Oracle’s Hurd Bullish on Cloud Business, Says Enterprise Market Largely Untapped
Softens tone on data center spend but reiterates that innovation can cut cloud capex dramatically
July 5, 2017
Oracle co-CEO Mark Hurd said enterprises have yet to spend most of the money they will eventually spend on cloud services that will replace their on-premises data centers, implying that even though Amazon Web Services has a massive lead in the market today, its market share is large compared to competitors but tiny compared to the market’s potential size.
He made the comments during a recent media event at the company’s headquarters in Redwood City, California, where he was interviewed onstage by Recode’s Kara Swisher. The conversation focused largely on the enterprise cloud market and Oracle’s role and aspirations in the space.
Cloud Data Center Spend
Cloud services is a capital-intensive business; the likes of Microsoft and Google have been spending in the neighborhood of $10 billion each annually to build out the data center infrastructure for their global cloud empires. At an event earlier this year, Hurd told an audience that because Oracle had faster servers, the company didn’t need to spend as much as its competitors on data centers.
At least one of those competitors called his bluff publicly. There’s little indication that Oracle has cloud hardware that’s superior than the hardware that runs in Amazon, Microsoft, or Google data centers, and many of the top engineers that designed Oracle’s new cloud platform came from those competitors’ infrastructure teams.
Hurd’s answer to the capital question was less heavy-handed this time around. He acknowledged that despite investors’ wishes big capital expenditures were unavoidable for a company that wants to play in the space, but added that it is possible to use technology to cut that Capex by half, or even by three quarters:
“If I do something technically, I might be able to halve my Capex cost. I might be able to turn it into a quarter. If I multi-tenant my database, if I put it in memory, if I multi-tenant my middle tier, I can actually shrink the number of data centers I need and actually shrink my Capex at the same time. I need capital, but I also need innovation, and I need technology."
Oracle decided to “go at this hard three or four years ago,” Hurd said, referring to the company’s recent ramp-up in investment in its cloud business. That investment included a big push to build a new cloud platform and launch data centers to host it.