The history of information technology is loaded with messianic predictions from countless men promising fame, fortune and a future beyond our wildest dreams.
Then there's Larry Ellison.
Ellison, who turned 77 last month, likes to think of himself as an oracle (pun very much intended) when it comes to the future of enterprise tech. Throughout the 1990s and 2000s, the co-founder of Oracle made his vision of the world happen through strong database technology, ruthless sales tactics and a determination to squash competitive threats to his company.
But about a decade ago, a completely new way of buying and selling enterprise tech began to get traction. Cloud companies like AWS and Salesforce established footholds inside the Fortune 500 that they would maintain indefinitely, and Oracle's approach to the market began to look stale.
Oracle recorded $35.6 billion in revenue during its 2011 fiscal year. A decade later, it recorded $40.5 billion in revenue during its 2021 fiscal year, just a 13% increase. During that same period of time, Salesforce revenue went from $1.66 billion during its 2011 fiscal year to $21.3 billion in 2021, while AWS revenue grew from a very small number in 2011 to $45.3 billion in 2020 and its growth accelerated during the first half of 2021.
During this period of explosive growth for cloud-based enterprise tech companies, Ellison faced many questions from financial analysts and investors about Oracle's plans to deal with this new reality. Time and time again, Ellison offered bold predictions and insulted fast-rising competitors in comments that ranged from amusing to shocking in retrospect.
We picked eight of our favorite comments made by the avid sailor and luxury yacht owner during earnings calls over the last decade, as transcribed by Seeking Alpha. Like almost all public companies, before every single one of those calls Oracle issued a standard disclaimer that statements made over the course of the hour should be considered "forward-looking," which absolves companies of any legal responsibility to actually live up to those statements.
Still, Ellison's batting average over the last 10 years would get booed at Oracle Park, home of the San Francisco Giants. Each of the eight statements has been assigned a "yacht rating," where one yacht denotes a merely amusing prediction and five yachts will be awarded to comments as divorced from reality as Oracle's chances of running TikTok.
In no particular order:
March 20, 2012
The comment:
"Now when SAP, and specifically Hasso Plattner, said they're going to build this in-memory database system and compete with Oracle, I said, duh, get me the name of that pharmacist, they must be on drugs. … The reason I wanted to get the name of his pharmacist was not because I don't believe in in-memory databases. I don't believe SAP is equipped to compete with us in a database business when we've been working on it for 10 years. This is arguably our core competency, database management. And SAP is going to beat us in data management with HANA?
The reality: First launched in 2010, SAP's HANA database was starting to gain traction in early 2012 when Ellison was asked about the competitive threat from Oracle's long-time rival. While it's not clear what type of substances were being consumed in Germany while HANA was taking shape, SAP has indeed managed to carve out a substantial business for its in-memory database in the intervening years.
Oracle still maintains a strong position in this market, but over the last nine years a flood of new database companies have emerged to give enterprise tech buyers lots of choices when it comes to selecting one of the most fundamental parts of their application stack. And SAP HANA is definitely one of those choices.
Yacht rating:
🛥🛥
June 16, 2020
The comment:
"OK. Let's start with Zoom. Demand for Zoom's services has increased almost 20 times since January. Zoom needed additional cloud capacity immediately. Within hours of the first Oracle deployment, OCI supported hundreds of thousands of simultaneous meeting participants. Usage has continued to ramp, where Oracle now supports millions of simultaneous meeting participants."
The reality: Ellison's enthusiasm for Zoom, which signed a cloud infrastructure deal with Oracle in the early days of the pandemic, was a constant theme of his public comments during 2020. Casual observers could have been left with the impression that Oracle's cloud played an essential role in helping deliver a service that countless businesses and schools depended upon to stay afloat during the pandemic.
However, that's not how Zoom's infrastructure works. In an interview with Protocol last November, Zoom CTO Brendan Ittelson said the company uses its own data centers to support the vast majority of meeting participants, and that its network was running at just 50% of capacity before the pandemic hit. Zoom CEO Eric Yuan and AWS, which also has a cloud deal with Zoom, have also disputed Ellison's remarks.
It's not hard to see why Ellison was so eager to tout Zoom as a prominent customer of Oracle's cloud infrastructure services, which trail the Big Three in market share by a sizable margin. But Oracle only played a support role — at best — on Zoom's infrastructure during the peak of the pandemic in 2020.
Yacht rating:
🛥🛥🛥🛥
Dec. 14, 2017
The comment:
"Let me tell you who's not moving off of Oracle. A company you've heard of just [gave] us another $50 million this quarter to buy Oracle database and other Oracle technology. That company is Amazon. They're not moving off of Oracle. Salesforce isn't moving off of Oracle."
"Our competitors, who have no reason to like us very much, continue to invest in and run their entire business on Oracle. I don't know who is moving off of Oracle. Maybe Mark does, maybe Safra does, but Amazon, you'd think Amazon would really want to move."
The reality: As Ellison must have known at the time of his comments, Amazon had begun the process of moving off Oracle databases long before late 2017, according to CNBC. An earlier report from The Information also noted that Amazon's migration from Oracle was in full swing at the time Ellison made his comments, and that Salesforce was also actively moving databases away from Oracle.
Less than two years later, Amazon announced that it had turned off its last Oracle database. It's not clear how far along Salesforce is with the transition, but the report from The Information said it had given itself a 2023 deadline.
