 The Cube presents an exclusive on the ground conversation with Oracle CEO, Mark Hurd. Mark sat down with John Furrier at Oracle's Redwood City Campus. Hello everyone, welcome to a special presentation of The Cube. I'm John Furrier, the founder of Silicon Angle. We're here with Mark Hurd, the co-CEO for a one-on-one exclusive conversation. Mark, welcome to The Cube on the ground. Welcome. Thanks, John. So at Oracle Open World, we were there with The Cube and we were on Howard Street. We taught the 48 folks from Oracle executives and we learned a lot in there covering it for six years. And one of the striking things was Oracle's cloud message wasn't really well received by the press in the sense of they consider you kind of not in the top two. It's Amazon, Amazon, it's this, that, another thing. You guys have been doing cloud for a while. I want to explore that conversation with you about Oracle's cloud, your business, startup landscape competition. But one of the things that struck me was your interview on CNBC with John Furrier. He said, are you determined to be in the cloud? And you kind of had a shock back response. He said, determined we're in the cloud, we're winning, he quoted some stats. Give us the update, you guys are in the cloud, we watched that, we learned that it's end-to-end. What's the current status of Oracle's cloud play right now? Yeah, thanks, John. Well, I think the way I would describe it numerically is we're not only in the cloud, we're a multi-billion dollar player in the cloud. And so we started really several years ago in the application part of the cloud or SaaS. We've had tremendous success across the pillars of our SaaS products or the pillars of applications in the industry. We've added a platform capability or PAS to that portfolio, and now we've added infrastructure as a service. So we're actually the only player in the cloud now today in infrastructure, in PAS, in platform, and in application. So a complete portfolio differentiated by its scope and also differentiated by each of the pieces we believe to be best of breed. And it's resulted in bookings. I think it's out in the marketplace, but I'll reiterate it today. We'll book more business in the cloud than this year, than anybody else in the industry. One of the things about the cloud that people love is the fact that it's fast, it's got great economics, but it has a scale component that customers are attracted to. Yet a lot of the folks who provide cloud technologies have different approaches. Larry Ellison was on stage at Oracle Open World saying he's long in the cloud game and you've reiterated that. What does that mean? And the business folks out there, they love this, but they don't want to have different technologies that become outdated. They want to have just solutions. So every vendor's got different approaches. Why is Oracle well-positioned for this long win or the long play as Larry and you talk about? Well, first, we've been in this business a long time. And so the fact is, I think nobody's provided solutions at the depth and breadth that Oracle has over the past 20-some years. So we've got a lot of experience in this business and that experience really is at the enterprise level. So experience is deep. That said, to your point, most of our customers spend a lot of money on IT and most of them have to go do this themselves. One of the promises of cloud is all of the things you said, plus the fact it's simpler, it's easier. And you're actually moving your innovation from your IT budget to Oracle's R&D budget. And that's very attractive, not just economically. It is attractive economically, to your point, but it's very attractive now to get in an area like HR. We have almost 2,000 programmers coming to work every day feature stringing that application. Would you rather be doing that on your IT staff or have that done by 2,000 people coming every work today who's on our payroll, not yours to drive your innovation? The other impact is global. Cloud is a global phenomenon. Obviously, the geographic regions is hearing that as a key table stakes. But it also brings in some economics on the economy side. What's your take on the global economy outlook right now in the world right now? And how does that affect customers' decisions and buying patterns? Right now, if you look over, when you say right now, I'll look at it over the past couple of years. Revenue growth across the global economy, the S&P 500 is fairly flat. So you've had about 1% revenue growth out of the S&P 500 over the past five years or so. Earnings growth, though, is about 5%. And you've seen that reflected a bit to a degree in the stock market and the run up of the stock market over the past several years. So with revenue flat and earnings up, that tells you that people are cutting expenses. People are being very careful what they spend and what they invest. And that gets reflected in IT. And you see this in the IT industry and some of the results of the company's in it. So companies are very much being very careful what they spend. I think companies overall are comfortable with their cost structures. They wish they could grow faster. And it becomes the reason why cloud, not just as a technology, but as a business approach and a business model, is extremely attractive to our customers in the broader market. So they're at the expenses. They don't only have to spend aggressively, but they need to perform as well. So it's also top-line revenue growth. Jonathan, it's a bigger problem than that. It's a bigger problem than that because I'm worried about cost. But at the same time, many of our customers face competition. They face competition from startups, new entrances into their industries. And so they have to be innovative. So it can't be just cut costs for cutting costs sake because if they do, they can easily get this intermediate from their customer, from their market. And therefore they wind up not being competitive. So the attractiveness back to the point about innovation in cloud is, yes, it's lower cost. It's better economically. Yes, it's simpler, but it also drives more innovation at the same time. And it's really the combination of all these factors that do the trick. I put a question on my Twitter feed in Facebook as I was interviewing you. And I got a question I want to read to you as it says, Mark's on the road constantly with customers, then coming back to the ranch to meet Larry and Safra and the teams. What is he hearing? What is the consistent need from his customers and CEOs that he's talking to, the position of the salesman? What's the common thread? What's the holy grail for the customer that you're hearing from consistently the pattern that you're seeing from your customer visits? Well, help us get from here to there. And I think when you're in our industry, you get a lot of people talking about cloud, let's go to the cloud. Well, if you're not in the tech industry and you hear that, you're like, what does that mean? And then more importantly, how do I get there? So it's easy for us to talk about where we are. Most of our customers are stuck in where they are today. And most of that is in on-premise. Many of those are older applications. They're homegrown applications. So the process of not just telling them where they could go, but how do I help you get there? And Oracle, again, we feel uniquely positioned in that we're not just big in the cloud, multi-billion dollar cloud player, but we have a heritage on-premise. And I see that as a very, very strong asset in the ability now to bring those two worlds together and help our customers operate some of their IT on-premise, some of their IT in the cloud and be able to move those workloads back and forth seamlessly. Timing is everything. You