Thoughts on OOW2014
First, products
From an overflowing hardware stash to its Java middleware, apps, and various cloud, SaaS, hosting, and infrastructure options, the company looks like a python that just devoured a pig — I say this with love. The pig in a python metaphor came to me in one of the general sessions when I was still trying to understand it all. Oracle gave me a lot of help to understand too. I had meetings with executives, briefings from leaders of major CRM groups, and attended a few breakout sessions that drilled into the nitty-gritty. In the end it was too much but again, I say this with love. Too much is a high class problem as they say.
The truth is that after a late start in cloud computing the company has come roaring back with a blend of in-house developed and acquired software that will keep it in good stead for a while, hence my original point. Implied in that point is something more urgent, however. While Oracle has stepped up to cloud computing, it has not fundamentally rethought its messaging, in my opinion. They still seem to sell or offer their stuff as products like they always have rather than as the services and solutions that the market wants as implied by the move to cloud. Selling ROI doesn’t help either. ROI is a consequence, not the thing you buy.
That Oracle is still in a messaging mode right out of the first Bush administration is not surprising or at least it shouldn’t be. In Larry Ellison’s keynote Sunday night, he waxed a bit philosophical which surprised me. At one point early in his talk he discussed his company’s commitment to its earliest customers more than thirty years ago and he circled back near the end of his speech to say that Oracle would stand by its customers with their on-premise applications for as long as they wanted to use those apps.
Never mind the logic of moving to the cloud to save money by making software an operational expense rather than a capital one or the promise of greater functionality and improved user experience of cloud apps. Legacy apps are still on offer, still serviced, supported, and enhanced, but so are newer cloud versions. Customers do things for their own reasons and Oracle is not about to insist that they make big changes to their businesses.
There are plusses and minuses to this approach. It will hopefully engender brand loyalty for the eventual upgrades and it provides Oracle with a graceful conversion from a license vendor to a subscription vendor. But it also leaves Oracle straddling two dramatically different worldviews and that can’t be cost effective. Some critics are observing that Oracle is not shifting its business fast enough because of its commitment to the legacy base but in Oracle’s situation, I don’t know of a better approach.
Overarching theme
Now back to messaging. Oracle is a dynamic enterprise and a very big one too. While it has assembled a wonderful cadre of innovative approaches to big data and IT in general, it needs to do a better job of communicating to the marketplace. Here are some ideas.
My big issue with Oracle is that its communication is too tactical. The company focuses on selling products by their features rather than best practices and in a situation where there are loads of products, some better indication of how it all works together to support specific business processes would be useful. Of course some parts of the organization are better at this than others. For example, the social apps and CRM in general have relatively good messaging though the pride of abundance can be seen in CRM too. Regardless, “hardware and software engineered to work together” misses the point by a country mile. It’s a heterogeneous world and customers expect their hetero systems to be well supported — the time when Larry Ellison could tell the market to install and use his products without modification is long gone.
Now, that said, selling features when describing new hardware makes sense. Speeds and feeds are what hardware is all about. Even when discussing database and middleware it makes sense because speed is what makes everything else possible. But the application space is the new battleground and when feature discussion bleeds into apps all you get is an incomprehensible pile of attributes and a less than clear understanding of benefits.
Speakers
We’ve been beating around the bush on this one for a long time so in an effort at clarity I will be blunt though this too is said with love. Many of the speakers who took the stage at OpenWorld were terrible. They lacked rhythm, pacing, and the ability to tell a story — as a matter of fact story telling is the first casualty of a decision to talk about features. When you sell features, your speeches sound like recitations of the phonebook in a congressional filibuster. However, I also question how much rehearsal some of the speakers committed to and also wonder how some of the most senior executives for Oracle as well as its guest speakers could rise to their positions without being trained to be effective on the stump. (Mark Hurd is not in this group he is fluid and precise while being personable and his press conferences are good.) Perhaps it’s the venue. The airplane hangar styled Moscone Center and monolithic slabs of PowerPoint on the walls are not conducive to conjuring an idea of an intimate conversation.
Where’s the Wi-Fi?
Speaking of the hangar, why is it so hard to provide working Wi-Fi in that place? Nothing says we understand the modern wireless customer reality better than good access to the Internet. It is a subliminal message that cuts both ways — when the Wi-Fi is bad credibility lags, it just does. I know many people who skipped some sessions because they could watch on streaming media from the comfort of their hotel rooms bathed in connectivity. That’s a terrible way to “attend” a conference.
