No longer disparaging, Oracle czar Larry Ellison now sings the praises of cloud computing.
As recently as 2009, Ellison was one of the industry's biggest cloud-bashers, questioning what the cloud really was, accusing venture investors of latching on to the latest fad and dismissing the cloud the hot fashionable buzzword of the day.
But since then Ellison's views on the cloud seem to have evolved. Today he's out and about speaking of the benefits of Oracle's ever-expanding cloud offerings. Last week he even spilled the beans on news his company will make at its OpenWorld show next week, expanding the Oracle cloud from a software as a service (SaaS) and platform as a service (PaaS) play into the infrastructure as a service (IaaS) market.
Some say Ellison's disparaging views of cloud reflected the threat cloud software vendors, such as Salesforce.com, Amazon Web Services and others, could play to Oracle. Others say it's just Larry being Larry. "Take Larry for what he is," says Michael Fauscette, an IDC analyst who covers Oracle. "He says a lot of things to be controversial." Now the question is what, if anything, Ellison's FUD-spreading in the cloud will mean for Oracle's own plans in this space.
BACKGROUND: Oracle quietly plotting ambitious cloud plan
Ellison's views of cloud computing could be described as having evolved during the past five years. There are multiple YouTube clips of Ellison disparaging cloud computing, calling it a fad, nonsense and "gibberish."
"When is this idiocy going to stop?" Ellison said at a 2008 analyst conference (watch video here). "What the hell is cloud computing?" he has asked multiple times publicly. In that video Ellison goes on to say Oracle will get into the cloud for marketing and sales. "Whatever, we'll make cloud computing announcements because, you know, if orange is the new pink, then we'll make orange blouses," he says. "I mean, I'm not going to fight this thing ... maybe we'll do an ad. I don't understand what we would do differently in the light of cloud computing other than marketing, than, you know, change the wording on some of our ads. It's crazy."
A year later, Ellison was equally dismissive of the cloud, saying that it has become an all-encompassing term to define anything in enterprise computing. "My objection is the absurdity," he says, before launching into a colorful rant, while taking a shot at venture capital investors spreading the hype about cloud.
Since then, Ellison has seemed to come around to the idea of the cloud though. During the past two years Oracle has been aggressively building out a broad cloud strategy through both internal development and major spending on mergers and acquisitions. Two years ago at Oracle OpenWorld Ellison said Oracle's cloud would be a "comprehensive development and execution environment that could run virtually all of your applications." This summer Ellison held a much-hyped press conference in which he changed the name of the company's cloud strategy from Oracle Fusion to Oracle Cloud.
On the software side, Oracle now offers more than 100 apps delivered in cloud-based software as a service model, including versions of its two major acquisitions from the past two years, the $1.9 billion purchase in February of human resource and talent management company Taleo and the October acquisition for $1.4 billion of customer service app RightNow. Those, along with other apps for financial management, procurement and social networking are all delivered through the cloud.
Oracle also has a platform as a service offering, in which developers can leverage Java development frameworks and the company's database management and middleware tools to create and deploy applications, all using Oracle's Exadata and Exalogic hardware boxes.
And now Ellison is set to announce yet another leg of its cloud platform at next week's OpenWorld conference, which he hinted would be an infrastructure as a service (IaaS) offering.
So does Ellison have some egg in the face after the seemingly 180-degree turn in his public statements regarding the cloud? "You could say that," says Forrester analyst Andrew Bartels. But in defending Ellison, Bartels says that CEOs, especially the outspoken ones, tend to make strong statements only to find out that the world changes around them. Another view is to give Ellison credit for recognizing the world has changed since his earlier comments he did something about it. Ellison has said, though, that Oracle has spent the last seven years building it cloud platform. By that math, Ellison's Oracle may have been working hard internally on cloud platforms while making those statements about it being "nonsense."
Cloud is a challenge for many software vendors though, Bartels says. While cloud-based software only represents 8%-10% of total software revenues today, Bartels says that's a slightly misleading figure because the total software revenue pie includes maintenance costs that are linked to on-premise licensed software, which vendors don't collect in a SaaS model.
About 40% of new applications, Bartels says, are purchased in SaaS-based models. The cloud, he says, doesn't pose a short-term threat to Oracle, but over the long term it could be a challenging position for companies that have relied on service and maintenance revenues. Perhaps that could be part of the reasoning behind Ellison's past dismissal of the issue, and the company's aggressive moves to be part of the what Ellison once called a fad.