Oracle has been holding its Open World customer conference this week in San Francisco, and that noise you hear is Larry Ellison pounding his chest and telling the world he's coming for AWS.
All I can say is good luck, because they have a long, long road ahead of them, and it's going to take more than bluster to get there.
In its favor, the database giant has a full cloud stack now with software, platform and infrastructure and it is the latter that Ellison is taking aim at when he says of AWS, "Amazon’s lead is over," sounding a bit like a presidential candidate.
It's a lot of bombast for sure, but the truth is Oracle faces a strong headwind, even in a growing market. It not only has to deal with AWS, the 800 pound gorilla in the market, but also Microsoft (a fairly formidable player itself), Google, IBM, all of the Chinese infrastructure players (including Alibaba, Tencent, Huawei and others), as well as the telcos and a host of others—many with a huge head start.
It's a long way to the top if you want to rock and roll
It's not exactly news at this point, but AWS owns about a third of all cloud revenue. Microsoft is way back in second place with around 10 percent. Notice where Oracle is in this chart from Synergy research. It's lumped together unceremoniously with the "next 20."
Yes, we've used this chart before—because it paints a clear picture of the current market. When Oracle claims to be "going after AWS," it's kind of like the manager of a team 15 games behind screaming he's going after the first place team. It's hard to take it seriously when there are so many teams to climb over, who are also playing hard.
Let's look at where Oracle is right now. It announced $816 million in total cloud revenue for its most recent quarterly earnings report, up 82% from last year. That translates into approximately a $2 billion run rate. It's not bad, but in its most recent quarterly report in July, AWS pulled in almost $3 billion for a quarter, blowing past its projected $10 billion run rate.
Oracle is built in its leader's image and it likes to talk a big game, but when Ellison says, "Amazon’s going to have serious competition," you really have to take take it with a grain of salt at this point.
It's certainly not impossible for a company the size of Oracle with over $50 billion in cash to make up ground along the way, especially in a growing market. It's entirely likely it will grow cloud revenue substantially over the next several years. In fact, its 82 percent quarterly growth rate was significantly higher than AWS's 58 percent, but as we've pointed out before, it's easier to grow a big amount when you have a small percentage of the market. It becomes much harder to sustain massive growth rates, the larger you get, making AWS's rate all the more impressive.
Clearly Oracle has a huge challenge ahead of it, but it's one thing to talk big, it's an another entirely to deliver—and time will tell if it can live up to the bluster.
Photo of Larry Ellison courtesy of Oracle.