|| Is Oracle cloud revenue for real?|
RumorScout writes "Last week, I wrote a post entitled "Yes, Oracle is finally serious about the cloud." Cloud was clearly the theme of Oracle OpenWorld,
as a flurry of SaaS, PaaS, and IaaS announcements indicated. In my
...Amit Chaudhry, vice president of public cloud, he stated
that cloud computing was "very, very serious business" for Oracle and
the company planned to fight "tooth and nail" against Amazon Web
I got pushback in response to last week's post from an
unexpected quarter: inside Oracle itself. This individual, who asked to
remain anonymous but has been with the company for nearly a decade,
opened with a zinger: "We'll be serious about the cloud when Safra
[Catz, co-CEO of Oracle] lets us hire some developers to work on it." I
checked the identity of this source and can confirm this person is well
placed and not in a low-ranking position.
In my post last week, I mainly focused on Oracle's IaaS
announcements, although I also mentioned existing PaaS and SaaS
solutions. My source told me it may be a while before we see those IaaS
Obviously we just announced Compute Cloud, but
in reality I don't see a true Compute Cloud in place for six months.
Our announcements are always a minimum of six months ahead of the
technology. This has been true of every single cloud announcement.
... In similar fashion, Java PaaS was announced in 2012, but we did not
even make it GA [generally available] until this summer. ... It seems
that we announce a new product and then start development.Although
these are strong statements, my source made clear the motivation in
stepping forward was not to harm Oracle. On the contrary:
larger issue here is whether Oracle is acting in the best interest of
its customers or even itself. My impression is that we let the analysts
drive our strategy. Five years ago, it was all about engineered systems;
now, it's all about cloud. The fact is that cloud is not a viable
option for many mission-critical systems and will not be for quite some
time. ... I find it painful to have to push a cloud solution that is not
a viable option for many customers.
My source also cited a Sept. 30 Forbes article written by Dan Woods entitled "Is Oracle cloud revenue for real?" In that story, Woods disputed analyst estimates that Oracle could claim $1.5 billion in cloud revenue in FY2015.
questioned what that $1.5 billion really represented. He asked whether
Oracle sales might instead be "directing client revenue toward cloud
spending, through mechanisms such as 'cloud credits' without really
achieving adoption." He added that an expert on Oracle licensing,
Palisade Compliance CEO Craig Guarente, had confirmed this.My Oracle source wanted to "clear up a few things" in regard to that Forbes article:
the account teams are doing is seeding cloud deals within larger deals.
So if a customer does a $10 million deal, we are throwing in $500,000
in PaaS. The rep then gets his accelerator of 5X or 3X on that $500,000.
I have seen this on 90 percent of our large deals. ... It is still
booked as a sale and goes through the appropriate approvals with account
reps getting credit. But in reality it is being given away. Somewhat
amusingly, the customer's IT staff are not even aware of the
inclusion. The problem, of course, is that Oracle does not recognize the
revenue until the credits start being burned.
In defense of Oracle, my source went out of the way to say that the company was not (as Guarente has suggested) using
license audits to strong-arm customers into cloud deals. My source also
noted that Oracle was in some cases "truly starting to deliver
self-service" for cloud customers.
whimsically, my source wished Oracle would "cancel OpenWorld for one
year, because it takes us a year or two to catch up with the marketing
announcements." In addition, my source maintained that none of these
statements would be a surprise to anyone inside Oracle, nor to
For everyone else, my source had a
message: "If I'm a customer, I should be asking slightly more
hard-hitting questions. [Like,] when do you expect it to be GA?"
Obviously, Oracle is not alone in hyping vaporware,
particularly when it comes to the cloud. That someone inside a tech
giant saw fit to go public with what appeared to be loyal dissent is
highly unusual, but it underscores the cost of getting too far ahead of
reality for both vendors who indulge in it and their customers.
Source: Eric Knorr — Editor in Chief for InfoWorld
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