Four Common Mistakes In Understanding Oracle’s Cloud Troubles:
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Financial analysts, as well as business and technology journalists, were startled when, as part of its earnings announcement earlier this year, Oracle abruptly stopped sharing specific revenue numbers for its cloud business.
But the resulting flurry of analysis misses key points about the bigger picture. Those points are crucial to understanding what Oracle can do to improve its situation. This article will catalogue those misconceptions and present a more complete picture.
Not unreasonably, a lot of people jumped to the conclusion that Oracle must be hiding something when they reduced the level of detail. At the very least, analysts were troubled by a loss of transparency. Oracle CEO Safra Catz answered a question on this issue from one financial analyst by saying, “First of all, there is no hiding. I told you the cloud number: $1.7 billion. You can do the math.” Yet no amount of math will tell you the numbers behind that number, such as detail on Software as a Service (SaaS) versus Platform as a Service (PaaS) versus Infrastructure as a Service (IaaS) cloud products, all of which are very different aspects of cloud.
Oracle used to provide granular detail but is now lumping revenue from cloud services in with traditional software update and maintenance fees. Why the sudden change?
While Oracle has been proclaiming the cloud is its future, analysts could be forgiven for concluding poor results are the reason Oracle is casting a haze over its cloud numbers. Oracle’s chairman famously spent several years dismissing the cloud as inconsequential to enterprise computing. Once he noticed the success of rivals like Salesforce in SaaS and Amazon Web Services (AWS) in IaaS, Oracle was left playing catch up.
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