If there's one top tech executive who isn't all that concerned about the ongoing economic meltdown, it's Oracle CEO Larry Ellison.

Given his personality, that's hardly surprising.

Citing the "most important" and "most profitable" part of Oracle's business as the "installed base that renews every year," Ellison believes that Oracle is in a strong position to weather the economic storm, going so far as to state that the firm will remain profitable regardless of whether or not new sales slow.

And despite the decline in Oracle's stock price, Ellison sees an opportunity to buy Oracle stock.

He has also made it clear that Oracle is going to take advantage of the weak market to put its cash to work buying up other companies that might be more eager to sell in such circumstances, most likely focusing on "small-but-growing companies rather than large publicly traded ones."

So what to make of Ellison's confidence? Is he confident because he doesn't know how to be or is he confident because he has good reason to be

When one looks at the position of many of the world's top technology companies, I suspect it may just be the latter.

While no company is going to come out of an economic downturn without a few scratches and bruises, Oracle is in an enviable position.

Oracle still maintains a dominant lead in the database market as measured by marketshare, has made great inroads in the enterprise software market and has a strong financial position. This gives it a lot of flexibility that many companies don't have.

While I'm personally not inclined to start buying technology stocks like Oracle (yet), I do think companies like Oracle have a much better shot at emerging from the economic mess in far better shape than many of their peers.

Why? One word - fundamentals.

As many in the tech industry are about to be reminded, solid products, customer lock-in, profitability, a strong balance sheet and revenue diversification are worth their weight in gold. This, of course, favors stodgy old tech titans like Oracle and Microsoft.

Even a company like Google, which has a strong cash position, has far more to lose than firms like Oracle and Microsoft because it has a single and vulnerable cash-cow.

As such, when looking at the companies most likely to emerge from recession looking a lot like they did when they went in, Oracle certainly has a place near the top of the list.

On an unrelated note, Ellison has spoken out about cloud computing. At a shareholder meeting in Redwood City, Ellison stated:

"I think it's ludicrous that cloud computing is going to take over the world. But they get very excited about it, and it's this big echo chamber."

According to Ellison, Oracle has no interest in building "the cloud" because "it's the Webvan of computing." Ouch.

Interestingly, Ellison noted that software-as-a-service, despite the hype, isn't the market that it's often made out to be. He pointed out that Salesforce.com, widely held up as the poster child of software-as-a-service success, is "barely profitable."

For those who believe that the next boom will be driven by "the cloud," his words probably aren't very comforting.

At the end of the day, if Ellison's confidence about Oracle's future turns out to have been well-placed, he might just want to treat himself to another yacht. And if he's right about cloud computing, venture capitalists and entrepreneurs looking to the cloud for Boom 3.0 might want to hold off on picking out their yachts.

Drama 2.0

Published 15 October, 2008 by Drama 2.0

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Comments (2)


Märt Ridala

Well here I would say that Oracle's actions are different from Larry's words. Oracle has announced its readiness for Amazon cloud in September: http://aws.typepad.com/aws/2008/09/hello-oracle.html They are technically supporting Oracle on Amazon cloud and more importantly they have adjusted their licensing fairly for the cloud! If anything, this is a sign that Oracle is serious about the Amazon cloud. I would illustrate it with the following facts:
- Oracle does not still have adjusted its licensing policy for running its products on virtual servers. (The virtual server technology has been mainstream for years now.)
- It took two years for Oracle to adjust its licensing for multiple core processors. Amazon EC2 has not been around for that long. The EC2 is officially still BETA. :-)

almost 10 years ago

Drama 2.0

Drama 2.0, Chief Connoisseur at The Drama 2.0 Show

Mart: here are some of the comments Larry Ellison made:

"We’ve redefined ‘cloud computing’ to include everything we currently do. So it has already achieved dominance in the industry. I can’t think of anything that isn’t cloud computing."

"The computer industry is the only industry that is more fashion-driven than women’s fashion. Cloud Computing. I remember I was reading W and I read that orange is the new pink. And cloud is the new SaaS. (Software as a Service) Or cloud is the new virtualization. It is the most nonsensical. I mean I read these articles … I have no idea what anybody is talking about. I mean it is really just complete gibberish."

"What is it? What is it? … Is it - ‘Oh, I am going to access data on a server on the Internet.’ That is cloud computing?"

"Then there is a definition: What is cloud computing? It is using a computer that is out there. That is one of the definitions: ‘That is out there.’ These people who are writing this crap are out there. They are insane. I mean it is the stupidest."

"We’ll make cloud computing announcements because if orange is the new pink, we’ll make orange… Okay fine, we’ll do some cloud. Maybe we’ll do an ad. I don’t know what we’ll do differently in light of cloud computing other than change the wording on some of our ads. It’s crazy. So that’s my view."

I think he makes quite a few valid points. The main one: old is new these days, apparently.


almost 10 years ago

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