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Oracle CTO Ellison: Cloud Business To Pass $20B Annual Run Rate Next Year

Wade Tyler Millward

‘Multi-cloud interoperability is an important step in the evolution of cloud computing. Multi-cloud interoperability is one of the reasons our infrastructure business is booming,’ Oracle CTO Larry Ellison said on the company’s earnings call.

A new era of cooperative competition to meet customer demand for multi-cloud environments, trying to lure away Amazon Web Services’ “most famous brands” and updates on recently acquired Cerner were among the focus areas for Oracle co-founder and CTO Larry Ellison on his company’s most recent quarterly earnings call.

Customers mixing and matching cloud applications and cloud infrastructure from various vendors is an opportunity for the Austin, Texas-based database product giant, Ellison said on the call.

“Multi-cloud interoperability is an important step in the evolution of cloud computing,” he said. “Multi-cloud interoperability is one of the reasons our infrastructure business is booming—growing over 50 percent in U.S. dollars, and almost 60 percent in constant dollars. We expect Oracle’s total cloud business to exceed a $20 billion annual run rate next year.”

[RELATED: Oracle’s Ellison: OCI Is Nabbing The ‘Most Famous’ AWS Brands]

Mark Clayman, CEO of Navisite, an Andover, Mass.-based Oracle partner, told CRN in an interview that the vendor has come a long way with its Oracle Cloud Infrastructure offering.

“[OCI] is a significantly better product than it was even a couple of years ago,” he said. “And they say it—and I would agree with them—that the fact that they were late to the market, I think, really did allow them to take a look at the way that other public cloud providers set up, bill and really created a road map for their infrastructure. And they’ve done a really good job, both from a price and a performance standpoint.”

Still, Clayman hopes to see more investment in the functionality of Oracle’s cloud applications to match their legacy system counterparts.

“They just have been slow to take a lot of the functionality for core ERP solutions—JD Edwards, Oracle E-Business Suite, PeopleSoft—and create that same functionality in their cloud apps,” Clayman said “I just would like to see them continue to accelerate the development.”

In a report published Tuesday on Oracle’s earnings for the first quarter of its fiscal year, a quarter that ended Aug. 31, analysts with investment bank KeyBanc Capital Markets noted good performance in cloud services, license support, remaining performance obligation growth, NetSuite growth, Oracle Cloud Infrastructure growth and Autonomous Database growth.

Negatives included slower database growth, more capital expenditures and services being the driver of this past quarter’s revenue, according to KeyBanc.

“We’re positive on Oracle’s back-office ERP application and OCI strength in a tough macro but remain concerned on Cerner execution and deal impact on the balance sheet, including reduction to the current ~$600M/quarter buyback rate,” according to the report.

Oracle closed its $28 billion purchase of health-care information system provider Cerner in June.

In a report from investment bank Credit Suisse, analysts praised Oracle’s Infrastructure-as-a-Service revenue growth of 58 percent year over year.

“Oracle’s strong FQ1 results and FQ2 and FY2023 guidance commentary reinforce our view that Oracle is well positioned to emerge as the #3/#4 vendor in the PaaS/IaaS market and as the #2 vendor in the SaaS market—enabling the company to continue to reaccelerate revenue growth into the double digits,” according to the report.

Oracle should benefit from customers seeking multiyear, strategic cloud transformation contracts, according to Credit Suisse.

“Whereas the focus of change following the Global Financial Crisis was at the applications layer with the adoption of SaaS, the focus of change is now on the infrastructure and platform layers of the stack,” the report stated., “wWe believe (1) 2022 and 2023 will be defined by businesses moving forward on multi-year, strategic cloud-first transformation roadmaps and (2) expect Oracle to be a key beneficiary of this accelerating trend given its database leadership and ‘down-the-stack’ strategy.”

Here’s what Ellison had to say on the earnings call.

 
Wade Tyler Millward

Wade Tyler Millward is an associate editor covering cloud computing and the channel partner programs of Microsoft, IBM, Red Hat, Oracle, Salesforce, Citrix and other cloud vendors. He can be reached at wmillward@thechannelcompany.com.

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