Oracle (NASDAQ:ORCL) kicked off its OpenWorld conference this week with about 50,000 attendees. Last year, the company played down concerns about the 2010 $5.6 billion acquisition of struggling Sun Microsystems that some feared would ultimately be harmful. This year, in the face of skepticism about the company’s cloud strategy, CEO Larry Ellison is facing a similar issue.
It’s pretty clear Oracle won’t give up its hardware business. Speaking this week at the event, Ellison said, “True cloud means we have to own the infrastructure, we have to manage the infrastructure, (and) we have to upgrade the infrastructure.” This is not necessarily a bad strategy, but some think the focus on hardware is a little much.
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“Overall, we think Oracle would have been better off focusing more intensely on cloud computing early — and we feel the Sun acquisition and engineered systems effort detracted from that focus,” wrote Patrick Walravens, an analyst at JMP Securities. This lack of focus has made competitors like IBM (NYSE:IBM) look like they’re always a step ahead.
IBM has moved into cloud services and big data analytics with surprising gusto. The company is leveraging its established enterprise client base to directly compete with leaders in the field like Amazon (NASDAQ:AMZN) and Salesforce (NYSE:CRM) instead of playing defense, like Oracle appears to be. Oracle’s strategy, which could be successful though boring, could simply be: become the cloud solutions provider to its massive existing client base.
However, both Amazon and Salesforce have seen substantial success in the mid-market, and are looking to expand up into that same enterprise client base. If Oracle is too slow, it could find its business going elsewhere.
“There’s a trajectory of them getting more serious and more detailed and more effective than they were before,” said IDC analyst Al Hilwa about Oracle. “But until they break out those revenues from cloud offerings, it’s not clear to me that they’ll convince the street.”
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