Oracle customers and partners say that Larry Ellison may never achieve his dream of toppling Amazon, but the future of its cloud looks bright anyway
- Oracle founder Larry Ellison sees the tech giant eventually beating Amazon in the cloud, given its tech arsenal and huge customer base.
- We talked to some customers and partners who believe Oracle could play a bigger role in the cloud, but faces an uphill fight against Amazon.
- "Oracle is late to the game," one partner told Business Insider. "They're playing catch up and it's really, really hard to play catch up."
- So while Oracle may never topple Amazon in the cloud infrastructure market, there's still a silver lining for the database giant: Its cloud applications are growing fast, and it has a huge amount of existing customers who haven't necessarily even begun moving to the cloud.
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A few days before Oracle began its OpenWorld event in San Francisco, Larry Ellison, the tech giant's founder, acknowledged that building a cloud system is hard - and grudgingly admired the way rival Amazon has shown rivals how it's done.
"A lot of people have tried to build cloud systems," Ellison told analysts during Oracle's earnings call. "It's not easy. I can attest to that. I have lots of scars...Our approach, I mean, sometimes they're critical of Amazon. Sometimes I try to learn from what they do. I mean, they were the innovator in cloud, and I give them credit for that."
But Oracle is fighting back, Ellison has said, painting a future when his company would one day play a much bigger -, if not dominant - role in a market now dominated by Amazon, Microsoft and Google.
That message reverberated at the convention where Ellison pivoted back to a more combative tone against Amazon, reminding attendees of the Capital One data breach believed to have been caused by user error that allowed an attacker to breach an Amazon cloud server and steal personal information from millions of customers.
Ellison takes aim at Amazon
"Clouds are complicated," Ellison said in his speech, in which he again touted Oracle's cloud platform as being far more secure than Amazon's. "The Amazon data breach where Capital One had 100 million of their customers lose their personal information happened because of a mistake...In the AWS cloud, if you make an error, and it leads to a catastrophic data loss, that's on you."
At the conference, some customers and partners expressed optimism about Oracle's chances in the battle against Amazon, even as they pointed to hurdles and some serious baggage the company brings to the fight.
Christian Primeau, global CEO of Syntax, a cloud management services company that works with Oracle, Amazon and Microsoft, said he definitely sees Oracle eventually joining the top tier of the cloud market.
But beating Amazon is another story, he said.
"I think Oracle is going to make it into that quadrant," he told Business Insider. "Are they going ahead of Amazon and, if so, how long is it going to take? Your guess is as good as mine...Oracle is late to the game. They're playing catch-up and it's really, really hard to play catch-up."
Amazon last year owned nearly half of the $32 billion cloud infrastructure market, which covers basic components of a cloud platform including access to servers and storage, according to Gartner. It was followed by Microsoft with 16%. Oracle was not in the top 5, though Google, Alibaba and IBM were.
Oracle was fifth-place in platform services, the segment that makes it easier for customers to create and run applications with programming tools and processes. It is in cloud applications, also known as software-as-a-service, where Oracle is strongest, coming in behind only Microsoft and Salesfore, according to Gartner.
'Oracle sits on a very rich set of applications'
Starbucks executive Jayabindu Singh affirmed Oracle's claim that its formidable arsenal of applications could propel it to the top of the cloud market.
"Oracle sits on a very rich set of applications, and no other provider has that," Singh, the coffee retailer's director of corporate technology engineering, told Business Insider. "The day Oracle figures out how to run that in their cloud, and how to bring customers to it, Oracle will be a leader. No doubt about it, but it will take time."
Oracle also boasts that its huge customer base of more than 400,000 companies, including some of the biggest corporations in the world, gives it a huge edge against rivals. Compared to Oracle, which has been selling technology to enterprises since 1977, Amazon, which launched its cloud business in 2006, is seen as a newbie in enterprise tech.
H.O. Maycotte, CEO of Molecula, a data virtualization startup and an Oracle partner, said the fact that Oracle is the top maker of database systems where the world's biggest companies store their data gives Oracle an enormous advantage in the cloud showdown with Amazon.
"The reality is about 95% of the world's data is still on-premise," he told Business Insider, using the industry term for traditional data center and server infrastructure. "With those companies that move off-prem and into the cloud, it tooks like Amazon is winning."
But the rise of hybrid cloud, in which businesses move parts of their networks to cloud platforms, but maintain huge chunks of their data and applications in private data centers, benefits traditional enterprise tech players, including Oracle.
"The borders around the cloud are about to go away, and I think Oracle stands a really good chance of continuing to own the systems of record," Maycotte said. "They'll continue to own the most important clients, the most important accounts."
Oracle as a veteran of the enterprise market
Oracle is also a veteran of the enterprise market, Primeau of Syntax said: "Oracle is very, very strong from a sales standpoint in the enterprise. They know the game. They understand the game. They know how to sell to a CFO. They know how to sell to a CEO...They've got the IP, they've got the size, they've got the brand to really be a key player in the industry for sure."
Ross Fujii, vice president of product strategy at Solarwinds, a network management software market and another Oracle partner, echoed this point, telling Business Insider: "Their background is definitely enterprise. They come with that strength."
But Fujii repeated a common downbeat view of Oracle's cloud infrastructure: "They're just behind." This makes it tougher for Oracle to dominate the critical segment of the cloud market where Amazon is the undisputed king and and a trailblazer.
"A company like Amazon will continue being extremely successful," Primeau said. "The pace of innovation from AWS is something that in my 30 years of industry experience, I've never seen anything close to that.
Ellison and other Oracle executives say Oracle is leading the rise of a second generation cloud, based on more advanced, more secure technologies. And they expect most of their customers to make the move to Oracle cloud.
'Our customers have been waiting'
"The reality is that most of our customers have been waiting for us," Oracle CEO Safra Catrz told analysts on the company's last earnings call. "They've not brought those critical large and security-conscious workloads … to the cloud so far. They didn't bring them to the other vendors. The other vendors are all actually having trouble in the enterprise with these important workloads. They have been waiting for us."
Another view comes from conversations with some Oracle customers.
Thornborn Johnson, a data architect with Nordea, a Denmark-based financial services company and an Oracle customer since the 1990s, said Oracle's cloud infrastructure "looks promising." But he said Nordea, which already uses the Microsoft Azure cloud, has yet to evaluate future cloud moves. Asked if Oracle will automatically be a top choice, he said, "Definitely not."
While Oracle boasts of a huge customer base, it is also known for having strained relations with some clients. Osama Elkady, CEO and co-founder of Incorta, a data warehousing startup, and a former 20-year veteran with Oracle. He called the tech giant "a big sales machine" with sales reps known for using aggressive tactics.
Singh, Starbucks' technology engineering director, offered a different view, saying Oracle "has been a good partner." Raman Galla a database administrator with Boardwalk Pipelines, a Houston-based energy company which uses Oracle systems in private data centers, also said Oracle "has been reliable and customer service is good."
But he said Oracle also has been trying to get his company to embrace its cloud products, which is not always helpful. "They are pushing the cloud," he told Business Insider. "They need to give more choices to the customer and let them decide."
Singh said Starbucks uses Oracle database and applications in a private data center, but it also maintains some of its network in the cloud. But Starbucks is not using Oracle's cloud. Instead, it chose Amazon and Microsoft for its cloud computing needs.
Singh said Oracle has also been pushing Starbucks to shift to Oracle's cloud software offerings. Oracle's approach, he said, has been "definitely aggressive."
"We will only make a decision when we are ready for it," he said. "It doesn't matter how ready Oracle is and how ready anyone else is. Our decision will be based on our readiness, not based on their readiness."
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