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Is Oracle Building A Moat In Cloud City?

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Summary

It’s important to understand the origin of Oracle’s public cloud offerings to understand how they will evolve over time.

Oracle is making a lot of marketing noise but proof of public-reference public cloud deployments is lacking.

3Q17 earnings report shows $178M of IaaS revenue. How much “Legacy Hosted Exadata” is making up this public cloud number?

Accenture wasn’t a logical fit but Oracle will need to make software acquisitions to compete with AWS, Azure and Google Cloud.

Oracle’s current public cloud approach appears to serve as a moat to guard the status quo of existing Oracle client deployments.

Oracle

When equity analysts and investors ask me about “The Cloud Wars” and how the public cloud is impacting the traditional technology market, my answers usually start with the origins of each respective public cloud. Who were the first use cases of each public cloud, or public cloud service, designed for? How can each public cloud grow/compete/partner over time as it evolves from its core to serve other clients and use cases? What are the business and digital transformations these public clouds will enable and what are the related economic benefits from these models?

I don’t believe that the following item regarding basis of public cloud revenues has been answered with the detail provided in their last earnings report, so I am posing this question to readers of this article as their own thesis evolves over time:

Oracle’s (NYSE:ORCL) 3Q17 earnings report with financial data through Feb 28, 2017, shows $178M of IaaS revenue. Does this include revenue from Oracle Database Exadata Cloud Service which is essentially their legacy product running in Oracle’s Public Cloud data centers? If so this is not a new offering and does not fit with the traditional definition of public cloud.

With Oracle Cloud, I believe that Oracle’s late entrance to the game will force them to make cloud software acquisitions in order to offer their clients a true public cloud experience to compete with Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL).

The Past

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