Oracle's fiscal first quarter results highlight a shift to the cloud as the company gained traction in areas such as platform-, software- and data-as-a-service, but CTO Larry Ellison is hell-bent on solving for the infrastructure-as-a-service piece and argued that the company can close gaps with Amazon Web Services.
Make no mistake. Oracle's infrastructure-as-a-service is the laggard when it comes to cloud growth. SaaS and PaaS revenue was up 82 percent in the first quarter compared to a year ago (in constant currency). The cloud portfolio bookings overall were up 42 percent from a year ago.
The revenue mix shows Oracle's transition to the cloud, which will be a primary topic at its OpenWorld conference next week (along with an updated database).
Why do IaaS at all? Oracle could do fine without the distraction of IaaS. Think of the Salesforce model -- it's software and platform. But the way Oracle sees it IaaS is an attachment to PaaS and Saas. The two flavors of cloud are sold together. As a result, Oracle needs to push the IaaS envelope -- a tall order given the lead AWS, Microsoft, and Google have.
Nevertheless, Ellison said OpenWorld next week will feature a big rollout of next-generation IaaS to compete with AWS. Ellison said:
We're very excited about the rollout of our generation two infrastructure-as-a-service data centers. These new data centers give us a significant cost and performance advantage over Amazon Web Services. Plus our new bare metal offering makes it possible for our customers to lift and shift their entire existing corporate infrastructure, data, and applications without any changes whatsoever and move it to the Oracle public cloud. You just can't do that with Amazon web service. Lift and shift the entire network, BM, database, data, applications, move all of that across to our data center without changing anything. It's a real advantage.
So for the first time, we have this big technology advantage in infrastructure as a service. We expect this will enable Oracle to accelerate our infrastructure-as-a-service business to the same high growth rates that we're currently experiencing in both SaaS and PaaS.
Ellison also added:
What we're looking for is the third leg of the stool, which is to push into infrastructure as a service, where we have an all new and very formidable competitor, Amazon, who we think now with our new generation-two data centers, we have a big competitive advantage over Amazon.com. And people will be buying our PaaS and our infrastructure as a service together.
According to Stifel analyst Brad Reback Oracle will push its IaaS as an offering that will promise twice the compute, storage, and more I/O at 20 percent lower cost relative to AWS. "We are more in a wait and see mode with respect to the level of success Oracle can anticipate from its new IaaS offering," said Reback.
Cloud service buyers may take that same approach.