Oracle CEO Hurd Stays Ellison's Course - InformationWeek

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Cloud // Software as a Service
Commentary
9/30/2014
09:36 AM
Doug Henschen
Doug Henschen
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Oracle CEO Hurd Stays Ellison's Course

Oracle flexes its muscle with a wave of SaaS releases and high-profile customer interviews. But is it leading or following in the cloud?
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Oracle CEO Mark Hurd.
Oracle CEO Mark Hurd.

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D. Henschen
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D. Henschen,
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9/30/2014 | 1:40:58 PM
I wouldn't say "Suddenly"
I wouldn't say suddenly. Oracle has been building up its cloud-data-center capacity for years and it now has 19 data centers in 8 countries around the globe. In some cases these are run by third-party contractors that have been in the business for years. It' not AWS-scale, as yet, but it's big.
Lorna Garey
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Lorna Garey,
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9/30/2014 | 1:14:31 PM
Re: Margins
Running cloud-scale data centers is suddenly a core competence? 
D. Henschen
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D. Henschen,
User Rank: Author
9/30/2014 | 1:11:48 PM
Re: Margins
In Oracle's analysis it will make more money because it's being paid not only for the app but also for providing the cloud services -- all the hardware, admin, maintenance and people behind the service. It's a safe bet it will be lower margin, but Oracle says its gaining service revenue and app subscription revenue (bundled together in the subscription) as it looses license revenue alone.
Lorna Garey
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Lorna Garey,
User Rank: Author
9/30/2014 | 12:17:48 PM
Margins
Doug, Oracle is known for making much of its revenue from ongoing licensing and maintenance, in addition to the upfront cost of the software. I don't see how it can maintain that sort of margin in the cloud. So, a customer dropping one of its legacy on-prem systems for the cloud alternative, as opposed to re-upping, equals a net loss, right? How will the Street react? 
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