 Live from the Oracle Conference Center in the heart of Silicon Valley, extracting the signal from the noise. It's theCUBE, covering the Oracle Cloud Launch, brought to you by Oracle. Now your host, John Furrier and Dave Vellante. Okay, welcome back everyone, we are here. This is theCUBE live in Redwood Shores, California, Oracle's headquarters. This is theCUBE, our flagship program. We go out to the events and extract the signal and noise, I'm John Furrier, the founder. SiliconANGEL, my co-host, Dave Vellante, founder of Wikibon.com. We are here pre-gaming the Oracle Cloud Platform Launch. Larry Ellison and the executives will be laying out the new platform updates and momentum. And we're going to cover that here live on SiliconANGEL.tv. And of course we're pre-gaming, getting all the interviews and setting the table and trying to dissect what this means. Our next guest is Carl Olson, Research, Vice President, Application Development, Deployment. Welcome to theCUBE, welcome back. Thanks. Good to see you. So I love having analysts on theCUBE because we can actually break it down. So we get two, two analysts and you and Dave. So we're teasing out, we can't really go in. We have the release where we have it in front of us. We can't really tease it out, but it's Oracle Cloud. And they're competing and Larry Ellison go back five years, false cloud at Salesforce, hitting them hard. And then all of a sudden that sea change in the middle of their investment in engineered systems. So you saw that sun acquisition, all that stuff going on within Oracle. And then all of a sudden cloud is a centerpiece. Big shift. What's your take on it so far? And where do you see it kind of connecting today? Well, I mean, when you talk about those two trends, you talked about engineered systems, which is a part of the larger converged systems movement that we've seen. That is one trend and cloud is another trend. So converged systems all about trying to improve your ability to maintain large systems in already very complex IT environments. What's another way to go? It's to move some of that operation to the cloud so that you don't have the complexity of managing those systems yourself. And you have it running on, as Larry likes to say, professionally managed systems. So we're seeing a lot of interest in the cloud in general. There's big uptake certainly on the SaaS dimension. We've been waiting for that at IDC. We've been predicting for the past few years that cloud was going to take off. But he said, we don't know exactly when. Because timing is one of those things where if you could actually answer that question, we'd be playing the stock market instead of being analyst. But it has been taken off. And now platform as a service is sort of like the next step where people who have complex applications, homegrown or they're looking to evolve or develop those applications, they want a platform that can support the things that they need to do. And that's a cloud platform because it gives them the agility, but a private cloud platform is actually pretty hard to manage. It's complex, you know, there's a lot of pieces to that. You get the nail on the head. I want to get Dave's perspective on this too because Larry Ellison has shifted his role over the past few years and he's engaged. I mean, he sees this market exploding. He makes comments over the past few years, like, oh, just, we'll just call it cloud. But what he really sees is the middleware market and his bread and butter and apps at, not at, potentially at risk, but they have a huge position in the marketplace. So Dave, Larry Ellison is CTO. He's totally engaged in the product line. Can you guys both comment on what that means from a technology standpoint? Because I asked Emmitt and Xavier earlier about the, how easy it is to just do middleware in the cloud. Oh, they have a hackathon this weekend. The past market truly isn't grown up yet. So the middleware is the battleground. So what's your thoughts, Dave? Well, look, I mean, the bread and butter is database as a service, right? Or database and database as a service is kind of the hot new thing. We were talking off camera. You've talked to a number of customers. I think we both agree. There's a lot of potential momentum there. What are you seeing in database as a service? Well, I think that the leverage is really at the past level. In other words, rather than pure database as a service where you write your application on your own systems and they communicate with the database in the cloud, that's awkward. There's performance issues involved. It's much more, it works much better if you have everything in the same cloud platform. And so using middleware that is part of the same environment as the database just makes a lot more sense. So what do you make of initiatives like Cloud Foundry? Which you're essentially, they don't own the database, almost count Green Plum, but that's not really the core of the global 2000, right? So going into the market, trying to build an ecosystem approach, obviously reliant on the global 2000 who's using Oracle or maybe SQL Server or others. What's your take there in the landscape? Well, for one thing I want to point out that there are a lot of different kinds of applications you might want to put in the cloud. Some of them are amenable to say a straightforward Java implementation against a relational database, but others have different requirements. So it makes sense to have a variety of choices, going with a Cloud Foundry approach where you have an environment in which most of the elements you need have been thought out and put together for you. It makes sense for certain kinds of applications. So the ecosystem approach can work? Sure, absolutely, yeah. I mean, yeah, I mean, you've got, let's make a distinction too, between the applications, there are applications that are going to run the cloud, they're going to be web-based, they're going to drive mobile devices, but they're very session-oriented. Obviously gaming applications come to mind, there's certain kinds of retail, especially location-aware retail applications and things. And they need certain kind of database functionality. They're probably going to use some combination of a no-SQL database of some kind, and a relational database on the back