 Live from the Moscone Convention Center in San Francisco, California, it's theCUBE at Oracle OpenWorld 2014. Brought to you by headline sponsor QLogic with support from HGST, violin memory and MarkLogic. And now here are your hosts, Dave Vellante and Stu Miniman. Welcome to Oracle OpenWorld 2014, everybody. This is Dave Vellante and this is theCUBE's SiliconANGLE Media's continuous coverage of events around the world. And we're here at OpenWorld. This is our fifth year at Oracle OpenWorld. And the big question is, has Oracle late to the cloud party? Is Oracle going to subsume the cloud into its red stack? We heard from Larry Ellison last night. We're going to be unpacking these and other issues all day today. 2014 has been a year of transition for Oracle. The company just released last week its latest earnings announcements. I'll cover some of the highlights there today. I will be joined by a number of guests here. We're inside the QLogic booth on the show floor. And we've got tons of folks from the ecosystem, people of course from QLogic, folks from a number of other partners of Oracle, competitors of Oracle, Oracle itself is coming on. We're also simulcasting live from the show floor in another booth. My colleagues John Furrier and Jeff Fricker are inside the Cisco booth, covering that dimension of the ecosystem, particularly with the network angle. Kim Stevenson, who was just on the keynote, is over there now and going to be discussing things with John and Jeff. But so let me start by talking a little bit about where we're at with Oracle. As I said, 2014 is a year of transition for Oracle. Oracle last night, Larry Ellison, talked about the need, the commitment, the obvious need to deliver a full stack. And what does he mean by that? He's talking about Oracle's need to deliver infrastructure as a service, platform as a service with Java and middleware and of course database. And then SAS, software as a service, Oracle's intent is to be number one in software as a service, number one in database as a service and be competitive with Amazon and Google and Microsoft as an infrastructure as a service player. Larry Ellison said that several years ago it became obvious to him and others around Oracle, which of course, if it becomes obvious to Larry then it automatically becomes obvious to others around Oracle that they needed to compete in all three layers of the stack. That's a market difference from most software companies. Certainly you see IBM taking that path but IBM has sort of always been a hardware and a software company. But you don't necessarily see that from a number of other major players in the industry. For example, Amazon focused purely on infrastructure as a service, Workday focused on applications as a service but increasingly you are seeing companies like Microsoft like Salesforce take on a lot of that infrastructure management. So we'll be talking about that. Ellison said last night we are not a specialist like Salesforce or Workday. We're not a specialist like Amazon web services. We have to deliver the entire stack. We made a promise to our customers 30 years ago. He never really explained what that promise was last night. I don't really understand it. I'd be very interested in your thoughts on that. I'm at D. Volante on Twitter. I'll be checking Twitter all day. So please tweet me, your comments, your thoughts. Essentially, Ellison talked last night about a build and a buy strategy. They bought lots of SaaS applications. They bought whether it's talent management, marketing applications and the like. So you're seeing Oracle build this huge portfolio of applications all built on top of its Java and middleware platform, all running Oracle database. He also said we're very much involved in what he called all that jazz. And by all that jazz he meant microprocessors and memory and semiconductors and flash and disk drives. So basically the value proposition that Oracle is putting forth to its customers is as Larry said last night, with a click of a button you can move any Oracle application to the cloud, any Oracle database-based application to the cloud. Now that's the catch, right? It's got to be a part of the red stack. But I will say this, having been at VMworld last August and early September, earlier this month, Oracle's strategy and its value proposition as it relates to competing with the likes of Amazon and Google and Microsoft and its SaaS competitors and its platform competitors is very cogent. It's highly integrated and I think it's going to work, certainly in Oracle's part of the world. VMware for example has to compete in an ecosystem-based strategy and it's much harder for them to so-called herd the cats. I felt this though and I said this in theCUBE that I didn't think that VMware really had nailed the cloud strategy. I thought it nailed Docker. I thought it had nailed the open stack messaging but I felt like it didn't really nail the cloud strategy. I think Oracle has really embraced the cloud in a way that is going to transform the company. I'll share with you some of the highlights from Oracle's quarter last week. So Oracle's cloud business is now at a $2 billion run rate. Did 477 million in the quarters, growing at around 30%. It's forecast to grow according to Mark Hurd between 40 and 45% over the next several quarters. It's SaaS and past business is 339 million in the quarter. Its infrastructure as a service is on a half a billion dollar run rate now. Having said all that, of course the big move that Oracle made back in 2010 was it acquired Sun Microsystems for effectively $7 billion and its hardware business continues to decline. It's down about 8%, its product revenue and hardware is down about 14%. Having said that, Oracle's