understand the athletes, world play tennis. Being at the right spot at the right time is really the business focus of customers. And so when they hear cloud or, hey, this is a new technology from Silicon Valley, they kind of, well, is that real? So this is not so much a scare of the Silicon Valley innovation. You're seeing Uber, Tesla innovating, things like GM and Ford. But a lot of mainstream businesses want to have an answer to their problems, not so much the shiny new technology. How do you balance the timing of delivering new cloud technologies with that next big thing in R&D or whatnot? I mean, what's the secret? And what do customers look for is the timing issue of having the right solution at the right time. What's your philosophy on that? What's your take on that? Of course you're right. I mean, the fact is, as we sit here in the Silicon Valley, we tend to invent words every couple of years that are going to solve all of the customer's problems. Cloud, big data, whatever it may be, whatever your problem is, we have a solution for it. And the reality is, most customers want to solve their business problem. They're concerned about growing their revenue. They're concerned about becoming more efficient with their processes. And so therefore, we have to help them get that done. So to your point, we have to come in with real solutions. Our solutions are baked around things as simple as running your HR system, running your core accounting, your core ERP, and your core sales organization, and being able to automate those applications. I think you'll see a tremendous workload coming around DevTest. 30% of all of IT, for example, today is really done in developing and testing applications. It's all done on-premise. It's all done with very little governance around it. That whole process, if Enterprise IT is a billion dollars, DevTest at 30% is, let's see, I think $300 million. How efficient do you think that spend is? Let's pretend it was 50% efficient, which I believe is very high. $150 billion of opportunity for our customers to no longer have data centers, computers, operating systems, databases, people, and be able to move all that to the cloud, be able to access all of that capability from the cloud, build and test their applications directly from the cloud, and if they even want, they can move those workloads to their on-premise production applications. So these are tremendous opportunities to change the way we think of IT. And to your point, the timing has to be right. There has to be an openness and an excitement about embracing these opportunities, and I think that time is now. What are you hearing from customers on that? Because it can be scary, it's shifting to the cloud, and they might ask themselves, hey, Oracle, you have your stuff, and I hear this shiny new toy in Silicon Valley, new technologies, but what's in it for me? That's the customer mentality. What's in it for me and my problems, as you said. What is that issue for customers, for your standpoint? How do they get over that fear to take that lead? Will the parachute open when they go to the cloud? That's the kind of mindset the customers I hear and I talk to. What's your take on that? Well, I mean, there are various different people that have different opinions. I think many of those initial perceptions are beginning to change. So I think you're getting more customers, more openness. We're sitting here in the United States. I think if you went back to Europe and Western Europe, there was always concerns about various issues, security, et cetera, data sovereignty. Many of those issues, I believe, were beginning to tackle and to resolve. But at the end of the day, the real excitement is about the core things we started with. This just costs less. This is simply driving more innovation, and it's easier at the end of the day, and those are three fantastic benefits for customers. So now there's a new class of buyers entering the market, your customers, and some of them are younger, and we see some of them don't even have voicemails that don't really use email. Is Oracle's success generational, and how are you guys bridging the gap, or if no, how are you bridging the gap to reach these new demographic of buyers who understand mobile and cloud? Have some that love that? Some are kind of, as I mentioned earlier, crossing the chasm on their own, but this new generation of buyers. What are you seeing there? Are you seeing a new demographic? Are you seeing a new class of buyers? So it's a complex issue you bring up because the new generation, people sometimes generalize about these generations called millennials, et cetera. They are both employees and customers, and to a large degree they interrupt much of the status quo. They work differently, they also buy differently. Now at the same time, remember that our customers have multiple generations of workers and multiple generations of customers. So this actually gets quite interesting. So if you take workers, somebody, my generation, I like to think of myself as young and I'm into technology, et cetera, but the actual data says I'm not. And I still work in a workflow-based. I use pieces of paper like you have today. And I look at those pieces of paper, not my kids. They work differently. They also work more collaboratively. They work in groups. But now I'm still in the company and so are a whole lot of millennials that work at Oracle. So we have to put processes and tools together that not only deal with what I do, but what they do and make sure that we can all then work together. That's a lot of work. That's a lot of technology and it's actually made the business problem that we're talking about harder. Same thing from a customer perspective. Those same employees that work differently, they buy differently. And you better be prepared to engage them where they want to be engaged, how they want to be engaged, and that gives an opportunity for Oracle to help our customers innovate, to give them better applications, better tools to go meet those customers and employees. It brings up a great point. I mean, it's getting more complex on the business logic and business model and also the consumption and technology. But isn't IT supposed to get easier? I mean, it once was easy compared to what it seems to be now. What's your take on that? It's got to get simpler. What's your strategy? First of all, part of the issue is the data set continues to grow. So the data set continues to grow and that drives tremendous desire for more information. This, while in some degree more data creates complexity, also creates a tremendous amount of insight. The things we can do today we would never have thought of 10 years ago. I mean, there are things, think about, can you imagine a world 15 years ago where we couldn't search for anything? We didn't have, think of all the tools we have today that we use every day that we didn't have. Think about it this way. Applications, the average age of an application in this country is about 21, 22 years old. Meaning they were built in 1993, 1994, 1995. Pre-search, pre-mobile, pre-social, pre-everything that we're used to. So as a result, you have this really old infrastructure trying to support this new world. And that's part of the promise, I think, of these new applications. They're engineered with mobile integrated into the applications themselves. They're integrated with collaboration tools from the ground up. And this world will continue to get easier. One of the questions we're asking in our Wikibon analyst team to our surveys and our customers is, which vendor will provide the value fastest for getting the most out of the data? This seems to be a question that's kind of buried a little bit in some of the conversations out in the