. It’s like trying to make a whole meal out of pickles instead of making it a part of your sandwich. Before long, people get sick of pickles and they never want to see another pickle again.
Larry’s rant is an extraordinary example of whistling past the graveyard. Oracle’s huge transformation over the last 10 years has been from an infrastructure company (databases & middleware) to an applications company (ERP, CRM, SFA ect). Now, just as this transformation is completed, along comes an infrastructure that will obsolete all the applications Oracle just got done rolling up. No wonder he sounds pissed – you would be too if you just spent >$20B on a bunch of wasting assets that are going to be shafted by the SaaS shift just as Siebel was eviscerated by SalesForce. The dead giveaway is that Larry focuses on SaaS profitability rather than SaaS market share – he knows the customers are deserting him in droves, what really angers him is that he can’t make as much money in the SaaS world.
[...] like Larry Ellison’s rant on that topic and I must admit I side with him. I have been planning and building hosted services [...]