end to manage the business dimension of what they're doing. And so, but Oracle's been pretty clear with that strategy. I mean, it's going after integration, right? So you talked earlier about some of the advantages there. What are customers telling you? I know it's a little early, especially for database and a service and even platform as a service, but what are you seeing there in terms of some of those advantages? I mean, we don't have a huge sample size, obviously. So I can't say, you know, it's a handful, but they've been pretty happy with where they're going. And the first thing you do when you move to the cloud is you move what you already have, what you already know, and then you go from there. Then you can take advantage of the flexibility of the agility of the cloud environment gives you. Step one is to, they're not starting from a blank slate, most of them. They're starting from, you know, we have needs to evolve our application beyond what we can manage in our own in-house data center. I mean, in other options. The complexity issue, though, it brings up a good point. I mean, the Oracle customers, their footprint is massive. So for them to roll cloud in really is a strategic win for them if they can pull that off. Oh, sure. The momentum alone last quarter was about 1400 plus new customers. Now, I don't know how many they've lost to the cloud. So there's a little bit of cannibalization going on that was kind of discussed in the areas. Guy's thoughts on that. I mean, obviously you have to eat your own before someone else eats it, kind of cannibalization. What is that thought? What are your thoughts on that? The good move? I'd love to get your take on this. I've said a lot about some of these large companies. I've certainly said about IBM and HP. They've got a shrink in order to grow. You're not saying the same thing about Oracle. They're sort of holding onto that base. Largely, I mean, there's big maintenance component there as well, but their cloud business starts to kick in now. They seem to be doing a good job managing that transition and their business, it seems clean to me. An infrastructure service, platform as a service, software as a service, and it's all rental. And it's clean. A lot of companies, is that really cloud or is that kind of actually on-premises? Oh, it's actually on-premises. So I think there's a clean story there. My question to you, Carlos, is the new growing fast enough to offset the headwinds on the old? Well, it depends on the timeframe you're looking at, I guess, answering that question. If you're looking at it, you're by year. I'd say over the next 24 months. Over the next 24, well, okay. So I think looking at, I'm not a prognosticator of revenue, of course, but in general, I would say, you said you have to shrink in order to grow. In Oracle's case, it's probably more like you have to accept more flatness in order to grow. I wouldn't say shrink. Right, I think that's right. But it is the case that when you move from a perpetual use-license model to a subscription model, there is going to be a bit of a hit there because you have customers who were writing a big check up front in order to use your stuff. Now they're writing a subscription check that's over time. So over time, that revenue stream amortizes and it works out to be growth. That's why I asked you the question of what kind of timeframe you're talking about. Over time, it works out, it overcomes where you were. Well, over 10 years, it's... Or even five years, I would say. Very exciting business, actually. Yeah, and not only that, but it's a more stable business because you have an ongoing revenue stream. One of the things that really gives a lot of heartburn to guys who are product managers in that field, as I used to be in my earlier days, is this worry about keeping people on maintenance and getting them to buy upgrades because that's what your revenue stream is. But when the issue is, let's get them on a subscription. Now we know that as long as we're satisfying their needs and they're being successful, we can keep them on that subscription. That's a much more stable revenue stream. It gives you a much more stable figure. Yeah, so I used 10 years because the back of the napkin math is about, you actually had a spending about a third more over a 10-year period and the margins are just as good. Well, this brings up the question of, you know, race to zero BS that's kind of been kicked around about Amazon. Dave, you won't call it on the cube. There's no race to zero. There's real dollars being there and then we had to debate the value shifting. So I'm a big believer that commoditization is evolution in industry. Certainly business models will change, but value has to shift somewhere. So I want to get your guys' thoughts. So race to zero is an easy conversation. Oh, it's driving prices down to zero, but okay, if the price is going to zero and the margins into another area like apps or whatnot and the time table changes, this is the new economics. What's your thoughts on this? Well, Amazon's turning hardware provisioning into like a service, a software as a service. Where's Oracle's value? So you'll see that as a race to zero. And so it's very hard to compete with that. Oracle can compete because it's got, it owns the database, it owns the middleware, it owns the apps, it's got differentiation that drives value. So that's my high level take on it. What do you think? Well, I agree. And I think that when you're dealing with somebody like Oracle, and they're not the only ones, but we're here to talk about Oracle, so let's talk about them. We can talk about others too. That you're dealing with somebody who is optimizing all the dimensions of the system for the service. So they have complete control, and that's what you need. They can control everything from the iron right up to the top of the software to make it fit, not only for the kind of service they want to deliver, but within the cost parameters that they need. What do you make of this sort of push button simplicity to go from on premise to the cloud that Oracle's sort of putting forth as a value proposition? Is it really that simple? Well, I don't know how you define push button. I mean, there's going to be some, you know, there's going to be some, I mean, you