marketplace, but it seems to be consistent. The value of the data is seems to be really, really important. Who's going to build the tooling and the automation and the integration capabilities to maximize the data? Whether it comes from some integration on an iPhone or a collaborative document or an ERP system, it could cover many where. And or mixing and matching data. That seems to be the focus. What's your thoughts on that? Getting the most out of the data and what is Oracle doing in that regard? Yeah, well listen, historically in our industry, you basically had applications that produce data. You've then taken that data, extracted it from the transaction application and warehoused it or marred it or used whatever term you wanted to use and then create a bunch of analytics through some very, very experienced scientific users who then would distribute reports out to the rest of the company. That's the history of sort of data analytics. I did that for a good part of the early part of my career. And I would say things are changing now that those analytics have to move right next to the application itself. They have to become real-time and they have to be integrated into the core applications. So what you see happening today in Oracle applications is no longer do you have to take data out of the application. You have to integrate it directly into the application so you can now get real-time insights. The ability now to integrate structured data and unstructured data and do it in near real-time so that you can now make a decision on something based on early indicators and then merge it and integrate it with the core way that you run a company. And that's how you'll see analytics evolve. The ability to take massive amounts of unstructured data but it's not gonna be good enough just to analyze that unstructured data, that social data. You're gonna have to be able to merge that data with a system that can now do something with it. And a customer telling you that there and you're hearing that from customers as well. Listen, the fundamentals come back to I want data that allows me to make the right decision at the right time with the right customer, the right employee to optimize my business. How do I get through all of this massive amount of data that you've been talking about so that I can make the optimal decision at the right time to benefit my business? That's the key. Let's talk about trends. The trends in the industry that you're competing in. The technology landscape has been very robust over the past few years and specifically past three years. What's your take on the landscape now? I mean, obviously the table stakes, the bar to get into the game, the barrier to entry. What is the technology landscape like today from your perspective as a CEO, co-CEO of Oracle with your competitors and your customers? Well, I think the shift is significant to your point. I think this forget the overused term of cloud but that method of computing at the application layer of the platform layer and the infrastructure layer is clearly where this industry is headed. I made a presentation in an open world that I thought by 2025 I predicted that 80% of that workload will be in the cloud. And I think I made this statement then that I may be slow. It may go faster. And that shift has a seismic impact on our industry. And it will happen. And the reason it will happen is because of the reasons I keep coming back to it. When the customer can get better economics, the customer can get more innovation and they can get something done more simply. They're gonna go do it. That's gonna cause losers and that's gonna cause winners. And that's why we've made the investments we have. That's why we've built out all the data centers around the world that we have. It's why Oracle has rewritten all of its applications from the ground up. 100%. 100%. All of our products now have basically been cloudified. They've been rewritten from the ground up to be cloud ready. And it's critical for us, John, because we believe this is, and Larry started on this a decade ago. So this isn't something we thought about like 18 months ago and said, hey, why don't we go do this? This came back a long time ago even before the term cloud was popular. So it's this whole method and approach to computing which is key. And frankly, we started out getting into the SaaS business, the applications business. And it was clear when you were in the applications business to really do that right. You had to be in the platform business. And then really to be in the platform business, you had to be in the infrastructure business. And that's why when you look at the barrier to entry, John, the ability to build out all three layers of the cloud, the ability R and D wise to do that or from a financial capital perspective to acquire all that good luck trying to do that. Then to build the infrastructure, the data center infrastructure and the capital. And remember, John, you have to do all this in advance. Think of it as to get into the cloud business from a IT perspective. It's like building a hotel. And you have to build a hotel before you can run a room. Nobody can stay in the hotel till it's built. Think of that on a much bigger scale as being what it takes to get into the global cloud. So it's not winner take all, it's winner take most. Or what's your take? There'll be a couple winners. I think, listen, I was public in my view that I think that there'll be probably a couple of application providers. I predict Oracle will be one. I don't know right now today. There is no other company in the industry who has got a complete suite of SaaS applications. Oracle's the only one. Somebody eventually will get that done, I believe. And I believe you'll have a couple of providers in that part of the industry. I think probably likely at the platform level, you have a couple of platforms that survive. You'll also find the ability for those platforms to work together. And I think like anything, you'll see a couple of providers, two, three providers at the infrastructure layer. Is Oracle a one big cloud, or is it a company of many clouds? I mean, we saw an acquisition this week with ADDIS and I saw the word data cloud. Sounds good, great. Good marketing, data cloud, but it makes sense it's social data. You see marketing cloud, social cloud. Are they a collection of clouds, or does it matter? Is it labeling as the long tail distribution? Well, it's branding. I mean, they are clearly a set of capabilities in the Oracle Public Cloud. Those capabilities are a marketing cloud, a sales cloud. They are not, if you will, architected as separate clouds. They are built on, as I said earlier, they are architected on the same platform. Everything is built on fusion, middleware, common platform, common base, common infrastructure that can work together. You talk about on your prediction here that all enterprise data we store in the cloud are faster and cheaper. You also announced that pricing, I think it was Oracle, it might have been earlier, cheaper than Glacier and Amazon. Is that consistent, the trend that you see pushing the price down lower and lower for the data storage? Yes. I mean, I think at the infrastructure layer, we've looked at that world as more of a commoditized world. That basically the infrastructure is a service there, you're selling compute and you're selling storage. And we think that market will continue to decline in price and we expect to be very aggressive with our pricing in that market. I want to get a take on startups. On the cycle of startups, Ken's ebbs and flows, we've seen it in the 90s. When I did my first startup, it was really hard to get into the business. You had to provision a data center, buy a router, buy a sunbox at that