Oracle Looks to Infrastructure-as-a-Service for Future Growth

Thursday Mar 16th 2017 by Sean Michael Kerner
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Oracle reports third quarter fiscal 2017 financial results, with total revenue of $9.2B.

Oracle originally built its business success with its eponymous database running on server infrastructure. Now in 2017, Oracle founder and CTO Larry Ellison still sees database as being core to success, though instead of it only running on local or company-owned data center servers, he sees the future as one where Infrastructure-as-a-Service (IaaS) cloud deployments dominate database workloads.

For the third quarter of fiscal 2017, Oracle reported revenue of $9.2 billion, for a two percent year-over-year Oraclegain. Net income was reported at $2.2 billion, up by six percent over the third quarter of fiscal 2016.

Looking forward, Oracle CEO Safra Katz provided fourth quarter fiscal guidance for revenue to grow from negative one to positive two percent.

Leading the way in terms of growth is Oracle's expanding cloud business efforts. Oracle's total cloud revenues were up by 62 percent year-over-year to $1.2 billion.

"In summary, all of Oracle's cloud businesses are growing rapidly, and IaaS will be leading the way in the future," Oracle founder and CTO Larry Ellison said during his company's earning call with financial analysts.

Ellison's confidence is in large part being fueled by his belief that customers will be moving their on-premises databases to the cloud. He noted that generation two of Oracle's infrastructure as service cloud now has the ability to run customers' largest databases, something that is impossible to do using Amazon Web Services (AWS).

"Amazon can only run relatively small Oracle databases in their cloud," Ellison boasted. "Many Oracle workloads now run ten times faster in the Oracle cloud versus the Amazon cloud."

Ellison Says IaaS Poised to Drive Future Success for Oracle

From a revenue metric perspective, Ellison said that together, Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS) grew 85 percent in the third quarter. He added that in his view,  infrastructure as a service (IaaS) will soon be growing even faster, eventually becoming Oracle's largest cloud business.

From a hardware perspective, Ellison said that organizations have been buying Oracle's Exadata Database Machines and are getting used to running very large databases very fast. He added that Oracle can now deliver comparable ultra-high performance at very low cost in the Oracle Cloud.

"How long does it take to migrate several hundred thousand customers and several million databases to the Oracle cloud and I think the rate of migration is going to accelerate over the years," Ellison said. "It's going to be at least a five-year run of very rapid growth as our database business begins to move."

While databases are moving to the cloud, Oracle recorded yet another losing quarter for its server hardware business. For the third quarter, total Oracle hardware revenues were reported at $1.028 billion, for a nine percent year-over-year decline.

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com. Follow him on Twitter @TechJournalist.

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