Oracle’s wise counsel steps aside as it prepares to define its future in the clouds

With company founder Larry Ellison gone as chief executive, last week's annual Oracle OpenWorld conference in San Francisco should have been infused with end-of-an-era nostalgia, but – perhaps predictably – it seemed exactly the same as usual.

The 60,000 attendees created the expected traffic headaches all around the Moscone Center, live music boomed out in Yerba Buena Gardens as people ate their boxed lunches in the sunshine, everyone carted around this year’s black and red giveaway backpacks. And Ellison still did his two traditional keynotes, one to kick off the event on Sunday evening and another to go deeper into products and strategy on Tuesday afternoon.

Outdoor monitors

His keynotes were the ones that packed out the huge main hall both days. On Sunday, latecomers were turned away as the room was overflowing, leaving many of the 60,000 attendees watching Ellison on giant outdoor monitors on a mild San Francisco evening.

All the keynote boxes were ticked in both talks. There was the rock and roll intro with videos of Ellison’s huge America’s Cup-winning yacht scything through the San Francisco Bay. There were the jibes at competitors such as Salesforce and SAP (“I know, it’s rude, but it’s the truth,” he said, after laying in to SAP).

There was the ridiculously named product that Ellison happily announced he’d named himself (the Zero Data Loss Recovery Machine). There was hyperbole. There was salesmanship. There was that laugh, Ellison’s unlikely mixture somewhere between a chuckle and a giggle.

The reality is that, although Ellison at 70 has now shed the chief executive role, he hasn’t let go of the profile or the power.

In theory, he's gone down a notch in the C-suite – he's the company's chief technology officer now, reporting to his new joint chief executives, Mark Hurd and Safra Catz, until last week, Oracle's joint presidents. But he's also now executive chairman, putting him back at the top of the executive pile, only without having to be quite as directly involved, or carrying quite the same sort of weighty responsibility. In other words, he's having his cake and eating it too – and why not?

Successful company

Ellison has taken the database business he founded in 1977 and turned it into one of the world’s largest and most successful technology companies, with products and services spanning the business technology portfolio. Oracle’s market cap is more than $175 billion (€139 billion) and annual revenues top $38 billion.

In the past, he has proved analysts, the media and critics wrong, especially in Oracle’s voracious acquisition strategy, spending more than $50 billion to swallow more than 100 companies, including big competitors such as Infosys, JD Edwards and PeopleSoft, as well as past partners such as Sun. Critics said integrating those acquisitions, especially the huge ones, would be cripplingly difficult, yet it’s been done with reasonable success.

Critics said customers would be wary of having to get their hardware and software from a single vendor, but the opposite seems to be the case, as many customers find products that all work together in the same ecosystem (like consumers using Apple products and services) make IT less complex and more innately compatible. Critics said buying Sun and going into big hardware and processors was a mismatch, but it’s given Oracle the ability to gradually develop fast and efficient “engineered systems” in which software is embedded at system and – coming next year – processor level, enabling applications to run faster and perform better.

However, Oracle also faces major challenges, reflected in this year’s OpenWorld, during which Ellison, Hurd and other executives packed their keynotes with references to the cloud and Oracle’s software as a service (SaaS), platform as a service (PaaS) and infrastructure as a service (IaaS) offerings. Oracle wants, and needs, to be seen as a major player in the cloud arena.

Cloud atlas

Oracle has come late to the cloud (at OpenWorld in 2008, Ellison famously and amusingly ranted on about the term). Understandably so, perhaps – getting customers to pay less to use cloud-based services and software means giving up higher margins and recurring licence fees from hardware and software.

Oracle is up against “pure cloud” competitors companies such as Workday and Salesforce, internet-based companies including Google and Amazon, which offer cloud infrastructure at low cost, and more old-school rivals like SAP, IBM, and Microsoft, also all vying for cloud services business.

Last week, Oracle’s other joint chief executive, Safra Catz, told CNBC that people shouldn’t underestimate Oracle’s ability to succeed in the cloud, noting that observers were failing to see the company’s long game in this area.

Oracle has reinvented itself enough times that the caution is warranted, but the company’s long-term survival may depend on her being right.