time, it was very expensive. And it was also hard to get customers if you were a startup and enterprise customer in this case. And then the world shifted and it was easy to get customers with open source. We seem to be shifting back around where it's hard for startups to get enterprise customers because of the scale and integration challenges and the SLAs and the global requirements, compliance and the list goes on and on. Do you agree with that statement or do you see it differently that it's going to be harder and harder for startups? It might be easier to start building stuff but to actually come in and compete and win enterprise customers. What's your take of the appetite of- And John, you're talking about tech startups. Tech startups that sell, say, I sell storage, hey, I've just invented an all flash array. And it's kick ass and it's going to eat into Oracle, LexaData and EMC and all these other guys and I'm going to go sell it to GM. Or I have a software product that I want to sell to a company. So again, getting into the enterprises used to be hard and then it got easy. It seems to be getting hard again. What's your take of this data, that customer? So again, a subject that's got quite a bit to it. I think first, I don't think companies are going to buy and I'll stick on the application layer for a second and talk about application startups. I don't think customers are going to buy from a hundred different companies for their cloud applications. I think when you're looking at applications specifically, you think about automating a vertical process, but companies also have to work together horizontally, not just vertically. So I think in the end, they will have fewer cloud providers, I mentioned sort of two. Could a company have three or a four, a couple of best of breeds, maybe. But they're not going to make the on-premise complexity and just move that complexity to the cloud. This is an opportunity to make things simpler to your earlier point and I think that's what will happen. Now, we happen to be, we acquire quite a bit, as I know you know. And so we actually get to look at a lot of startups. And I would say you're right, that we see with many startups is they start off trying to inexpensively as possible, which is, I don't think I try to do it as expensively as I could. Try to build a capability. And then many run into problems with eventually scaling, maybe eventually being a build out. We see this as we acquire. I think for startups, one of the real attractiveness of the cloud is that no longer any of those costs you described a few minutes ago exist. I can now go do the, remember that DevTest I talked about? That DevTest I talked about for the big company is the same thing you could do on the cloud. You can go get Java, you can get the Oracle database. You can only use or pay for what you use, no longer do you have to buy a Sun server that you described or get a license. And you can build on the most industrial strength, commercial capability in the world, Oracle. And you can do that now as a startup and be enterprise grade from the first piece of code you write. So being a world-class leader might be hard if we start to crack that nut versus becoming part of an ecosystem. I think that's right. I think what you said is right. And I was trying to address both. I think as a startup you have an opportunity to build on commercial grade tools from the beginning. And I do think you're right. That being part of an ecosystem almost assuredly will be necessary as this market matures. A lot of commentary that we could see yes, but Ford and GM announcing lift with a deal with lift and big investments try to be like Uber and Tesla, electronic cars to in-car entertainment. Some of us say that the car is one big gadget smartphone internet of things device, which is true. It's not a big data problem. That brings up the question. GM and Ford are incumbent leaders in Detroit and the automotive industry are shifting radically this digital transformation. Is that something that you see similar in other verticals that? Well, I'll stick with that vertical for a second. I mean, that vertical has shifted dramatically over the years. I mean, it used to be those companies made money selling cars. They no longer made money selling cars years ago. They then made money on service. Now they don't make much money on service. Now it's going to become the services that sit in the car whether those are entertainment services or whatever they may be. And so it's going to be very interesting in that industry how they innovate. Do they outsource those services to another technology company in the Silicon Valley? Or do those become the core differentiators of those companies? And that disintermediation occurs industry by industry by industry. We've now talked about tech and what the implications are for the cloud on tech. Same things occurring in virtually every vertical. So you said earlier, is there an enabler or it's going to freak people out? It's it, well, this is what happens with innovation when time comes. And this is why we've done at Oracle what we've done. We've moved as quickly to the cloud as we possibly could. It doesn't mean our on-premise business isn't strategic and important to us. Of course it is. And I think the combination of the two capabilities gives us a huge differentiator. But that's that for us to move quickly was critical we think to our long-term success. And that's why we've been as fast moving as we can. And I believe that true in every industry. If you spend doing words like balance, protect all of those sort of verbs, they don't lend themselves to long-term success. Let's talk about the company now that you're leading with the team. The number one question I get to ask that I was told to ask you was ask them how the co-CEO job is going. And I'd like to know what it's like in the day and the life of Mark Erd with Zafrikaats, Larry Ellison, take us through some color around what goes on behind the curtain. No, I think, well first of all, we've been together a while. So this is not like a new phenomena. So we think we have sort of a capability that we can do a lot of things at the same time. I don't know that there's a broader team in terms of experiences. I'm not trying to say we're great or try to be arrogant about it at all, but it gives us the capability to touch a lot of things at the same time. I've been a CEO multiple times and I can tell you it's a lonely job. It's a hard job and it has a lot of responsibilities associated with it. The fact that you can get a team that brings with it different skills, different capabilities and that you get the right personalities that blend together, that's a blessing. And if you can get it, take it. That's not just the top two, the management team also, throughout the company, it's pretty strong. You know, I'm glad you brought that up, John, because I get questions like that a lot about Larry or Safra or they get questions about all that. But the reality is we're 140,000 people in this company. So we're a large company with an enormous number of talented people. I mean, Thomas Kurian who runs our software development organization, John Fowler runs our hardware development organization, Dave Donatelli, our people running regions. We have a lot of very, very skilled people like our chief architect, Edward Scraven. I mean, we just have a lot of depth at Oracle and so it's a lot bigger than the three of us. And you get the newly hired Dave Donatelli who is a shark when it comes to infrastructure. He is strong. And how's he working out? I mean, how's the, that's a big opportunity. I think Dave's done great. I mean, listen, and Dave is really leading the product management, go to market efforts around all of our