Oracle has always faced a hard road to the cloud. As one of the premier vendors of the client-server era, it had up until fairly recently resisted the move to the cloud, but like all legacy vendors, Oracle has made its move.
That move appears to be paying off, at least to some degree, with the company reporting its earnings this week and cloud revenue up 62 percent year over year to $1.2 billion. Before you get too excited about those numbers it pays to compare them against competitors, and to see what's driving the growth.
For starters of the $1.2 billion Oracle reported, the vast majority, a billion dollars, came from software (SaaS) and platform (PaaS) services. That leaves only $200,000 from infrastructure where Amazon and to a varying degrees Microsoft, Google, and IBM have an edge.
Of that $1 billion in SaaS/PaaS revenue, it's important to keep in mind that a good chunk of the SaaS revenue very likely came from the NetSuite purchase last year, for which Oracle paid a cool $9.3 billion. It doesn't appear that Oracle broke down the NetSuite revenue now that it's in the fold, but to give it some context, for its last earnings report in October 2016, NetSuite reported $243.9 million in revenue, up 26 percent year over year.
A billion ain't what it used to be
It's a fair bet that NetSuite's revenue increased at least a similar amount this time around, so that would represent about a quarter of the revenue reported. There's nothing wrong with paying for marketshare but Oracle certainly paid a steep price for it, and if you subtract that, the quarter doesn't look nearly as good.
It's also worth pointing out that Oracle's total sales for the quarter were $9.2 billion, so cloud still represents a small part of the overall revenue picture for the database giant.
Interestingly enough, Fortune reported that during the earnings call, Oracle chairman Larry Ellison had some choice words for his competition, claiming his company had "a huge technology lead" over his rivals, Amazon and Microsoft. That's a good deal of bombast for a company that's not anywhere near its competitors in marketshare statistics, but he needs to attract attention, and that's a good way to do it.
As a means of comparison — and I'm sure for regular readers this isn't new — AWS has by most estimates between 30 and 40 percent marketshare and they are on a $14 billion run rate this year. Microsoft, which has around 15 percent marketshare had an even better quarter with $5.9 billion.
All of this says that while Oracle is starting to get a bit of the cloud revenue market, and while there's plenty of marketshare to be had, it still has a long way to go catch the competition.
Photo Credit: Oracle PR on Flickr. Used under CC by 2.0 license.