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why the cloud scares Oracle
Submitted by Douglas Dooley on Tue, 02/09/2010 - 17:59.
It takes some effort to look below the surface and additionally look past the comedic routines of its CEO on stage, but i am sure there are more people in the industry that ask, besides me, why the purveyor of the most robust database appliance in the marketplace offers nothing towards the cloud-based movement of apps running on virtualized hardware: in other words, why is Oracle running hard from hosted infrastructure?....
Even considering security and Identity management webinars coming up, based around cloud-infrastructure and the little salesforce.com competitive hedge that Ellison is invested in: why would oracle not be in the driver's seat when it comes to offering a competitive cloud based offering around MySQL and Glassfish, along with the ESB, BPM, and tools, not to mention Amberpoint?....
That is the question i have for the roadmap determinants, when they finally release a clustering schedule for glassfish v. 3, and it is a question i have had for Sun for some time now, why is MySQL and Glassfish not reserved for scale-out deployments, when the core Fusion/Oracle DB can handle enterprise accounts?....
Is it resources, that keeping two competing application platforms within the same company would be too distracting, too costly, too cumbersome, too cannibalizing, or too threatening to the money makers of WebLogic and Oracle DB, to just build a cloud org., in the form of MySQL and Glassfish, and put to rest the roadmap questions that will come if Oracle offers anything other than full enterprise-wide, web-wide support for the Sun software assets?....
My only answer can come from the open source model of the Sun infrastructure product-lines that never had a chance in a hardware scenario, but could become true deal makers in a software sales force's hands, and that is Oracle refuses to abide by a competitive affront to their proprietary model of selling high license cost, and even higher maintenance cost products, that do not have competing organizations, whether they be channel, SI, or ISV to under-cut them on price....
They have spent a lot of money on Sun, for a dying company that was doing great things in OSS terms so they have to get their investment back, through more than just hardware margins, and that means pushing Fusion out the door with little to no impediments to competitive pricing, and honestly where does that pricing pressure come from: not from IBM and WebSphere with Global Services offerings, only Red Hat with JBoss stands in the way of WebLogic pricing, now that Glassfish is safely behind closed doors, or so it seems.....
So, I respect the Glassfish people at Oracle, and will listen to them to be patient, and wait for the roadmap, but it is pretty tough now to back-down from what was said two weeks ago with the web event to announce some details of the Glassfish and MySQL purposes within a new Oracle software organization, and wonder why Oracle continues to deride something that everyone else is planning on, in the form of cloud-scale deployments....
It takes integration of apps and data, and it takes open standards, in the form of web services, and honestly it takes Open Source Software in order for those things to happen, and i am not so convinced we are going to see an investment beyond Fusion for engineering resources to be applied to scale-out deployments, like what it would take in the form of Reference Architectures and the like in order for non-techy sales people to translate for customers....
OSS is not what Oracle likes to do, except unless it means hurting or at least attempting to hurt Red Hat's model for Enterprise Linux by doing their own fork job, and though Mike Lehmann, Thomas Kurian, and Ted Ferrell are saying that OSS will continue, can they promise or agree to definitive support for the open source communities that were built around java.net at Sun?...i dont think they can or are willing to do that, considering the immense under-taking of getting three world-class ERP systems on one app server platform, along with all of the ancillary products to accompany it, in the form of Fusion....
I wonder, and then stop to wonder why there is no cloud future for Glassfish and MySQL because honestly, that was the major threat to Oracle Fusion in the form of technology parity and pricing pressure before the merger, so what is the incentive now to continue them now that they dont have to?.....lots of questions still remain but it becomes clearer as to what Oracle will ultimately prioritize in the face of hard choices on resource allocation, that will come regardless of current promises, and irrespective of amount of money available beyond what Sun had....
The reality will be a hard lesson for anyone trusting altruism from a company specialized to turn a profit at the expense of what is best for its customers....thats not all i am saying, but it begs the question, Oracle: what is so bad about the cloud to your business?.....
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Dollars
Douglas,
The sailboat Racing team has already stated their is little money in SAS...The cloud only promotes the viability of these offerings.
SAS is a good model if you want to run apps for the lowest possible cost. Oracle is not interested in showing the world how to runs apps for the lowest possible cost.
The Cloud goes against everything Oracle does, they want high license cost, long term tie-down to their contract and pre-determined maintenance revenue. The Cloud undermines each of theses areas for the BMW/Oracle racing team (race 1 re-scheduled to tomorrow morning at 700am PST.)
As they say at the bar at closing - "you don't have to go home, but you can't stay here"
SAS does not equal cloud
There are some definitive parallels between what clouds offer and what SAS has built, but they are not the same thing, though similar....