systems team, which is going through its own transformation because we see the way infrastructure is now being used today and it's going through a lot of change and Dave's just a great addition to Oracle. He knows the EMC playbook and certainly they have their challenges. So I ought to ask you a question. Another one is that the hardware middleware market is about integration. You mentioned that horizontal integration. How challenging is that for you guys and is this part of the transformation message that you guys have done internally because you're asking customers to transform. And so can you give an example where you've transformed yourself? Well, when you talk about the middleware market, I actually, you mentioned the middleware market at least in some of the transformation. I actually think with all of the data that we've described earlier, the opportunity to integrate that data and to integrate that data in the cloud is a huge opportunity for us. We introduced it at Oracle Open World, the integration cloud services, Oracle integration cloud services. And the opportunity now for us to bring that to market and bring that capability to customers. Fantastic opportunity. Let's talk about competition, my favorite subject. HP split up, EMC sold to Dell, IBM is trying to make a run at it. What does all this mean for the marketplace and specifically customers because those are big companies that are transitioning or struggling, as I'm saying. What does all that mean? Connect the dots for the industry dynamics with those competitors? Well, I think the industry, our industry is no different than any other industry. It's looking for revenue growth. It's got leaders that are being driven to grow revenue, to grow earnings, to grow cash flow. And many times when you realize you can't do that or they find that they're not in a position to do that, they change. And change is inevitable. And that's all you're seeing here is the change of what we described earlier. You've got a certain market that behaved a certain way for a long time. That market is now interrupted. It's gonna cause certain people to fail. It's gonna cause certain people to combine. And as a result, that change is gonna occur. And if you're not able to do the things I described, the things that Oracle's done to if you will cross the chasm, then change is coming. And I don't think you've seen the end of it, John. And a lot of these folks made big bets years ago, going back a decade. What bets do you see not paying off? And what bets should people be making to be competitive in this new era? Well, I believe what I said about our strategy. I think if you're not first in the cloud to begin with, you're not gonna be long for this industry, point one. Point two, if you don't have enough Brett in the cloud and you're just a single player with a point solution, you're probably not long for this world. So in the end, companies want more from fewer people. They want help with innovation. They want better economics. And that's gonna prove in the end to come from a few companies, in my opinion. I think you'll see the same cycle that we've seen before, that you'll see companies that frankly, remember if you went back to the 80s, think about how many great companies were in this industry in the 80s. When I started in the industry, I'm ashamed to have to admit that. I'm ashamed, but I hate to have to admit how long ago I started. You're trying to fool me, look good. Well, they're all gone. I mean, Wang is gone. Digital's gone. Data general is gone. This prime computer is gone. I mean, this happens a lot. And this is just us going back to the future where we've got an interruption in the industry. It's gonna cause winners and losers. And it's the reason, John, that we've made the investments we have. We could have easily done none of this, invested none of this capital and harvested our existing business. And it would have looked great for a while. Not long run. And you guys invested in the future at the right time, seems to be working great for you guys. The numbers are good. How do you invest in R&D? What are some of the numbers on the cloud in terms of revenue bookings? Well, we don't give out all of our data forward-looking projections, but what we did in our last quarter was we talked about our growth in the cloud, virtually doubled our bookings year over year. We've now got a chance to be in the ball. Well, I won't give numbers out right now because I was already gonna make a forward projection. But think of us now as multiple billions of dollars in revenue in past platform and SaaS. Growing, and as our revenue has grown, John, our growth rate has actually gone up. Let me say it one more time. The revenue's grown and the growth rate has increased. And so I think this comes down to the fact that we've just gotten better and better at this. We've added more people from a salesperson perspective. More of our products have become available in the market to the point of the percent of our portfolio that's now available in the cloud. And we've now got lots of references. And so it's an exciting time for us. I got to ask you about Amazon Web Services. Obviously, they've been going after Oracle with our database and saying they can suck all that in. We'll comment on that in a second. But I interviewed the former CTO of EMC who's now doing a storage startup on its own. And he had a comment and I said, well, Amazon's winning. And he says, well, because we always debate what ending are we in the industry. And Dave Vellante and I, my co-host, argued that he thinks we're in the seventh inning. I think we're in the first inning. And so the guest said, no, you guys are both wrong. Amazon won game one of the double header. Game two is about the enterprise. And it's not even started. So I want to get your thoughts. Amazon certainly did well. And doing well, the numbers are pretty clear with public cloud. But now they're aggressively moving into the enterprise. And it's just a different ball game. Talk about the dynamics there vis-a-vis Oracle. You're targeting a much more business approach, understanding the IT side of the business. Amazon is kind of do-it-yourself, launching new stuff every day. What's the distinction between the two? Some love Amazon. People love the success. Good job, Amazon. We cover them. We like them. They have a good product. But it's not the end game to your message. What's the difference between the two? All right, I'm going to stay away from all the baseball analogies that you made. I think that they started out as a retailer. They had an IT infrastructure to support a retailer. I think very clever. They needed a lot of IT capacity when retail season was at its height during the holidays. They said we've got a bunch of unused capacity during other parts of the year. We'll go rent it to people so they can leverage it. Makes sense. Now, as you start to move into other workloads, as you start working into enterprise workloads and dealing with all of the issues that come up, there are more complexities to come up. I think that we are in the, I'll just say, early stages. And by the way, remember one thing I mentioned to you, I think earlier, just before we started and started this interview. It doesn't take much of a change in IT to have a dramatic effect on the revenue of the industry. So I mentioned earlier about this dev test thing. 30% of the industry, $300 billion. If only 5% of that moves, it's $15 billion. 