Oracle Corp. is enjoying incessant growth in the field of cloud computing, though as it goes on to fix its sight on Amazon as its greatest area of growth, its profit margins for the future could be attacked.
Oracle (ORCL, +0.61%), on Wednesday, reported earnings reports, which were better than expected. This was mostly due to its cloud growth, including its latest NetSuite acquisition.
However, Larry Ellison, the co-founder and chairman of Oracle, told the investors that the efforts of the company in its infrastructure business that rivals directly with AWS (Amazon Web Services), cloud computing will be the greatest cloud effort of Oracle. Ellison doesn’t cut short his words as far as competitors are concerned.
On Wednesday, Oracle’s chairman referred to Amazon (amzn, -0.01%) as conquered competitor in cloud computing as far as its technology quality is considered. He called Microsoft (msft, +0.53%) also as a defeated rival.
Ellison, on an earnings conference call with the analysts, said that Oracle now had a vast technology lead over AWS and Azure cloud computing service (Microsoft). Many times during the discussion, he boasted that the refreshed cloud computing service of Oracle was faster and cheaper than the rivals, and that it will gradually turn out to be the crown jewel of the company.
The executive chairman told the investors – “Together, SaaS [software as a service) and PaaS [platform as a service] grew 85% this past quarter. But soon infrastructure-as-a-service will be growing even faster, and before long, infrastructure-as-a-service will become Oracle’s largest cloud business.”
The total revenue of Oracle from its cloud services was 1.2 billion dollars, an increase of almost 62-percent, still an incomparable but increasing part of its overall 9.3 billion dollars revenue in the third financial quarter.
Ellison is known for making such imposing statements and nudging his business opponents. However, his latest comments completely skimmed over the point that the cloud businesses of both Microsoft and Amazon are growing quickly and inopportunely to Oracle.
Ellison’s biggest concern is if clients change their current Oracle databases to Amazon Web Services – something that the ecommerce giant has been seriously motivating customers to do. If something of that sort happens, it would imply that those clients are more likely to use the Amazon cloud services portfolio instead of that of Oracle.
Investors will soon get to know if Oracle’s chairman is filled with bluster or whether he can manage to support the talk with more client wins and revenue growth. However, there’s a dark site to this growth story. If things gradually heat up in the cloud market, there is a possibility for price wars, which in turn could affect the bottom lines of everyone involved.