Why it matters: You can’t build out a cloud in the real world without massive CAPEX investment. Look at the AWS / Amazon, Microsoft Azure and Google numbers. On the flip side Oracle execs are smart enough to not throw good money after bad money – e.g. put CAPEX $s in a non-working cloud infrastructure. So, at any chance given to me since 2014 I asked CEO Mark Hurd – when will Oracle spend more CAPEX? The answer has always been evasive… But at its OpenWorld conference, Oracle unveiled the 2nd generation of its IaaS solution. It now seems to get the CAPEX it needs to get real.
|From Oracle Q4 2017 / FY 2017 earnings call material|
MyPOV – Good to see Oracle finally putting the CAPEX where its ambition is. PowerPoint and keynotes are cheaper than datacenters, Oracle knows this – but as said above, why spend into something that you know will be replaced (e.g. one year ago, internally, IaaS Gen2 was happening) and will have to be replaced later… So, this is good commercial acumen. But it’s only one quarter and Oracle will need a string of 2B CAPEX quarters (or even more) to make IaaS Gen2 a real offering around the world. It was interesting to see earlier this year that Hurd claimed higher data center efficiency due to the Oracle engineered chip to click stack… it was worth AWS data center guru James Hamilton to respond (worth the read here). In short: Data center efficiency matters.
|Larry Ellison at OpenWorld 2016 - with TCO claims of Oracle Gen2 IaaS vs AWS|
CxO Advice: This is good news for a CxO running Oracle systems. When your vendor’s IaaS is more efficient and becomes real – then you are in for better (and likely cheaper) cloud computing. And it is good for the market overall, as more competition improves offerings and keeps the vendors sharp, all to the benefit of enterprises. CxOs running the Oracle database should consider pilots and collect experience with DBaaS on IaaS gen 2. Enterprises can’t miss out on an option to run critical systems with lower TCO. If you are not an Oracle CxOs, look on what is happening, and ask for similar performance and TCO for your RDBMS running in the cloud. Potentially take advantage of aggressive Oracle pricing – migration is a two-way street.