15 billion goes from somewhere, some companies that are supplying that today, to somebody else. And that's the very beginning of this. See, I actually think very little of this workload today has moved compared to what it will be five to six to seven years from now. So from that, just a sheer numerical dimension, we're in the very beginnings, the very early phases of this. The ability to get the bulk of this market is the ability to move massive amounts of workloads from some of the most complicated jobs in the world. So we're just scratching the surface with this. Just beginning. Okay, so talk about the customers that you have, because you have a lot of customers. You guys have a zillion customers. Oracle is a dominant player for many, many generations of IT and computing. We've seen that, but I'm sure some of them have Amazon presence or they're kicking the tires, doing some shadow IT, doing some things. How do you guys do that? Because you kind of partner with Amazon on one hand, but you also have customers, because you have customers there. How is that conversation going with Oracle and Amazon? You say, hey, whatever, or is there? No, I think that customers can choose to take their Oracle licenses and run them on Amazon. They can also get those same capabilities directly out of the Oracle Cloud. We can take jobs between Amazon and Oracle and have them work together. So it's really the customer's choice as to what's best for the customer. My general view would be that if a customer is doing a platform job, writing an application in Java, I'll probably get infrastructure from the same person I'm getting Java from. So I'm more likely to buy that infrastructure from Oracle if I'm buying that application from Oracle or using that platform from Oracle. But if a customer says, I'd really like to do my platform job on Oracle and store some of that up on Amazon, that's customer's choice. Okay, Amazon is on the list of competitors. Larry said one of the things is seeing new competitors, these be SAP and IBM now, new names. Yes. Amazon, Microsoft, Azure seems to be doing well. We don't see VMware on that list yet, but I mean, Azure's getting into a little bit of some of the other players, market share and cloud. People have different cloud visions. Amazon certainly has their incumbent business, Microsoft. What's your take on them vis-a-vis Oracle? Which one? Microsoft, Microsoft. Microsoft, Azure. I'd say Microsoft done a good job. I think Microsoft has moved its estate to the cloud, not very dissimilar from Oracle. Their applications, is Microsoft the competitor of Oracle? I think the answer to that would be sort of, but in many cases, not directly. Their applications are really different from our applications. My guess is many of the people using infrastructure from Microsoft are using infrastructure because they use their IP and their platform and or their applications. So I think therefore they're doing the job that strategically, that you see Oracle's multiple billion dollar cloud business doing as well, which is moving many of its core capabilities from on-prem to the cloud. They also have the capability now to merge an on-prem business and a cloud business, which again, I think is a really key differentiator as we move forward. It seems to be the differentiators seem to be dependent upon what people had or have going on, either pass or present. So with that, there's different approaches. So I got to ask you the question. I'm a customer, pretend I'm a customer. Hey Mark, how do I evaluate all this stuff? At the end of the day, it's like an, I need a matrix of like, who's got what? No one's got check boxes. What criteria should I use to decide who I pick? I still think Johnny comes back to the core stuff. Who's got the best stuff? Who's stuff really in the end does the best job for you? Starting at the application layer, through the platform layer, through the infrastructure layer. And then the fact that you can now get this stuff in the cloud is a huge advantage for all the reasons we've been talking about for the past several minutes. But it's still going to be about who's got the best IP? Whoever's got the best IP in the end, probably will win. Speed matters too. I mean, you know, performance. Speed, security, I can go through a lot of other issues, John. But let's start with, who's got the best IP? I promise you, promise you, we will perform from a performance perspective. I promise you, we will have the best security. Now that said- So a customer has a license on Amazon Web Services and certainly probably doesn't run as good as on Oracle. Listen, I mean, obviously, I believe- With the IP you have. I believe that we're pretty good at running Oracle workloads. I actually believe we're the best in the world at running Oracle workloads. And I think you're going to see that get even better as we move forward. Well, I can test, and then in the CUBE interviews on the 48 interviews we did, it was pretty clear that Oracle is very well optimized for Oracle on Oracle. No doubt. I mean, clearly the performance is order of magnitude significantly slower. But John, let me add, our cloud will also be capable of handling non-Oracle workloads. So, you know, we think in the end, while we'd love the whole world to run on Oracle, we believe there'll be a portion of the world that doesn't. And the fact that you can run those capabilities on the Oracle cloud, along with your Oracle workload, becomes critical as well. Yeah, I want to drill down on that. Because one of the things that I've observed over the past decade and past five years in particular, there's been kind of a Oracle huge community because you have huge customer base. But it's always been like, you know, Oracle, the red stack, it's proprietary. And it's kind of like some, whether it's truthful or not, that's been kind of a narrative. But now it's with MySQL, we got a lot of open technologies. This Oracle open world became very clear that integration, it's not about red stack anymore, referring to Oracle's, you know, boxes and brand. It's, Oracle runs great on Oracle. But if you don't have Oracle, you can still be an Oracle customer. So talk about that dynamic. This is a significant opportunity for Oracle. New business around. Maybe the narrative is the way you described the narrative and you lowered your voice. You know, I got a certain impression from the words you said. Now, that said, Oracle's always run hybrid workloads. Multiple applications around the Oracle database. SAP runs on the Oracle database. Lots of applications around the Oracle database. So I think Oracle's always been, if you will, open from that perspective, while continuing to build a complete stack. Now I'd make the argument that the cloud in many ways is of any cloud provider is a proprietary stack. I mean, in certain name here is, what is by the way the, do you know what the middleware is that Salesforce uses or the database? Or the middleware that Workday uses you can go down company by company. And at the end of the day, you really though don't know what's behind that. It is really totally provided to you by that provider. And that is what you see being shifted in the cloud. You can make the argument, and this gets very into another interesting debate. Much of IT has been the do it yourself sort of approach. I'm gonna, if I will, as an IT staff become an R and D organization. And if you're a CEO and not a tech CEO, but a CEO of a company with an IT organization, you have to ask yourself, is that really what I want to do? Do I really want to glue an operating system to a server? And build anything from scratch? Sure. Support it. And do all this work and, or would I rather have somebody do it for me? Now, as long as the economics are right, and as long as I have trust in that partner and I'm secure in all of the things we've talked about. But at the end of the day, transferring a lot of work that doesn't give me a lot of economic value add. And moving that, as I've mentioned earlier, to Oracle's R and D budget, I think becomes really