CTO Ellison: Oracle Is Poised To School Salesforce.com In The Cloud

Oracle CTO Larry Ellison said Tuesday that his company, despite being a cloud latecomer, is poised to become the industry's number one software-as-a-service and platform-as-a-service vendor this calendar year.

During Oracle's fiscal third-quarter earnings call, Ellison said his company is second only to Salesforce.com in the SaaS and PaaS markets as measured by new business and annual recurring revenue.

Oracle, in its earnings release, said it sold almost $200 million in new SaaS and PaaS business this quarter and expects that figure to climb to more than $300 million next quarter.

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Ellison said in the release that Salesforce.com has announced it's on track for around $1 billion of this kind of business this year.

Ellison predicted in December that Oracle would overtake Salesforce in new SaaS and PaaS business by the end of its fiscal 2016 next June. But after a quarter of booming SaaS and PaaS sales, Ellison said he's been compelled to revise his forecast.

In fact, Ellison thinks Oracle can beat Salesforce.com by selling more than $1 billion in new SaaS and PaaS business.

"I now believe Oracle will overtake Salesforce in calendar 2015," Ellison said on Tuesday's call. "It's going to be close, but I think so. And I expect this will come as a big surprise to some people."

A Salesforce.com spokesperson declined to comment on Ellison's remarks.

In Salesforce.com's fourth quarter earnings release last month, CEO Marc Benioff said his company was the fastest enterprise vendor to reach $5 billion in annual revenue and is now aiming to be the first to $10 billion.

Oracle's SaaS and PaaS revenue rose 30 percent year-over-year to $372 million during the quarter. Oracle's overall cloud business has a sales run rate well north of $2 billion, Ellison said.

Troy Lutes, senior vice president of Oracle solutions at Hitachi Consulting, thinks Ellison has a point.

"From a product perspective, Oracle is far more differentiated from any of their competitors in the market from a SaaS and PaaS perspective," Lutes told CRN. "Their offerings in this space are best in class, and the SaaS products will pull through the PaaS offerings."

Ellison is also bullish on other areas of Oracle's cloud business, like ERP, which he said attracted 150 new customers during the quarter. By the end of Oracle's fourth quarter in June, the Redwood Shores, Calif.-based vendor will have sold more than 1,000 cloud ERP systems, he said.

"We are on our way to building the largest ERP business in the cloud," Ellison said.

For its fiscal third quarter ended Feb. 28, Oracle reported revenue of $9.327 billion, which was basically flat compared with last year's quarter. Oracle co-CEO Safra Catz said on the call that the strengthening U.S. dollar and foreign exchange considerations impaired revenue growth by 6 percent.

Oracle's profit dropped 4 percent year-over-year, to $4.2 billion, and earnings per share came in at 68 cents. Wall Street was expecting earnings of 68 cents per share on revenue of 9.46 billion.

Oracle shares rose 73 cents, to $43.60, in after-hours trading Tuesday.