Ellison's 'What, me worry?' moment on cloud computing

I really like this post by WaveMaker CEO Christopher Keene, deconstructing Larry Ellison's aversion to cloud computing.

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, etc.). 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 ticked--you would be too if you just spent more than $30B...on a bunch of wasting assets that are going to be shafted by the Cloud/SaaS shift just as Siebel's market share was eviscerated by Salesforce.

Larry Ellison is a smart guy, and Oracle is a hyperaggressive company capable of beating most companies on the market. While Keene's macro view is probably spot-on, I suspect that Oracle isn't going to turn into Computer Associates overnight and start an inevitable decline.

No, Oracle has single-handedly assured its long-term appeal by consolidating the market around its database technology with that same $30 billion in acquisitions. It's not necessarily good for customers that are locked into Oracle to an increasing degree, so much so that they can offer but token resistance to Oracle's pricing power, but it's good for Oracle's profitability.

Still, I think there's something to software as a service. Will it change the world overnight? No, it has already failed to do that. But it's a long-term threat to an old-school way of delivering software, one enabled by the Web and ever-improving bandwidth. Ellison is safe today, but tomorrow? That's another chapter.

[Pishkado]

If Oracle's customers want SaaS, which at least some of them do now and more of them will in the future, nothing Oracle can do will stop them from getting it. Oracle's only option, if it wants to hold on to this growing fraction of its customers, is to make it possible for them to get it from Oracle. Yes, that means less revenue than they'd get by selling them apps to run on their own servers, but it means more revenue than they'd get from losing them to the competition.<br /><br />Failure to recognize this fundamental truth has been the downfall of many companies in the past, including some of the biggest names in computing history. You'd think Oracle would have learned, but egos can get in the way. Nobody ever said Ellison doesn't have one.

[MadLyb]

Yay! A voice of reason...you, not Keene. <br /> <br />I think XaaS will only have significant penetration in new business models for the next couple of years and then only with ones that have a minimal footprint into areas like privacy and security. <br /> <br />For existing businesses, it will take many years and lot more maturity in both the technology and the business models for "Cloud Computing", before adoption is significant.

[daves_done]

I never thought I'd say this, but I hope Ellison is right. I don't want to leave my data on a machine that does not belong to me. 'Cloud Computing' will create the ultimate in vendor lock-in and will probably increase the risks of identity theft. The only thing I leave on a server that doesn't belong to me is personal email (that doesn't contain personal info), &#38; I'm not really comfortable with that. I'd also like to see how businesses in the medical field could remain HIPAA compliant with a cloud infrastructure that doesn't belong to them and how all other business could remain compliant with SOX.

[U. Tripps]

My very first SaaS experience was with an Oracle product called NetLedger (now NetSuite). It was still in it's infancy, but obviously had great potential.

[U. Tripps]

daves_done is correct about that. When we switched from NetSuite to SAP, as required by our parent co., we did not have a good or affordable way to keep or transfer the transactional data from NetSuite to SAP. Reams of printouts and excel spreadsheets in your archives, anyone?

[daves_done]

Yeah, I would never surrender my data to the 'cloud' and furthermore I can't say I see the basic design of the PC as it is today changing very much in my lifetime. <br /><br />I can't see how enterprise backups and data validation wouldn't become a nightmare.<br /><br />The closest thing to 'Cloud Computing' I see gaining more ground in the enterprise is the presence of thin clients and terminal services. I can see the 'mainframe' coming back into play.