 Hi, everybody. This is Dave Vellante coming to you from our Boston, Massachusetts, Marlboro offices. I want to talk today about the Oracle acquisition of NetSuite, a $9.3 billion acquisition that everybody's talking about. Of course, the narrative in the press is focused on the conflict of interest that Larry Ellison has because he owns, he's the largest shareholder in NetSuite, he's the largest shareholder in Oracle. That makes for great, big press, but I want to talk more about why Oracle acquired NetSuite, does it make sense and what's really happening in the marketplace. It's worthwhile thinking about, first of all, Oracle's cloud business. If Oracle's got this traction in cloud, why does it need NetSuite, a pure play cloud vendor? I think it's worth looking at some history. You go back to Oracle's or Larry Ellison's cloud rant back at the Churchill Club in the mid to middle part of the 2000s when he was talking with Ed Xander. What did he say? He said that, what's the big deal about cloud? Are we screwed because of cloud? No, we're not screwed because of cloud. Because cloud is operating systems and servers and storage and databases and microprocessors and applications and middleware, et cetera. Everybody misinterpreted that as Larry doesn't understand cloud, he's denying cloud. That clearly was not the case as you've seen today, Oracle investing like crazy in cloud. Maybe it was a little Larry head fake just to let people look over here while he was really investing in R&D over here, but clearly that was a signal that people misinterpreted. The other thing I would bring up is that historically, years ago Ellison used to denigrate as competitors for those who wrote checks, not code, and then all of a sudden Ellison and Oracle completely changed the industry with some massive acquisitions. Everybody remembers the hostile takeover of PeopleSoft, BEA Systems, and many, many others, multi-billion dollar acquisitions that Oracle made that completely changed the software business by the recognition that the fragmented application business was going to consolidate and the winners were going to be those who were doing the consolidating. So Oracle is very, very proactive about that. So bringing it back to sort of what's going on with this acquisition, in my view it's signals that were basically changing the control point to SaaS. SaaS is becoming the new control point within organizations, particularly from a supplier perspective. Oracle's control point, of course, has always been the database, but the second big trend that this signals has been, there's been a 10-year collapse in infrastructure, hardware, and software pricing. And it's really due to two factors, cloud and open source. So the response that Oracle is taking is to really shift into sort of a full-stack approach. I'll come back and talk about that a little bit. I want to address the other sort of signal here, which is it's no secret that Oracle's database business has been under pressure. It sort of has a good, strong maintenance business, good renewal business, but there's little pieces of database activity picking off workloads that normally would have gone to Oracle, the Hadoop stuff, the Mongo, the Cassandra, Amazon coming out with Aurora, and Redshift, and a lot of activity, maybe not attacking the core mission-critical aspects of Oracle's database, but the periphery, if you will. So again, what Oracle's doing is shifting, recognizing the shift of that control point to SaaS and being proactive about that. So Oracle's also countering with a full-stack approach. Safra Katz loves to talk about even though it's ratable revenue, meaning recognize, let's say monthly or quarterly, versus all up front, Oracle's going to get paid for the servers, the storage, the operating system, in addition to all the other software that had always historically got paid for, the middleware, the database, and the applications. So it's picking off margin to the extent that it can get critical mass in that business from all the hardware pieces. So that was a big part of the Oracle acquisition of Sun Microsystems, that's $7.4 billion acquisitions, in addition to Java being a key linchpin of that, but also the whole notion of software and hardware engineered together, Oracle, we often talk in theCUBE, John Furry myself about Oracle's trying to be the iPhone of the data center. So let's get back to NetSuite. A lot of people talking about the overlap between NetSuite and Oracle, well, there is some overlap just in terms of the function, NetSuite, big in ERP, financials, and obviously Oracle ERP and financials, NetSuite doesn't have HR, but the big reason why I'm not concerned about the overlap is that NetSuite really has focused on small and mid-sized customers. It was trying to move up market, but really SMB was kind of its sweet spot. It's something that Oracle, I think, covets. And so what Oracle now provides NetSuite is a massive distribution channel globally. So that's why Oracle is saying this acquisition is going to be a creative. It's a game changer for a smaller company like NetSuite. What about integration? We saw with Oracle Fusion the difficulty of integrating all these bespoke application companies that Oracle purchased was very, very painful. It took the better part of a decade, if not a little bit more than a decade. Again, it's a big reason why Oracle acquired Sun, in my opinion anyway, was to get Java. I mean, Oracle rewrote Fusion from the ground up in Java, took a long, long time, and it wasn't going to let IBM, who was also bidding on Sun Microsystem, get access to a key linchpin of its technology in Java. But nonetheless, integration with Cloud will not repeat, in my view, what we saw with Fusion. Why is that? Because customers running in the cloud in a SaaS generally are running the current version or maybe even one version behind. So the integration complexities with Cloud are going to be sort of one by one or two by two sort of equation, versus if you think about Fusion when Oracle was buying up all these companies that were on-prem companies, the permutations are endless. It's end by end, because where end is this virtually unlimited combinations of instances and customizations and the like. So much, much more complicated than I think the net suite integration will be. I'm not saying there won't be any integration challenges, there always are. But Oracle's proven over the years that it's quite good at acquiring companies. The other thing about the SMB focus is my sources indicate to me that Marker has really been pushing on tele-sales, lower-cost tele-sales people that are really driving more volume. That's the perfect model for net suite. When you think about how Salesforce sells, a lot of Salesforce activity, of course, is done over a tele-sales. So the bottom line to me is this actually makes perfect sense. It's a signaling that's consistent with trends that we see in the industry. It's an accretive acquisition. It's a pure cloud play and Oracle has signaled that it's in, all in, on cloud. So that's my quick take on the net suite acquisition by Oracle. What do you think? Tweet me at D-Valante. Thanks for watching, everybody. This is theCUBE.