Paradoxically, sometimes the Internet service is OK at Moscone, but at other times it is not and the vendor renting the space doesn’t seem to matter. So, this is an engineering problem for the landlord, one that ought to be taken care of once and for all and the owners of the hall need to step up to it because it makes zero sense for a major showplace and venue in San Francisco to have this kind of problem.
Note to the landlord: Can you guys figure this out before Dreamforce?
My conclusion
There was a lot to like at this year’s OpenWorld. Oracle is a company in transition of its product line, its customer base, and its business model. It has done a lot of the hard work in building and acquiring new products but it needs to now focus more on how it presents its products and services to reflect the more social and mobile marketplace it is selling into. This shouldn’t be hard, but for an engineering company this might be very unfamiliar territory. The difficulty and opportunity might be summed up in a punning phrase that began circulating at OpenWorld featuring the names of the new co-CEO’s, Hurd and Catz. Say that three times fast.
Larry Ellison
NOTE: This has been edited to correct the spelling for Safra Catz’ name and to remove a ‘not’ that completely misled my meaning.
I was going to write a post about Larry Ellison leaving Oracle after he announced his retirement on Thursday but it is probably pre-mature. Ellison will become the executive chairman while Safra Catz and Mark Hurd run the shop as co-CEO’s and I have a lot of doubts.
It’s not that Safra and Mark are competent executives because each has held down significant positions for a long time. Recall Hurd was CEO of HP a while ago and Catz has had significant responsibilities at Oracle. But two things strike me. First Larry isn’t going anywhere. If he said he was going sailing or going to live on the island he bought in the Hawaiian Islands that would be a good indication for retirement. But as executive chairman, Ellison will still be heavily involved in the day-to-day operations so I am not sure what if any difference this will mean.
Second, I am leery of two riders on the same horse, which is what you have with co-CEOs. It’s not a good idea — heck sometimes one CEO is too many. By keeping Catz and Hurd in the same relative positions they were in when Larry was CEO we run the risk of losing steam, credibility, innovation, and creativity.
I see this situation as an analog to Microsoft. When Bill Gates retired, Steve Ballmer was waiting in the wings. He was one of the original team and he was a continuation of Gates possibly without Gates’ smarts. In the event, Ballmer stayed the course, rewriting Windows every few years and living off the cash cows and that was exactly what Microsoft didn’t need.
The list of markets that Microsoft plays in but does not lead as a result of a drowsy decade of following Ballmer’s script include cloud computing, phones and tablets, and CRM. We’ll see about the Internet of Things (IoT). I fear that something similar could happen to Oracle. The company has bought a lot of other companies recently and knitting them together is a big job that has to be done but I am not sure that constitutes a vision of where business computing should go and I am not sure the new team has that vision.
Perhaps the vision exists in some of the people who came into the company from the acquisitions, an iffy proposition to be sure. Very often when a company gets bought, the founders and lead talent make enough money to leave. They work through a transition period and then depart for some beach to contemplate their next moves. Some stay. Anthony Lye was a great case in point. He came with the Siebel acquisition and turned Oracle’s CRM group into a real money maker. But he’s gone along with many others.
So the question is what’s next. How long will the transition of Larry all the way out of the organization take? The answer will manifest itself when Larry really does retire and more visibly when we see some new blood in the corner office driving a new vision of Oracle.
Oracle OpenWorld Preview
They closed down Howard Street near the Moscone Center in San Francisco last night and it will remain closed for most of the week as Oracle brings its annual OpenWorld conference to the city. On the street the company is erecting a small village complete with some towering signs announcing all things Oracle.
It might look like vanity but as a practical matter Howard St. runs through the middle of the Moscone Center dividing it into two buildings connected by a tunnel. Under normal operating conditions the tunnel is adequate but with Oracle bringing 60,000 of its BFFs to the conference, the Moscone’s owners discovered long ago that they needed more bandwidth between their buildings, hence the village.
This does not come cheap, shutting down part of a major street in the city costs upwards of $250,000 I have heard but that’s a small price for Oracle and the restaurants and hotels pick up significant trade so it’s all good. Howard is not even the only street getting a temporary makeover. Near the Hilton on O’Farrell they’ve covered over part of one side street for a Java sub-conference too.