attractive for a whole suite of reasons. Yeah, I think it's a great opportunity. I'll rephrase the question. So Oracle has a business, a great business, and you have customers. They have Oracle software. And that contract value increases, they renew, they buy a new license, new technology, you grow your customer base. But with Cloud Native, what we learned with the web skills, you pointed out a lot of companies were successful building their own stuff because they didn't have the cash, but they had expertise. So they would build their own caching and my stuff on the hood. And they support it and pick up that cost. But now as IT moves to Cloud Native, that's a huge deal. They don't want to build their own. So I agree with you. You're looking at a new- I will say this, and I don't mean to interrupt you, but there still is quite a debate in big companies. And this is one of these transitions. We've talked about the transition really from a tech industry perspective. But inside the customer, inside IT organizations, the cloud is a threat. So when you look at as- Like the mainframe guys, when many computers were a threat to the company. So I'm now in an IT organization. This do-it-yourself thing. This is quite a bit of job security. I wrote this application, I've got to glue this to this. And this is all really complicated. And if you talk to a CEO, again, a non-tech CEO, and you say, well, listen, you really don't want to mess with all this because this is really complex. And I'm the only one that really knows how to do this. This whole thing where we're going to transfer that complexity to somebody else has its own degree of threat to IT organizations. So that debate you described, that debate today, John, is still not over. I think the Holy Grail, whoever can provide a cloud-native, scalable, turnkey infrastructure, will probably- Of course you're right. Win that business. Of course you're right. But this is why these moves, to your point about what in-een are we in or what phase are we in, these things have multiple episodes. So are we in that cloud-native phase right now? Are we, for the new customer, comes to Oracle? Hey, you know what, I'm growing. I've been doing stuff in the cloud with Amazon. I've been doing this over here. Got my Bootstrap data center. I really want to go to the cloud in a big way. I'm growing leaps and bounds. I'll stick with what I said earlier. We're in the very beginning of this. And we're in the beginning of this. The amount of IT, John, the suite of applications, you go to any of these big banks in the United States around the world, they have just scores of applications, most of which were homegrown, many of which sit on those mainframes. You say we're threatened 25 or 30 years ago. This whole move is a big set of moves that will take several years and use my discussion of 10 years out where I think it'll head. It'll take time like that to move. Now, what customers are going to want, again, one more time is, I'm not going to be able to take that whole on-prem capability and just say thank you, move it over here. It's not going to work. So therefore the ability to move this thing job by job and then to be able to coexist these hybrid environments over a period of time become a key issue for our customers. So have them move at their own pace, basically. Not have before. I think customers, I gave you examples. I mean, I think DevTest is a, as much work as has to get done to do that is a sort of an intellectual layup. I think you're going to see a lot of DevTest move quickly. I think you're going to see applications, particularly those applications that don't differentiate the enterprise, customer-facing application that you think is your unique, sacred sauce. You may keep that as homegrown on-prem. But those commercial applications that don't differentiate me, me being the company, I will move to the cloud as quickly as I can. Great excitement at Oracle Open World this year on the theme of integration. And we talked to some customers and they were excited by that. It's a big problem. So that's one thing that I'd like to talk about. And the second thing is what confidence can you share with the customers around your growth strategy? Obviously organic M&A and organic growth versus M&A, you're a big buyer, you're not afraid to go out and pay a premium for world-class IP, but also you're doing IP internally. Tie those two together. Integrations are big themes. Continue to advance the product side as well as the growth strategy around organic growth and buying companies that might fit into. Sure. We spend a fair amount of R&D. Starting with your second question. When I came, I think we started spending 3.8 billion in R&D. We'll probably spend 5.2 billion this year in R&D. So we invest, not all of it is D. We have a few hundred million dollars of R as well. So we spent R&D. And in addition to the D, the way I like to think about the innovation of Oracle is the D, it's the R, and it's what we acquire. And so we have not built everything. We've had very much a buy and build strategy. We've bought in some capabilities that we weren't building and we've merged those to create the portfolio that we have today. And yeah, we're not- You're not gonna stop. That's the cadence of Oracle, right? Just continue. Yeah, I won't predict anything. But I will say- You won't stop. I will say that we're very focused and not at all hesitant when we see something that we think is strategic to us to bring it in and add it to the portfolio. You mentioned something earlier, I wanna drill down in horizontal integration and growth and vertical integration. Sometimes people think that mutually exclusive, horizontal industry standard commodity hardware was a rage with open source and that helped grow a lot of the market in the web scale days. Now, vertical integration where, hey, it works, it's kick ass, it's high performance, secure. I don't really care what's in there. It works. Oracle supports that. It's also working. Oracle was kind of, people were kind of poo-poo in this whole appliance thing, going back, you know, five years ago. Good call, working. So- By the way, that is the same strategy that's called the cloud. I know. So when you really look at vertical integration, the cloud is the ultimate in vertical integration because somebody's done now all the work for you. When you buy, I try to explain this to customers all the time, that when somebody buys an application in the cloud, they have actually procured hardware, database, middleware, services, a data center, floor space, security, they've bought all of that at the same time. And so this shift to the cloud really is the ultimate testimony to vertical integration. And horizontal, they're not mutually exclusive. You don't see them as mutually exclusive. That's why I mentioned earlier what I said about why I think there will not be 100 cloud providers supplying to our customer, because integration, we just talked about it in the vertical sense. We want an HR application that's completely integrated or an ERP application that's completely integrated. But those applications have to work horizontally as well as vertically. So I would actually like my ERP application to talk to my HR application. It might be nice. If my marketing service applications talk to my ERP applications. So I really don't want to spend a bunch of money on my IT staff horizontally integrating 100 clouds. I'd like somebody to do that for me. And that's why Oracle having the suite that we have in terms of applications, platform, and infrastructure is so important. And that's really the trick, balancing both. Really making that happen seems to be key. You gotta do both. I'm a firm believer that you really have to have that full suite of