Oracle Q1 Earnings: Why Larry Ellison Will Hammer Amazon, SAP and Workday

A couple of years ago, Oracle earnings calls were long on Larry Ellison’s visions of overtaking Salesforce as the world’s leading SaaS provider, and short on details of exactly how Ellison planned to become a legitimate player in cloud infrastructure.

But later this week when Oracle (#6 on the Cloud Wars Top 10) releases its fiscal-Q1 numbers, don’t expect to hear much if anything from Ellison about #3 Salesforce, whose monster Q2 results have all but eliminated any hope that even the audacious Ellison might have regarding overtaking former protégé Marc Benioff’s company.

Instead, Ellison will use the earnings call to accomplish 3 objectives:

• read a lengthy list of customer wins for Autonomous Database and Gen2 Iaas;
• beat on #2 Amazon for what Ellison will cite as its lengthy list of shortcomings; and
• portray its primary SaaS rivals, #5 SAP and #8 Workday, as lacking either technological depth or product-line breadth.

On Thursday’s earnings call, Ellison wants to convey to the world the clear sense that Oracle has a vibrant and fast-growing cloud business that spans all three layers of the cloud: infrastructure, platform, and applications. For more on that, please see Larry Ellison’s Miracle: Oracle Becomes Big-Time Cloud Infrastructure Player.

While he is likely to avoid mentioning Salesforce other than to say Oracle plans to be #2 in the CRM market, Ellison will very likely hit hard on two other SaaS heavyweights that he feels he can beat in ERP and HCM: SAP and Workday.

Ellison will probably bang on SAP about not having “real” cloud applications and claim that SAP has merely papered over its original on-premises apps with a pretty UI. 

Although it’s true that Oracle and SAP have certainly taken very different paths to the cloud, that contention from Ellison doesn’t hold much water. I hope he will begin shifting that conversation from one of increasingly arcane technological trivia to one centered on whose applications offer more business value and innovation for customers.

With Workday, Ellison will cite his own company’s fast-growing cloud ERP business as an indictment of Workday’s shortcomings in that category. But that story is losing steam rapidly because Workday co-CEO Aneel Bhusri makes it very clear that his company is not competing in the ERP space, and instead is focused on HCM and Financials. 

That might seem like overly fine hair-splitting. But as business customers continue to become even more bullish on the cloud, these distinctions will become more significant as the urgency builds among customers to move rapidly into the digital age.

But I’d guess that Ellison will reserve his hardest hits for Amazon, which over the past few years has at times been almost an obsession for Ellison. What’s different here in the latter part of 2020 is that for the very first time, Ellison can go to war against Amazon with more than rhetoric.

With a fast-growing IaaS business that Ellison has interlaced with his breakthrough Autonomous Database—anyone wanting that high-demand database must run it on Oracle infrastructure—Oracle has a legitimate claim to being a somewhat-disruptive competitor that could become a significantly disruptive competitor.

Bear in mind that Amazon’s AWS cloud unit has revenue that’s about 4X higher than Oracle’s cloud revenue—so my point is not that Oracle’s market share right now is in any way a threat to Amazon. But as I’ve written before, Ellison’s ace in the hole is his Autonomous Database, a product that tens of thousands of businesses are likely to move to in the next few years. And because that database only runs on Oracle IaaS, that means that all of those businesses eagerly pursuing Autonomous Database will also have to buy Oracle IaaS as well. 

So suddenly Oracle has a combo that leverages its traditional leadership in database with its historically weak presence in cloud infrastructure.

On top of that, Oracle’s coming up with some highly innovative go-to-market plans that have even won the praise of Gartner’s Lydia Leong, which I wrote about a two months ago in Oracle Cloud Is So Hot Even Legendarily Cynical Gartner Analyst Likes It!.

This is the essence of the Cloud Wars: world-class tech vendors battling one another to deliver optimal business value and innovation to customers at precisely the time those customers need it most. And I look forward to seeing how Larry Ellison frames Oracle’s current position when its fiscal-Q1 numbers come out on Thursday, Sept. 10.

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