Oracle joins Cloud Native Computing Foundation, reports cloud revenues of $1.47bn for Q118

Updated Sep 15 Oracle has announced it has joined the Cloud Native Computing Foundation (CNCF) at the platinum level, boosting its push for Kubernetes with new open source product releases, while reporting cloud revenues of $1.47 billion in its latest financial results.

The foundation, whose role is to help sustain containers and microservices architectures, said Oracle’s ‘key role will help define the future of enterprise cloud.’

“CNCF technologies such as Kubernetes, Prometheus, gRPC and OpenTracing are critical parts of both our own and our customers’ development toolchains,” said Mark Cavage, vice president of software development at Oracle. “Together with the CNCF, Oracle is cultivating an open container ecosystem built for cloud interoperability, enterprise workloads and performance.”

Oracle becomes the third such vendor to sign up to the CNCF in a matter of weeks, after Amazon Web Services (AWS) confirmed its participation earlier this month and Microsoft did so in July. The cast list of the CNCF now reads like a who’s who of cloud computing, with Oracle the last holdout among the first and second tier players.

Alongside this, Oracle is releasing Kubernetes on Oracle Linux, as well as open sourcing a Kubernetes installer for its cloud infrastructure. “Developers gain unparalleled simplicity for running their cloud native workloads on Oracle,” as the company put it.

This is one of various initiatives Oracle has recently been putting into place regarding open source. The company announced in June it was making investments into Kubernetes, with a blog post from the developer team saying at the time: “Oracle is investing in Kubernetes first and foremost as a way to deploy and operate our new cloud services. We think our understanding of operating Kubernetes will translate into value for the community as we turn our real-world experience into action.” In the same month, Oracle also announced three new open source container utilities.

Finances

The company’s most recent financial results, in June, saw total cloud revenues hit $1.36 billion (£1.06bn), or 13% of overall revenue, with Larry Ellison predicting its platform as a service (PaaS) and infrastructure as a service (IaaS) businesses will outperform the software arm in due course.

With Q118 earnings announced on Thursday, Wallace Witkowski, writing for MarketWatch, said the previous day the company is “expected to mark a major milestone in its transition from traditional software sales to the cloud.”

As it transpired, the predictions were bang on. For the first time, total cloud revenues surpassed new software licenses. The ‘nearly $1.5bn’ Witkowski cited came in at $1.47bn for cloud revenues - up 51% from this time last year - while new software licenses were at $966m, again in line with Witkowski’s analysis of on-premises software ‘expected to fall lower than $1bn.’

To put these figures in perspective, the previous quarter saw new software licenses at $2.63bn, a decrease of 63% this time around. Yet cloud revenues for Q118 stand at 16% of total revenues.

Safra Catz, co-CEO, said Oracle was “off to a very, very strong start” in financial year 2018, while Mark Hurd, co-CEO, described the quarter to analysts as “strong…across virtually every metric that we track”, as well as noting the full year 2018 cloud booking growth should be “quite strong.” Ellison, as transcribed by Seeking Alpha, discussed what was to come for Oracle in the shape of a ‘fully autonomous’ next generation database.

“On October 1 at Oracle OpenWorld, we’ll announce the next generation of the Oracle database,” he said. “When we deliver it by the end of this calendar year Oracle will become the world’s first fully autonomous database. Based on machine learning, this new version of Oracle is [a] totally automated self-driving system that does not require a human being either to manage the database or tune the database.

“Using artificial intelligence to eliminate most sources of human error enables Oracle to deliver unprecedented reliability in the cloud,” Ellison added, citing a four nines SLA the company was working towards for the database. “To achieve that level of reliability, Oracle has to automatically tune, patch, and upgrade itself, while the system is running.”

Thus followed a swipe at Amazon – “AWS can’t do any of this stuff”, said Ellison – with the Oracle CTO adding that customers moving from Redshift, Amazon’s data warehouse solution, to Oracle can expect their costs to reduce by “half or more.”

Anyone who thought Salesforce, Oracle’s long-term target, would get off scot-free with the focus on AWS would be proved wrong. The press release attributed a quote to Hurd whose very first sentence boasted Oracle’s cloud applications business “continues to grow more than twice as fast as Salesforce.com”, while Ellison got stuck in after an analyst question around momentum in their cloud portfolio. “We sell double what Salesforce sells in absolute dollars,” said Ellison. “We did it last year and we will do more than that this year, and we are growing – and we are catching them very, very fast.”

You can read the full financial statement here (pdf).

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