Oracle keeps eye on the prize: Dominating the cloud market

Oracle's executive chairman doesn't mince words about the competition, paying credit to a few legacy veterans while brushing off others as irrelevant.
Written by Rachel King, Contributor
SAN FRANCISCO---A quick glance at the sea of red and white banners flooding the blocks in and around San Francisco's Moscone Center is all it takes to glean where Oracle's focus is right now.

The simple answer: the cloud.

"Along with Microsoft, we're the only one working at all three layers of the cloud," remarked Larry Ellison, executive chairman and chief technology officer at Oracle, on Sunday evening.

Tens of thousands of customers, investors, analysts and media have descended once again for Oracle OpenWorld, the tech giant's flagship conference.

Many of them will be zeroing in on Oracle's cloud stack to see if it matches up in an exceedingly crowded market -- not to mention with Oracle's own ambitious goals for market dominance.

Trumpeting the "integrated cloud," Ellisonopened the show by unveiling new products for managing cloud-based apps and platform services.

Among them are two major new applications for manufacturing and e-commerce, which Ellison characterized as stepping stones as Oracle "fills out its footprint" in the cloud.

In the wake of a disappointing earnings report last month (including a miss in cloud revenue during the first quarter), Oracle has its work cut out for it this week as well as the next few months.

Oracle executives have been asserting for nearly a year now that it plans to achieve between $1.5 billion to $2 billion in new Software-as-a-Service (Saas) and Platform-as-a-Service (PaaS) bookings by the end of the year, aiming to surpass rival Salesforce.com and take over the market.

Ellison followed up on that prediction on Sunday, projecting Oracle will "sell more new business" in SaaS and PaaS than any other company around. More specifically, Oracle plans to sell at least 50 percent more than Salesforce, Ellison projected.

Yet, in a brief retelling of the cloud market over the last two decades, Ellison insisted we're really just in the "middle" of what is taking shape in the market, suggesting top players now have run rates upwards of $6 billion versus $100 million a few years ago.

The first cloud companies, like Workday and Salesforce as cited by Ellison, were cloud companies 15 years ago before "cloud" became the default catch-all category.

But it has been a decade since Oracle realized it would have to rewrite virtually all of its applications to run "as-a-Service," Ellison recalled, acknowledging more work had to be done, including retooling all of Oracle's middleware and databases.

But during that time frame, Ellison reflected on how the competition has changed too. The former CEO pointed toward Salesforce, Workday and Amazon Web Services as competitors at different layers in the stack.

But Ellison didn't mince words about two other industry stalwarts.

"We no longer pay attention to either one of them," Ellison said flatly about IBM and SAP, admitting it has been "quite a shock."

In some cases, Oracle is blatantly going head-to-head with its competitors. For instance, Ellison promised Oracle will always at least match -- if not outright beat -- Amazon Web Services on pricing.

AWS, much like Microsoft Azure and Google Cloud Platform, is famous for routine price cuts for cloud services throughout the year.

Nevertheless, Ellison also promised Oracle will never price higher than AWS.

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