focused on things like Exadata, Exalytics, engineered systems. Its NAS business is growing with the ZFS appliance. It announced last night, actually I believe this morning, late last night, the FS1, the FS1 is a new SAN product that came out of the pillar data. Some of you may remember a company called Pillar Data that was born in the virtualization day along with companies like 3PAR and Compellant. Larry Ellison made an initial investment in pillar data and their emphasis was always quality of service and the like. They have announced, Oracle has announced a new SAN product. Now SAN has been in rapid decline so their hardware business is in major transition. Of course they're again bringing a lot of that into the cloud. Some other fun facts from the conference call last week, they claim that they've now three X Workday SaaS business. Its goal is to be bigger than Salesforce. People look at profits and price to earnings ratios and Oracle has missed its earnings expectations. It's become kind of a consistent habit of Oracle to miss some of its earnings expectations but one of the things that Oracle's not missing is its free cash flow. It is throwing off gobs and gobs of cash. Oracle threw off about 15 billion in free cash flow for the last four quarters. Just 6.5 billion in the last quarter alone. But it's new license revenue on-premises down about 2% but its maintenance business is going so they continue to milk the maintenance business. Engineered systems, exadata, exolytics, those appliances that have hardware and software engineered together are up in double digits. It's about a third of the product revenue now. So what you're seeing as Oracle is really a cash flow story. It's a transition to a cloud story. It's got a huge portfolio of things like human capital management and marketing automation and it builds in analytics, social, search and the like to all of its applications. So if you're developing applications on its platform in Java, you get the benefit of all of these innovations that Oracle's putting forth. That's the company's strategy. Of course the criticisms on Oracle remain. It's expensive, you're locked in. It's not about choice. Of course Larry Ellison would argue with that vehemently saying, hey everything's built on Java, standards matter. He said that several times last night as keynote. He also said just as quality was job one at Ford decades ago, security is becoming job one at Oracle. And so its strategy in competing with some of the infrastructure as a service providers is to have similar cost structures with better reliability, better security. I'm going to talk about this some more, bringing David Floria later on this week. But one of the things that Amazon has trouble with is bringing online transaction processing, the hard to move OLTP applications, really hard core database applications that Oracle's running, bringing those into its cloud. Now Oracle, or Amazon will point to many, many examples of Oracle databases running in its cloud, but you're not really seeing a broad based adoption of the hard core Oracle OLTP applications in the Amazon cloud. That's something that Oracle is clearly showing proof points for. The other thing that you heard from Ellison last night is if you move to the Oracle 12C database, which is going to be slow, it's going to be a slow transition, but he said you will endow your applications with modernity. Thought that was a standout quote last night. He also took a big swipe at SAP HANA. He said taking a tagline from SAP HANA powers the cloud. He asked who's cloud, what cloud, where. And then he said that 19 of the top 20 SaaS providers run on Oracle's platform. Salesforce runs on Oracle. Many of SAP's companies run on Oracle, including SuccessFactors, NetSuite, which is of course Larry invested in, Oracle of course runs on it. He didn't mention IBM. IBM's definitely the top 20 SaaS providers, so it's a little Oracle math on that. You saw some Oracle math last night as well on the EMC comparisons. Oracle was saying that it's five times faster than, I think nine times faster than EMC. Comparing of course bandwidth, really not comparing some of the other metrics. Latency, we're going to talk to Greg Scherer about that in a moment. Greg's a technology expert with Q-Logic. We're going to unpack some of those performance claims and really try to help people understand what performance is all about. Not just big data, but big fast data. But he talked about, Larry Ellison this is last night, talked a lot about Oracle's cloud, 400 petabytes of data in the cloud, 62 million users per day. So it's not Google scale, but it's pretty big and pretty impressive. So as I say, we're going to be going wall to wall here. Unpacking Oracle, talking to the analysts, talking to the people in the ecosystem, talking to Oracle itself. We've got Mike Workman coming on. He's a senior vice president at Oracle, member of Oracle, application providers at the Cisco booth with John Furrier and Jeff Frick. So we're going to be covering that wall to wall. Tweet me at atdvalante. Check out wikibon.org for all the research. David Flores posting some stuff up there today on the FS1 announcement. Also, check out siliconangle.com for all the news. And of course, watch us on siliconangle.tv. We'll be here all day. This is theCUBE. theCUBE is SiliconANGLE's live mobile studio. We'll go out to the events. We extract the signal from the noise. We're here at Oracle OpenWorld 2014, live in the QLogic booth at Moscone South. Please stop by and see us. We're right near the Oracle demo room. And as I say, we'll be going all day today, tomorrow, and Wednesday. So keep it right there, everybody. This is Dave Vellante. We'll be right back after this work.