Yacht rating:
🛥🛥🛥🛥🛥
Sep. 14, 2017
The comment:
"Let me just jump in here and say that we also have an $80 share of stock price target that's part of the comp plan. We also have a target that says we will be double the market cap of IBM, double the market cap of SAP. I mean, there are a lot of targets here. In terms of margin, we have a cloud margin target that I think is 80%."
"So, actually we are well on our way to achieving [our SaaS and Cloud] margin target, so we expect the margins in our businesses to go up, the stock price to go up, for us to distance ourselves from our, if you will, our legacy competitors and join the ranks of the new generation of the tech companies like, as Microsoft has done and smaller companies like Salesforce and Workday. That's where we position ourselves."
The reality: Oracle actually backed up several of Ellison's claims in this case: As of market close on Thursday, the company's stock price was $89.80; its September 2017 price was $50.62. But it's almost impossible for laypeople to determine Oracle's cloud margins after the company decided to lump cloud revenue in with traditional on-premises license revenue in June 2018, which financial analysts at the time interpreted as a gambit to obscure its cloud performance.
The company's margins have improved over time, but given the data at hand it's hard to conclude that's a result of a shift to the cloud or a series of layoffs. Oracle and Salesforce have similar market caps as of this week, but Microsoft has distanced itself from legacy competitors like Oracle with its rise to an astonishing $2.2 trillion market cap.
Yacht rating:
🛥
Larry Ellison walks onto the stage during the Oracle OpenWorld 2018 conference.Photo: David Paul Morris/Bloomberg via Getty Images
Sept. 18, 2014
The comment:
"We are all focused on this unbelievable opportunity to be the one big company, the one big company with all the resources to make this transition to the cloud and become the leader in that next generation of computing. It's an opportunity we are all focused on and we are not going to miss it."
The reality: Seven years after Ellison made those comments as he stepped down as CEO to focus on Oracle's technology, it's pretty clear the company has missed that opportunity.
AWS is the undisputed leader in cloud infrastructure. Microsoft's cloud business across infrastructure and enterprise software is enormous, and both companies' cloud businesses were much smaller in 2014 than they are today.
And dozens of smaller cloud-native database companies have made inroads into Oracle's core database business. Only IBM's Db2 prevented Oracle from receiving the dubious "most dreaded" award from Stack Overflow survey respondents earlier this year.
Business leaders are supposed to project confidence in the future of their companies, so it's a little hard to fault Ellison for this one. But there's no question that cloud computing was defined by a different set of companies, and it's hard to see tangible evidence of Oracle's progress toward a leadership role.
Yacht rating:
🛥🛥🛥
Dec. 17, 2014
The comment:
"Look at our product portfolio. Who wins in all of these battles? The suite vendors always beat the point solution guys. It's happened in every generation of computing where the end user, the customer, doesn't want to be the integrator of 30 separate applications from 30 separate vendors. No different now, just on the cloud now."
The reality: This argument does indeed run in circles every decade, but Ellison's timing was pretty poor in this case.
By the end of 2014, an explosion in enterprise software innovation was well underway thanks to software-as-a-service, which made it far easier to operate dozens of internet-based applications from different vendors across a company. This happened organically inside many companies, where individuals within different departments realized they were best qualified to pick the tech tools their teams needed, rather than having a clunky suite of software forced upon them by the IT department.
It's impossible to talk about enterprise software during the years between then and now without noting how many "point solution" companies built enormous businesses at the expense of big integrated vendors like Oracle, IBM and SAP. One of the reasons they were able to thrive was because they welcomed integrations from their competitors that allowed their mutual customers to use the tools of their choice.
As Protocol | Enterprise readers know, there is a sense these days that the situation has gotten out of hand and that enterprise software within medium-sized and large businesses needs to share data more easily and efficiently; Microsoft is clearly setting itself up as that one-stop cloud shop. But suite vendors lost a lot of battles in the mid-to-late 2010s.
Yacht rating:
🛥🛥
Dec. 15, 2016
The comment:
"We are growing our cloud business much faster than salesforce.com and we can beat them to the $10 billion mark, but it's going to be close."
The reality: Salesforce hit the $10 billion yearly revenue mark during its 2018 fiscal year, which ended in February 2018.
When Oracle changed the way it reported cloud revenue in the announcement of its 2018 fiscal year results, which happened on June 19, 2018, co-CEO Safra Catz said Oracle had recorded $1.7 billion in fourth-quarter "cloud services" revenue, according to its old standard. Add up the "cloud services" revenue for the prior three quarters, and you get $6.3 billion.
Yacht rating:
🛥🛥🛥🛥
Dec. 10, 2020
The comment:
"There is no large-scale enterprise application business in the cloud that's growing as fast as we are. In the coming months, our cloud ERP market leadership will become even more obvious when we announce that several major large-scale SAP ERP customers are leaving SAP and moving to our Fusion ERP cloud."
The reality: Ellison's comments last December were a preview of an early 2021 PR blitz in which he rattled off lists of dozens of companies he said were switching from SAP to Oracle. It was a little too much even for former Oracle and SAP spinmeister Bob Evans, who published an interview with SAP's DJ Paoni pushing back on Ellison's claims.
It does appear that there are some SAP customers who have switched to Oracle, but Ellison's comments imply that this is a zero-sum game when the modern reality of cloud services at large companies is anything but. Paoni pointed out several customers who purchased Oracle software recently but remain big SAP customers, including Dow and Keurig Dr. Pepper.
Compared to some of the other comments to make this list, this type of jousting is standard operating procedure for most enterprise tech companies. All's fair in love and customer marketing.
Yacht rating:
🛥
