September, 2016

  • September 27, 2016
  • traveljourneyOracle goes into its annual customer conference, Oracle OpenWorld, flying high according to the news from its earnings call on September 15. It’s clear that the company has succeeded in pivoting from on premise to cloud software offerings and while the vendor will continue servicing its on-premise customers, the revenue acceleration from cloud products and services suggest that Oracle will derive an increasing share of its revenues from cloud solutions in the future.

    Co-CEO Safra Catz told the earnings call that combined revenue from cloud, SaaS, and PaaS for the quarter was up 82 percent from the prior year and above 80 percent of her guidance to analysts at $816 million. According to the company, organic growth in SaaS and PaaS has now accelerated for seven straight quarters. It was a very good quarter for Oracle.

    CTO and founder Larry Ellison said that the growth was primarily from new business and not from converting a large number of Oracle’s customer base to cloud solutions. This is significant because the customer base is seen as a huge reservoir of future business. However, it must be noted that in another part of the presentation Catz said that license revenues were down, a natural consequence of the shift to cloud computing but one that nevertheless must be stated.

    While Oracle’s cloud revenue growth was significant and overall revenues were substantial, at $8.7 billion, the company still has some distance to travel to reach the performance of some competitors like Salesforce.com. Salesforce’s annual revenues are roughly on a par with Oracle’s quarterly revenues, but Salesforce captures all of its revenues—north of $2 billion in a quarter—from cloud operations.

    Additionally, although Oracle’s cloud revenues are significant, executives are careful to point out that they come from infrastructure services as well as software as a service. Oracle competes with companies like Amazon whose AWS services deliver running computer hardware with operating systems and databases pre-installed so that customers can install and run their software without the effort expended in installing and managing this infrastructure.

    So while Oracle’s cloud revenues are impressive they also are not a direct comparison with pure cloud companies but that’s to be expected given its position and large legacy base. But success is success and Oracle has now established the momentum and a credible claim to being a major player in the new world of cloud computing at a time when much of its installed customer base must be wondering about what comes next and how to reduce the costs associated with running a modern IT department.

    Cloud solutions are clearly a part of any long term corporate technology direction and the news shared by Oracle this week will help the company’s cause next week as it makes its annual pitch to customers to further invest in its products and services.

     

    Published: 8 years ago


    6a00d8345190da69e201bb0922fb1f970dAutomation has a habit of killing jobs and this has been true since the Industrial Revolution though it seems like we’re discovering this truth all over again. We easily forget when we only focus on the job creation aspects of automation and that usually gets us in trouble.

    Since the IR there have been five distinct economic waves lasting between 50 and 60 years. These waves have been named after the late Russian economist Nicolai Kondratiev and are now referred to as K-waves or the Kondratiev Cycle. With an economic cycle this long very few people alive and working remember the last transition so of course it feels new.

    The first Industrial Revolution revolved around water wheels and later steam power, iron, and textiles; it gave way to an age of steel and heavy engineering; then petroleum, electricity, cars, and mass production; today we live in an era of information and telecommunications. I estimate this era began around 1970 so it’s getting long in the tooth.

    The first half of a wave is wonderful. A new technology takes hold and drives the economy, jobs are abundant even for the unskilled, inflation kicks up a notch or two and things seem pretty good. Inevitably though the second half kicks in and some of the earlier gains evaporate. The focus now is on gaining efficiencies from earlier innovations and product line extensions.

    In the second half over-qualified people have a hard time finding a job, wages are flat, and capital reaps significant returns on investments made much earlier in the cycle. Sound familiar? But the good news is that if you know where and how to look you can see the next wave forming just as sure as a surfer can spot the next big one. That’s the nexus on my friend Vinnie Mirchandani’s new book, Silicon Collar—Dear reader please be aware that I am quoted extensively in the book but that I’d be writing this piece regardless.

    In Silicon Collar, Mirchandani gives us a surfer’s-eye view of the next wave or at least the candidates for next wave. At this point there are many pretenders competing for the mantle and often the winner is hard to predict. Our current era, Information and Telecommunications has roots in the Space Program and the race to the moon. If you were alive then you would have bet anything that the next big K-wave would have had something to do with flying cars and many people predicted this but they were wrong.

    IT and Telco were still embryonic in the 1960s and nothing like what they’ve become. Telco was a sleepy oligopoly, a regulated monopoly, printing money and delivering so-so service. Computers were things that required climate controlled rooms and lots of paper to perform really trivial tasks. Few people predicted that the miniaturization required to place a guidance computer on a space ship would have such far reaching effects, but it did.

    That’s my look backward but Mirchandani tries to peer into the future. In this meticulously researched and reported book, he interviews leaders in about 50 new companies/industries and lets them tell their tales of the future. It’s an optimistic look at a future that far too many have glanced at with fear and suspicion rather than optimism and curiosity. You can’t blame them for their insecurities. We do live in interesting times. But our strength and the strength of Silicon Collar is its hopefulness and inquisitive nature. It’s worth reading even if you think you already know what the future will look like.

    It might surprise you because you might find some backwater idea that only has a low power proof of concept that you think couldn’t possibly go anywhere.

     

    Published: 8 years ago