Michael Liedtke June 07, 2012
Not the moon, the cloud... Oracle CEO Larry Ellison at the company's headquarters unveiling new cloud services. Photo: Robert Galbraith
Business software maker Oracle is finally adapting to a shift in computing that was threatening to turn the company into relic.
The 35-year-old company hailed its technological transition late Wednesday at its California headquarters, where hyperbolic CEO Larry Ellison announced plans to distribute more than 100 business software applications over the internet instead of selling them as products that have to be installed on individual office computers.
The concept of leasing software applications reachable on any internet-connected device is one of the services known as "cloud computing." It's an idea that Ellison has frequently mocked as a passing fancy, but his comments Wednesday made it clear that he realised some time ago that the trend had become a serious business. Ellison has however invested in both Salesforce.com - the trailblazer of software-as-a-service companies, and Netsuite.
Ellison said it took thousands of Oracle engineers the past seven years to rebuild all of the company's applications as a suite of cloud computing services. The work was code-named "Fusion," but Ellison acknowledged it became so disjointed that he understood why it was skewered as "Project Confusion."
The new suite includes services in three areas: Cloud Platform (services for developers), Cloud Application (enterprise applications such as ERP, CRM) and Cloud Social (enterprise collaboration, social media monitoring applications).
Despite all the manpower and money that Oracle poured into its cloud computing expansion, the company still couldn't build everything on its own. To fill the gaps, Oracle has spent more than $US3.5 billion buying some of the early pioneers in cloud computing, including RightNow Technologies and Taleo.
"This was as difficult a thing that we have ever done at Oracle," Ellison conceded Wednesday during a presentation that The Associated Press watched on a webcast. He said he now believes Oracle has "the most comprehensive cloud on planet Earth."
All boasting aside, Oracle will have to prove that it can adjust to the changes triggered by cloud computing. All this while still trying to profit from the old model of installing and maintaining software on the premises of its corporate and government customers.
Ellison acknowledged it won't be easy, saying "very few technology companies cross the chasm from one generation to the next."
Oracle is in no danger of fading away anytime soon. The company remains of the of the world's most successful software makers, with annual revenue of about $US37 billion and a market value of $US137 billion.
But the 67-year-old Ellison, an elder statesman among Silicon Valley's CEOs, doesn't want to risk becoming obsolescent. He is trying to stay a step ahead of longtime rival SAP as it also embraces cloud computing while Oracle tries to catch up to one of Ellison's former proteges, Marc Benioff, who is now CEO of Salesforce.com. Not long after leaving Oracle to start Salesforce, Benioff emerged as cloud computing's more persuasive evangelist. The two have taken their rivalry public in the past.
Salesforce.com is expected to generate $US3 billion in annual revenue this year and has a market value of $US19 billion.
Ellison, who has an estimated fortune of $US36 billion, was one of Salesforce's earliest investors. He also owns a 46 per cent stake in a Salesforce rival, NetSuite, run by another former Oracle executive, Zach Nelson. During the NetSuiteWorld conference last month, members of the press attended an evening event held at one of Ellison's homes in San Francisco. He wasn't present.
Oracle's expansion into cloud computing also puts Ellison on a collision course with an old antagonist, software entrepreneur David Duffield. Ellison bought Duffield's former company, PeopleSoft, for $US11.1 billion in 2005 after a bitter takeover battle that lasted 18 months. Duffield has since started a cloud-computing service called Workday that sells human resources management tools.
Ellison predicted Oracle eventually will trump Salesforce and Workday by offering a wider and more secure range of services that will fulfill all the cloud computing needs of big companies and government agencies.
Oracle's new services include "social relationship management" tools to analyse what people are saying on Facebook's social network and other online forums such as Twitter.
Ellison also said he noted that SAP doesn't expect to have a cloud offering until 2020.
"2020. A terrible year to get into the cloud," Ellison said to laughs from the audience.
In an apparent effort to underscore his commitment to Oracle's new focus, Ellison sent his first tweet shortly after leaving the stage Wednesday. His message promoted Oracle's new cloud computing applications while still saving enough space to throw a jab at SAP.
AP with Reuters