3. Cloud Is Just Another Delivery Vehicle

Oracle has been pretty consistent on its fundamental message about the cloud. Early on, Ellison stuck his nose up at the mention of the word, but he was really trying to emphasize that it was simply a computing model. Over time, Ellison softened his aversion--witness Exalogic Elastic Cloud. But I doubt he has changed his underlying beliefs.

In a speech two years ago, Ellison had this to say about the cloud: "But it's not water vapor! All it is is a computer attached to a network—what are you talking about? I mean, what do you think Google runs on? Do they run on water vapor? I mean, cloud: It's databases and operating systems and memory and microprocessors and the Internet."

Hurd doesn't veer from this course: "It's just a delivery vehicle. You tell me what the cloud is. Oh, it's capex to opex. OK, great. That sounds like rent-a-car versus buy a car. So, OK, got it...what's in the cloud? Isn't it a server? Is there storage in the cloud?" There is system automation that happens on top of it, he adds, and an ability to "share resources across the multiple instances of information."

Oracle, he says, will give you a choice. It has a group that builds a cloud solution for you, on site, or you can go to Amazon, which is an Oracle stack, he notes. Everything (like Oracle applications) can run in a public cloud or private cloud. Oracle will run it for you, or not; at its own site, or at yours.

I asked Hurd about SAP's Business ByDesign software-as-a-service application suite. "Come on," he says. "I was a big customer of SAP at the other place [HP]...the core of R3 is built for big companies. Business ByDesign is built to compete with NetSuite...[it's for] little companies." He poked fun at one of SAP's signature customer wins and said SAP would do better to rewrite R3 in a way that scales up and down.

On Tuesday's earnings call, Ellison specifically called out SaaS vendor Workday, saying that Oracle's SaaS offering performed well compared to the cloud-based ERP standout.

I wouldn't be surprised to hear more from Oracle on its cloud offerings at Oracle Open World.

4.) Customers Want More Oracle

On Tuesdays' earnings call Oracle provided some tempered second-quarter guidance, at least compared with recent Oracle trending. Catz noted that the second quarter of 2010 was a good one (21% new license growth), but she projected anywhere from 6% to 16% growth for its next fiscal quarter, and revenue growth between 4% and 8% (Q1 saw 12% GAAP revenue growth). In light of global economic conditions, this might even be remarkable.

Oracle is all in.

There have been many changes around Oracle's sales structure. Hurd alluded to them during our interview, but I asked him about it specifically. Oracle, he says, is simply just adding more. More salespeople, more consultants, more architects, more sales focus around vertical industries--more resources to support customer needs. During Tuesday's earnings call he said the company added 350 employees during the first quarter.

"I don't hear many CEOs saying 'spend whatever you want to spend,'" Hurd says. "Most of them say hold it flat. They have to bring down infrastructure spending. That usually means consolidation. That usually means do more with less. Less servers, less infrastructure, less people. That's why I think this vertical thing [the stack] works." And it's also why Oracle thinks providing them with architects and consultants will work. Of course, that comes at a price, too.

And so we come back to vertical integration, and why it's good for the customer. "I think we look at vertical integration, and you can consolidate around Exadata, Exalogic, storage servers, software. And you can actually eliminate services...If you bought a car from the IT industry, how would that go? If you buy a Porsche windshield, a Mercedes engine, then you have Accenture put it together in your driveway. And then they tell you you can only drive it for four days a week. You wouldn't buy a car from those guys. But that's how IT sells that. So how does that get changed? We've actually gotta take services out. We're automating those services and provisioning [them]. Makes life simple."

Just as I thought: Oracle wants to win on its stack, too.

That ain't vapor.

Fritz Nelson is the editorial director for InformationWeek and the Executive Producer of TechWebTV. Fritz writes about startups and established companies alike, but likes to exploit multiple forms of media into his writing.

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