have to at least move the data, and their issues with that, is you know, we're talking about running systems that can't be interrupted. So that's a little complicated, but I mean, I think they are trying to make it as simple as, look, they're not- Well, test dev, that's kind of a no brainer. A test dev is absolutely a no brainer. And in fact, that is the strongest business mind. That's what we're seeing taken up first, by the way, in terms of database, you asked before about data service. That's what we're seeing taken up first is the test dev model, because that is the model that benefits the most from the kind of agility and sort of self-service capability that the cloud gives you, right? I mean, in other words, and a lot of people don't necessarily know this, but one reason why applications can't evolve fast enough to meet the changing needs of the business is that you have to schedule time and resources for your development environment in order to make those changes and test them. But if you have a more agile environment, which you can sort of say, okay, today we're going to test this, boom, okay, the database is ready, let's go. I mean, what a huge difference that is, instead of having to wait a week for the IT guys to set aside some of these constraints. Well, this brings up your control thing. So the last couple of minutes, I want to drill into this whole control. I mean, optimizing for the cloud service is a great thing for its control. So we had this debate going back to the first year of theCUBE when Paul Moritz laid out the VM where he was the CEO of VM, or VM where he laid it out, basically cloud, mainframe in the cloud, so to speak. The question is, at what point does the top get hardened where no one cares? We used the debate of the Intel processor, a lot of proprietary stuff underneath there that no one cares. It's just, no one can say it works. It enables more value on top of it. So this comes up in the cloud. At what point, where's the hardened top, and is that okay? It's okay to be have full control. I mean, it's proprietary oracle stuff, but it's optimized for that kind of enablement. So what's your thoughts on that concept? Is this the new Intel kind of model on the cloud? This is a concept of hardening what looks like proprietary technology could be open source or whatnot, but at some point, do people really care? It works really fast and eliminates complexities. So what you're really referring to is a term that a lot of vendors don't like to use, which is lock-in, right? In other words, at what point are you at a system where you can't move out? I don't think that that's the issue here. I think that the issue here is, if I can continue to meet the needs of my business and you can make it as simple as, I just focus on what I need to do, and I don't have to worry about all this other stuff, all the operation, how it works under the covers, what the technology is, and all that. You're saying, I don't have to worry about that. I'm willing to pay for that. Well, I mean, I'm not down on lock-in. I mean, I talk about this publicly all the time on theCUBE. Lock-in with choice is competitive advantage. So if it works, lock-in with no other alternative is like customers have no choice and they have to deal with it, but if someone says, hey, here's a product that works better, and you have choice to switch to anyone else. But this works, this is a piece of great hardware and software, and it's not a bad value proposition. And I'm sure that if Larry was sitting here, he would also point out that you write your code in Java, which runs on many platforms. And it's a relational database, and if you choose not to use Oracle extensions, it's very easy to move the data. That's their open card, is Java. Yeah, yeah. So, you have a story. Everybody has an open story and a choice story, right? Well, a lot of times choice and openness is just marketing. It's marketing. The truth is, I was just gonna say, the truth is that Oracle isn't the only, everybody's doing this, which is what I think you were getting at, well, not everybody, but you know, you look at Oracle, you look at Microsoft with Azure, you look at these other environments, they are custom made to serve that customer and those technical needs, and they have submerged the details that you shouldn't have to worry about. People criticize Oracle, because Oracle has more pricing power than most. So, because of the database, and they leverage that pricing power, and so, okay. Well, now there's another dimension of change too, which is that Oracle's, we already know this, that Oracle's move to the cloud made them attractive to customers who are smaller than they used to deal with, because they used to only sell database. They've expanded their TAM as a result. That's a good point. That gives them more flexibility. That's a good point, and I want to get the shout out to Dennis Hallett, who's on the crowd chat, and asked a question, commenting on the longer single license deals. He says that logic is a little bit off from his perspective. He's seen regular deals at 3 p.m. running 10 to 15 years, I don't know what 3 p.m. means, but 10 to 15 years horizon. Similarly, we're seeing price increases in cloud apps among the major players. So, two things, obviously, the TAM is lower on the market, but he's still seeing price increases. No, we're agreeing. I'm saying over a 10-year period, the spend that you'll spend on the cloud is higher than it would be on-premise. If you buy, you're going to spend less than if you rent. The other thing is people don't know how to compare these things. They're comparing what they're doing in their internal IT system today with what they're going to do in the cloud, but they're going to be doing so many more different things in the cloud. How can you compare those things? You know? I mean... Yes, that's great. We got great commentary. Jim Crawford just jumped in with similar commentary. Again, we'll be back more, we're live here. The Cube, special pre-gaming of the Oracle Cloud platform announcement coming up shortly. Larry Ellison and Top Execs is with me on stage, detailing out all the successes and new features coming from the Oracle Cloud Platform. This is The Cube. We'll be right back with more coverage after this short break.