All of these preparations are standard fare for Oracle as well as for Salesforce which will re-do some of this in November when the Benioff company brings its annual camp meeting to town. All in all, I am wondering why Moscone and Howard St. and environs has never been awarded the moniker of the “burned over district” to borrow from the region in upstate New York that saw the rise of repeated religious revivals in the early 19th century.
Revival might be a good theme to meditate on as OpenWorld gets going. According to an article in today’s New York Times, Oracle will use the conference to go “all in” (Who edited that story?) on cloud computing. The poor Times didn’t even catch its own irony in using the famous phrase that Steve Ballmer, soon to be CEO emeritus of Microsoft, used to launch his company toward the computing heavens a good decade after Salesforce.com had already established its permanent space station way up there.
No matter.
Over the last several years Oracle has used this event to position itself versus all things cloud at first denying its importance and gradually, as it developed products for the brave new world, to embrace it. Look this year for Oracle to try to own it in its own way.
That way will mean encouraging a gradual shift from on-premise computing to the cloud which will provide customers with a logical transition which any enterprise will need what with building and buying new systems and writing down the older stuff. It will also give the Ellison company a similar opportunity to transition its revenues from one and done deals to subscriptions that provide a steady trickle of revenue over time. For both it will provide the runway they need to begin to interact as vendor and subscriber rather than pusher and consumer. That’s not a criticism, it’s just a good metaphor.
I have not been briefed on any specifics of front office announcements, in part because I have been traveling a lot, so I don’t have insight into specifics that might be announced. A wild guess is that analytics and mobile solutions will be top of mind. Oracle’s in-memory database and humongous hardware for the purpose, Exadata, make this a sure bet. Social was last year so I think it will be secondary, though still very important in the scheme of things.
No matter what, I am already in San Francisco having attended a very well received Zuora user meeting, Subscribed, this week. I think there are things Oracle could learn from Zuora though it is hard to see how they could ever buy the company given its strong roots in the Salesforce platform and ecosystem. Still some big announcements are expected from the event.
Conspicuously missing is any reference to Marc Benioff and Salesforce.com. Having made news earlier in the summer that the two companies would be more cooperative in the future, and with Benioff having invited Ellison to Dreamforce, it is odd that Ellison has not reciprocated. Odder still is that Benioff had historically filled a speaking slot at OpenWorld until last year.
Ellison’s keynote kicks things off for the Oracle faithful on Sunday night opposite a football game. I will be reporting from the scene this week.
Microsoft Buys Nokia, Gets Elop Back
With a nod and a wink Microsoft announced it was buying most of Nokia today getting its own mobile phone platform to further its ambitions in that space. It also got ex-Microsoft executive, Stephen Elop back into the fold. Elop had left Microsoft to head up Nokia and when current CEO Steven Ballmer announced recently that he would retire, Elop was among the people cited as possible successors. At the time though, Elop’s tenure at Nokia looked to be a significant barrier. It’s amazing how many hurdles $7.2 billion can clear away.
So the question immediately becomes, does Elop want the job? Does the board want Elop or was the acquisition just more business as usual? Well, with or without Elop as the future Microsoft CEO, the deal makes sense. Microsoft’s Windows Mobile has not seen great adoption despite its really attractive and intuitive interface. Google’s Android leads the parade (it’s hard to argue with free) and Apple’s iOS is the defacto standard in the industry which makes it difficult for Microsoft to play catch-up, a game that’s not second nature to it to begin with.
So what’s the net?
Assume Elop is the future face of Microsoft keynotes. A blind horse knows the future of computing is in wireless, handheld devices and the cloud. But too much has been made in recent years of the device and not much consideration has been given to the huge changes ahead in the data center to make the magic in the device really work.
The device is the new 3270, smarter for sure and much smaller, but it’s a relatively dumb terminal at the end of an extensive network of satellites, storage, and brute force processing. Given this, success in the cloud will be governed by more than whose OS is in your hand. It will be about the back end. Larry Ellison understands this and his team is working overtime to build the plumbing for the new edifice. And there are loads of vendors like the Benioff Company that are staking a lot on the front office and the device while doing a fair bit in the back of the house too.
But Salesforce may be to the cloud what Apple was for a long time to the desktop. Elegant, forward thinking, entrepreneurial — pick a half dozen more nice adjectives here. This doesn’t mean Salesforce is destined to have a measly five percent share of the market, Benioff is too smart for that. But it does mean there is still an open niche in the cloud for a Microsoft-like competitor that understands the front and the back end of the transaction and that wears the mantle of trust so assiduously cultivated by IBM in the business world. It might as well be Microsoft.