capability. Okay, so Dave Vellante, my coach, and he wanted to get a question. So I told him I'd read a question for him. He says, and this is around the on-prem thing. Your strategy to create seamless experience between on-prem, off-prem solutions. Obviously your customers can't get there overnight. How far along on the completion bar are you and your customers to achieving that vision? Of integration of on-prem and off-prem. And off-prem. Seamless experience between off-prem and on-prem solutions. Today, you can have an Oracle job running in the cloud. You can have an Oracle job running on-premise with Oracle Enterprise Manager. You can manage both jobs seamlessly and move workloads back and forth between on-prem and the cloud. And you can do that today. We talk a lot about, you know, mainframes, minis, going back and look at history. Total cost of ownership is a word that's been used in the computer industry going back to technology is a great way to justify things. So let's talk about total cost of ownership. But I also want to get your take on what does patchwork IT mean to you? That notion of patchwork IT in context to total cost of ownership? Well, you have a lot of terms you'd like to use. I would stick strategically what I said earlier. I think of much of what happened over the last seven, eight years as a lot of do-it-yourself work. Whether you want to call that, whatever term you want to use it. The whole view, for example, in this valley, if you drove up and down the 101, you would see a slew of companies who individually are trying to sell you an IT organization of a company, a piece part. Be sort of like driving up and down and buying a muffler and then buying a bumper and buying all kinds of stuff and putting it together in your driveway. This is really now a shift in the industry away from, you know, patching together all these systems that are extremely complex and moving to a simpler, more fully integrated, tested optimized environment. And it increases the complexity of cost of ownership. You said increases the complexity? Decreases the complexity. And decreases total cost of ownership. Even in the industry through many cycles of innovation. Does that mean I'm old? Yeah. Okay. I'm sorry. You're at the peak of your career. Thank you very much. People are freaking out. Some people are winning and happy because they're on one side of the disruption era or the other. What does this innovation cycle mean to you right now? Compare and share your color or personal opinion around what's going on right now in the industry compared to other ones? And how big seismic differences are there? Are there, is it a big shift, a little shift, compare, contrast? This moment in touch. I think it's so exciting. I think it's the most exciting things have happened in our industry in a long time. I think the fact is this industry is now in a position and evolving into a position where we can really help customers. We can get them out of this very complex world that we the industry have created. And like many industries simplify the way our customers get access to fabulous intellectual property and make it easier. And I think this is an opportunity that if you're in this game, if you're not in the, listen, let's face it, out of colleges, we haven't had the excitement in the tech industry in years. The fact is now with a new game to play, this is a tremendous change with tremendous set of winners and frankly, there's gonna be the losers involved at the same time. That's what makes it exciting. And cloud is the bet. Cloud is the bet. Cloud is the bet. Mark, security was huge at Oracle Open World. I gotta ask you this question. This came from a source on our Wikibon team. Top killer tech announcement at Oracle Open World was security. But with the ISIS massacre and the France thing, the encryption has become a bad word. It was debated about for years. Encryption was a top topic in the conversation. And that was a key message at Oracle Open World, everything could be encrypted. Beyond encryption all the time as Larry said, you guys were talking about what is the state of security right now with encryption and Oracle? Does that change your security angle with the products or what's going on with security right now? So we're talking very much now about enterprise applications and I think it was the cloud of all. We talked about this a little earlier about the perception that I'm now gonna take my data that is very safe in my data center and on-prem which we could debate. And I'm now gonna move it to a cloud and therefore I feel vulnerable. I feel vulnerable that my data is now in the hands of some other entity. And for us, I think one big advantage Oracle has is the fact that we're very good at data. We've managed data since the beginning of the company. I mean, our first customer was the CIA. Data bases. Yeah, well, and the CIA was our first customer. They remain a customer today. And so security's always been at the core of Oracle's DNA. Now, one of the reasons we haven't encrypted databases for years is because when you encrypt them, the performance of the database actually slows. So it's been years of evolution, years in terms of exadata development, in terms of all the memory that's now, I won't go into all the details of the technology, but now we can fully encrypt the database and get incredible performance. So what you actually- So no hidden performance on the security. None, none. Incredible performance and at the same time, you have an encrypted database. Now, let me tell you what that means. That means that when a customer's HR data is in our cloud, our people that are moving around the customer's data don't see the customer's data. They see, frankly, gibberish, they have files. The key to that encrypted data can sit with a customer. So when those files come back across the network, the customer can decide when, where, to use the key to open that encrypted file. So therefore, when you're in the Oracle cloud, and I listen, I encourage everybody, ask our competitors how they deal with this. Ask them what their options are. How do they deal with that data? Is somebody who's an HR provider, are there people looking at the customer's data as they move files around? Well, we've decided that we think the most important thing we can do is secure that data. So let's pretend, and by the way, I don't think this would ever happen, but if somebody actually got access to those, there's nothing to have access to. It's all encrypted. Talk about the implications for cloud on a global basis. Data sovereignty is a huge issue with cloud. Does this impact at all? Does it help? No, it does. And so it's the reason we've had to, one of the reasons that we've put data centers in many locations as we have. So we do have customers that, by law, have operated in Germany and in the UK. And employee data can't be of a UK employee cannot be in Germany and vice versa. Well, we now have the ability, because of our data center capability in Germany and our data center in the UK, to actually make that capability work. And so this issue of data sovereignty, like security, is a big issue. So you're helping the data sovereignty problem with this opportunity? Yes, we've had to address it. We've had to address it. We've had to embrace it and we've had to help it. And it's the same thing with security. So now you can have a fully secure oracle capability in 1920 different countries to help deal with that data sovereignty and security issue. Mark Hurd, thanks for taking the time here for the CUBE 101 conversation. Thank you very much. Thanks, John. Appreciate it. You're watching special one-on-one exclusive conversation with Mark Hurd, CEO of Oracle here on theCUBE, on the ground here at Oracle's headquarters.