Oracle has shut down network.com or any variation of what Sun was building for the clouds, but that does not mean they have to walk away from product-lines that offer cloud functionality beyond how far you can scale WebLogic deployments, and that naturally comes from MySQL and Glassfish....
What prevents a competitive hedge toward clouds by offering real services that embed Sun's software assets to service providers and ISVs that do not want the bloat of the Fusion product-line?...i know i am beating a dead horse, literally, but questions remain as to why Oracle is walking away from successful implementations of scaled-out Java....
4,000 enterprise customers at $100,000 on average per annum is a good business, ~ $4B, but it leaves you open to competitive offerings from start-ups that offer cloud functionality, and apparently Oracle is willing and in a position to acquire all competitive affronts to their business model of high license cost, higher maintenance revenue: is the model to acquire all apps that are successful on the Oracle DB and ERP apps?....
I am sure there are people just as aware as me of the potential for clouds, given the way customers are beginning to deploy, and so the question remains: what is better for customers Fusion/Oracle DB or Glassfish/MySQL?....i think the latter is more relevant, but then again, i dont run that business and am not an accountant watching the bottom-line of Oracle....
its a shame how this is shaping up, for nearly everyone involved other than the Fusion product team....
It's classic innovators dillemna
Great thread/topic, btw. You touched on the core issue, which is that Oracle has a very very hard time jumping on a new trend that threatens existing P&L product lines. I was on the team in mid'90s that started the AppServer division. Since the DB guys thought they could put HTTP listeners, and JVM's in the Database itself, the AppServer was a threat to revenue. It sold at 1/3 the price of the DB. So, guess what happened? They played politics internally and ran the first AppServer management team out of the company. Who did they put in charge? Thomas K. It took how many years and how many app server versions before Fusion became even sort of legit? It really wasn't until they bought BEA (here the pattern begins) that they had really were serious in the space. The other project I worked on in '97 was Oracle Business Online V1.0. It was Oracle's first SaaS offering of the Oracle Apps. GE wanted to move their entire company to a SaaS model. It was all teed up, but at the end of a quarter the big O needed the license revenue so sales mgmnt did a last minute deal and swapped it all back over to a perpetual license purchase so they could book it all as revenue in the quarter. Again, Cloud revenue is more spread out over time. It robs Oracle of the book it all at once and make it count in the current fiscal quarter. It's not all Oracle's fault on this last one, as the financial analysts don't really understand how to factor in these transitions very well either. I have a lot of respect for where Oracle has come over the last 10 years, but they will continue to struggle with Cloud until there is a Cloud vendor big enough to acquire that has it's own critical mass of revenue and profitability (Rackspace anyone?). The problem there is that the margins are tough compared to SW.
Oh - and by the way - Fusion is Thomas Kurian's baby
He built his entire career in Oracle Server Technologies Group on Fusion - a way to both win in the middleware space, as well as merge all the disparate ERP/CRM applications they've acquired over time. It will always be Fusion first (even if it is WebLogic under the covers).
At least we still have Tomcat and other OSS projects.
nothing to see here, move on
Douglas, yes, you are fighting a trend. The trend is consolidation and it mostly only makes sense in numbers. I don't think anybody really has given 2 bits of shit, as to how BEA and the rest of the gang integrates. First acquire and then, as long as recurring revenue streams from maintenance are steady, let engineering figure out what it all means...(yes, in dilbert tradition, it means they are great acquirers and you are a lousy engineer).
Of course, the problem of what Fusion is, or becomes as accountants throw acquisitions on the integration plate, is actually very interesting. Like you said 3ERPs on 2 middleware and 2 DB. Some of which are open... Kurian must be having fun. I am jealous...
Re the cloud, I think that for middle market a purely SAS solution makes a ton of sense. I think big IT will always want their data inside, or at least will fight the trend of outsourcing themselves. So there may be a natural market segmentation. Not all data is worth the same.
Re Glassfish: let it be. Oh, and I don't think marc fleury cares much about these problems these days... ;)
Policies
Interesting points by everyone. What really rings true are the above comments about the original app server team getting the boot to close a quarter end deal...Those same issues will shape the Sun acquistion. The contract that is in place with every Oracle customer can't be tweeked to add cloud, and why would Oracle ever want to?
When you sell Oracle, you are driven by one thing and one thing alone, license revenue. This floats all the way up the chain. Decisions are made at the Regional Manager and District Manager level that shape the direction of the company. Revenue recognition is king to this group. The cloud does not allow revenue recognition in year. Quota carrying sales people are driven my compensation. Fusion compensates in year, the cloud gets you fired. Its as Simple as that.
All of the acquired open source products will be left to dry on the vine. No sales person is going to commit suicide by selling GF. Who can blame them, they have families to support through license sales.
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