Oracle's sea-change moment: This week, Oracle reported that for the first time,it sold more cloud software subscriptions than new on-premises licenses in its fiscal 2018 first quarter. This should be seen as a genuine milestone from both the vendor strategy and customer buying perspectives.
Total cloud revenue for the quarter was $1.5 billion, comprising SaaS, PaaS and IaaS, with SaaS taking up $1.1 billion of that sum. Meanwhile, new license sales fell 11 percent to $966 million. Revenue was $7.4 billion overall for the quarter.
To be sure, Oracle has spared little expense and effort in transitioning its business model toward the cloud, through both a series of acquisitions and an overhaul of its sales force and compensation strategy. The single largest move Oracle has made in the cloud was the $9.3 billion acquisition of NetSuite, which gave it a nearly $1 billion annual cloud revenue boost.
POV: The numbers need to be placed into context. In its Q4 2017, Oracle reported $2.6 billion in new license revenue and $1.36 billion in cloud sales. But Oracle's Q4 is historically its largest and is when many on-premises deals are finalized.
Still, Q1's results represent "an inflection point for Oracle and the industry overall," says Constellation VP and principal analyst Holger Mueller.
Oracle says that within SaaS, ERP is the largest segment, with 5,000 Fusion ERP customers and 12,000 NetSuite customers. Now the question is how Oracle can accelerate growth in the PaaS and IaaS segments, where it lags the likes of Microsoft Azure and Amazon Web Services by a great deal.
The low-hanging fruit for Oracle lies in migrating on-premises Oracle database workloads to the cloud. In a statement, chairman and CTO Larry Ellison revealed one way Oracle will convince on-premises customers to make the switch:
"In a couple of weeks, we will announce the world's first fully autonomous database cloud service," said Oracle Chairman and CTO, Larry Ellison. "Based on machine learning, the latest version of Oracle is a totally automated "self-driving" system that does not require human beings to manage or tune the database. Using AI to eliminate most sources of human error enables Oracle to offer database SLA's that guarantee 99.995% reliability while charging much less than AWS."
A related number—Oracle's capital expenditures—is also important to watch. In its fiscal 2017, Oracle spent roughly $2 billion on capex, largely to build out its global data center footprint. The total was much higher than in previous quarters. That pace of spending continued in Q1, with $473 million in capex.
The first iteration of Oracle's IaaS was not a major success; a next-generation version rolled out this year may account for the jump in capex.
Microsoft introduces Azure confidential computing: In the wake of mega-hacks such as the Equifax incident that exposed the personal information of up to 143 million people, security is an even bigger differentiator for cloud vendors. Microsoft this week took a significant step forward in security for its Azure platform, with the rollout of Azure confidential computing. Here are the key details from a blog post by Azure CTO Mark Russinovich:
Put simply, confidential computing offers a protection that to date has been missing from public clouds, encryption of data while in use. This means that data can be processed in the cloud with the assurance that it is always under customer control.
Data breaches are virtually daily news events, with attackers gaining access to personally identifiable information (PII), financial data, and corporate intellectual property. While many breaches are the result of poorly configured access control, most can be traced to data that is accessed while in use, either through administrative accounts, or by leveraging compromised keys to access encrypted data.
Russinovich says Azure, Microsoft Research, Windows team members and Intel have been working on confidential computing for more than four years.
The software and hardware involved uses Trusted Execution Environments (TEEs) to shield data. Developers won't have to change their code to use the TEEs, which initially include the software-based Virtual Secure Mode, which leverages Hyper-V and Windows Server 2016; and the hardware-based Intel SGX TEE.
POV: The announcement comes a few weeks after Microsoft unveiled the CoCo framework, for creating large-scale, confidential blockchain networks. An early adopter program for Azure confidential computing is open now, and Russinovich is set to demonstrate the technology at Microsoft's upcoming Ignite conference.
Cloud vendors including Microsoft have already provided encryption for data at rest, or in storage, and data in transit. Adding encryption to data that's in use completes the picture. It's worth noting that Intel's SGX isn't exclusive to Microsoft, meaning it could show up in servers owned by cloud rivals sooner than later.
However, Russinovich didn't discuss pricing in his post; one would consider the confidential computing capabilities to come at a premium, but one that companies may be more than willing to pay for their most senstive data and applications.
Taking a look at Looker 5: BI and analytics vendor Looker has experienced rapid growth, coming up on the 1,000-customer mark. This week it released Looker 5, the latest version of its data platform. Here are some of the key details from its announcement:
Looker 5 delivers dozens of ... features that transform the way users experience and interact with their data, including: simplifying daily workflows by letting anyone interact with Zendesk, Salesforce, Adwords and more with the Action Hub; empowering departments with purpose-built Applications by Looker; and dramatically improving the user experience with new Viz Blocks for nearly limitless visualizations and Data Blocks to add valuable public data to any analysis.
Finally, Looker’s flagship business intelligence tool gains powerful features like Data Merge to easily combine data from different databases, 57 new statistical functions, a new SQL runner with visualizations, and many more.
Looker 5 is set for release next month.
POV: Looker has made significant progress in breaking down longstanding barriers between back-end databases and warehouses and front-end analysis capabilities, says Constellation VP and principal analyst Doug Henschen. With its human-friendly LookML language, which abstracts SQL, and its reusable Block approach, Looker is designed to make it easier for analysts and power uses to integrate, transform, model data and quickly deal with new from multiple sources without moving it – steps that used to require heavy lifting by data management professionals, he adds.
"As the names suggest, Action Hub and Applications are good examples of going beyond BI to put data-driven insights to work," Henschen says. "I like the cloud-services and SaaS-based focus of Action Hub and expect the list of data-driven Applications to fill out beyond the initial list of three over time. People forget that delivering BI and analytics shouldn’t be an end goal; they should be the means to making smarter, better-informed decisions."