So, given all that, I look at the Elop acquisition, er, I mean Nokia actually, and I think this could work. Elop’s understanding of Microsoft and his recent baptism in mobile might be a good combo in the new Microsoft chief.
There are other issues well beyond those, however. The new CEO at Microsoft will need to be a consensus maker and someone who can break down the fiefdoms that long time Microsoft executives have constructed. The company has to get lean and to check its multiple egos before it is ready to take on the changed market — from somewhere that’s not the bottom but certainly is not the top either. Also, it’s no guarantee that you can take the once great phone maker, Nokia, and the one time titan of the desktop and get anything more than mush when you put them together. Elop, or whoever gets the nod will need to be a leader of Bill Clinton proportions.
Who’s the Customer? Deux dot oh
I think I have used this title before but this is in a whole different context. Also, this is a short piece because I know you are likely out contributing to the leisure economy, as you should be. This will be here when you get back. But I couldn’t help but make one more comment on The Oracle-Salesforce announcements of last week because I see them as an important watershed.
First, let’s dispel some notions that may or may not be true based on these announcements. Marc Benioff is not going to be CEO of Oracle in the future and Oracle is not buying Salesforce. Both those things could happen, but to read either into the announcements is a bit of a stretch. Those ideas would have been very important strategic directions and, they could happen, but my read of the situation is that the announcement is far more tactical. Of course Marc has reminded me many times that tactics dictate strategy. Think about that one.
To get an idea of my thinking, refer to the infographic. As you can see it projects there will be fifty billion devices on the Internet by 2020, just a few years out. It’s easy to see fifty billion as just another number in the stream that we all swim in daily but this is more. By 2020 I doubt there will be ten billion people on the planet — and I hope that’s right because we don’t have infrastructure, natural resources, and some basics like housing for all of them. So, clearly we’re talking about a population boom in devices more than in people and the real interesting question, to put it another way, is: what kind of devices are these customers going to be?
Answering the device question answers the original question, who is the customer? And it goes a long way toward explaining the Oracle-Salesforce announcements. Clearly getting to fifty billion devices will involve many, many non-human Internet users. We’re already watching as Salesforce, Oracle, and others ramp up the Internet of things or as the people at Cisco have co-opted the generic phrase, the Internet of everything.
It’s real too. Salesforce is already talking about its interface with the new Coke machine, with Toyota cars, and with GE aircraft engines and that’s just scratching the surface. Just yesterday the New York Times ran an article about Apple trademarking the word iWatch in various markets around the world. And Google is hard at work perfecting Glass. Wearable technology will depend on its connection to the wireless web to prove its utility. As more devices become smart enough to transmit performance and other data to computers at headquarters, the population of devices on the Internet will swell to the fifty billion projection.
So who is the customer? It’s your device(s) more than it is you, though you’ll pay the bill. Getting to the fifty billion mark will require significant commoditization and price erosion. Don’t worry they really will make it up on volume. Companies that use thousands of devices will go nuts if they have to pay a seat price even approaching that of your iPhone. And given that both Salesforce and Oracle have dogs in this hunt AND that one dominates the front office (that would be Salesforce, see the Gartner CRM Magic Quadrant Reports for 2013) while the other is a major player in ERP and you can deduce a few things. Also keep in mind that each vendor has an emerging suite of development tools that will drive the front and back office apps of the future.
Larry Ellison said the other day in a conference call that I participated in that he wanted to be able to provide integration between his back office and Salesforce’s front office systems that could be downloaded and installed with the press of a button. Here I think he’s aiming at Apple AppStore-like convenience and likely AppExchange and he’s right too. Business has the same expectation of easy download and operation that individuals have for their personal devices. That’s especially critical if by 2020 you have an expectation of plugging in a new machine, letting it find the wireless Internet, and then downloading the software it needs to call home. The whole process has to be inexpensive and dead solid easy.
So the competition for the hearts and minds of the two to three billion humans who can afford computing devices and software today, (rising to maybe five billion by 2020), is very small indeed compared to the fifty billion or so devices whose silicon hearts these vendors covet. All the more reason to bury the hatchet, make a gentlemen’s agreement on dividing up the market and pursuing the biggest prize we’ve yet seen in computing.
Oracle back office, Salesforce front office; what happens to SAP and Microsoft? This is not over.
