Oracle's Larry Ellison Compares Company's Offerings to Amazon's
September 19 2016 - 8:30AM
Dow Jones News
SAN FRANCISCO—Oracle Corp. co-founder Larry Ellison brashly
predicted Sunday night that the software giant will provide stiff
competition to Amazon.com Inc. in providing computing power and
storage in the cloud.
It is a market where Oracle barely registers now.
Mr. Ellison, the executive chairman and chief technology officer
of the Redwood City, Calif., company, said Oracle's latest
technology in the market, known as infrastructure as a service, is
faster and cheaper than Amazon's technology.
"Amazon's lead is over. Amazon is going to have serious
competition going forward," Mr. Ellison said during his Sunday
night keynote speech at Oracle OpenWorld, the company's annual
conference for developers, partners and customers in San Francisco.
"We now have a tech advantage over Amazon in infrastructure as a
service."
An Amazon spokeswoman declined to comment.
But Amazon, which pioneered the market a decade ago, dwarfs
rivals. Earlier this year, Morgan Stanley estimated that Amazon Web
Services generated $7.9 billion in sales last year, nearly eight
times as much as Microsoft Corp.'s Azure, the second largest
infrastructure-as-a-service player. Alphabet Inc.'s Google Cloud
Platform registered third, at about one-sixteenth the size of
Amazon's business, Morgan Stanley estimated.
When Mr. Ellison hinted at the infrastructure push and challenge
to Amazon during the company's fiscal first-quarter earnings
conference call Thursday, analysts were skeptical. Deutsche Bank
analyst Karl Keirstead wrote in a report Friday, "We don't believe
[Oracle's infrastructure-as-a-service offering] will be competitive
anytime soon." Stifel Nicolaus & Co. analyst Brad Reback noted
Oracle's "limited" success in the market in a Friday research
report, adding that the firm is in "a wait-and-see mode with
respect to the level of success" of the new service.
Oracle is trying to pivot from a seller of software licenses, a
lucrative business that is shrinking for the company, to web-based,
subscription services. Its cloud-based business applications, known
as software as a service, are growing quickly, as are its web-based
tools to program and manage apps and analyze data, called platform
as a service.
But as more companies shift their operations to the cloud, the
infrastructure-as-a-service market is crucial for Oracle. That is
because moving to the cloud puts much of a company's computing
operations in play.
And Amazon is aggressively making a bid for that business.
Earlier this year, the company introduced new technology to make it
easy for customers to move data to its data centers with AWS
Database Migration Service. It was a direct threat to Oracle.
Perhaps the biggest obstacle to Oracle's challenge to Amazon is
building the massive, and expensive, data centers around the world
that are required to handle global customers' computing needs.
Amazon has spent billions of dollars building those operations. Mr.
Ellison didn't say how many data centers Oracle has, or how much
the company plans to spend to build its rival business.
It is clear that Mr. Ellison expects Oracle to build its
infrastructure business with its existing customers. They want to
ease into cloud computing, taking their time to transition away
from running data on their own servers. Oracle has developed
technology to let customers make that move "with the click of a
button," Mr. Ellison said.
"There is going to be a 10-year period of coexistence where you
have data centers [run by customers] and applications in the
cloud," Mr. Ellison said. "It's very important that those things
coexist gracefully."
Write to Jay Greene at Jay.Greene@wsj.com
(END) Dow Jones Newswires
September 19, 2016 08:15 ET (12:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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