Oracle announced their Q4 Fiscal 2014 Financial Results this morning and the results were less than expected. Oracle attributes these results to the transition to cloud.
This article (http://www.bloomberg.com/news/2014-06-20/oracle-sales-profit-miss-estimates-amid-cloud-transition.html?cmpid=yhoo) has a quote from Oracle’s CFO on this transition.
“[Oracle Chief Financial Officer Safra Catz]… attributed lower revenue to the transition to cloud software, products for which the company recognizes revenue over the term of a subscription. With traditional software, Oracle recognizes revenue up front when it makes a sale.”
It is fairly clear that Oracle knows that cloud subscription services is the future and this is not a question of “if cloud will be a viable financial business model?” but rather “when will cloud be a viable business model?”. For Oracle, specifically, they clearly continue to struggle with this transition. However, companies such as Salesforce and Amazon who absolutely embraced cloud from the inception are reaping the huge rewards of their once not-so-popular ‘faddish’ thought-leadership positions.
Another interesting part of this article is the publicly available facts that Oracle has started to clearly break out their financial results into several ‘cloud’ categories including infrastructure-as-a-service (IaaS), software-as-a-service (SaaS) and platform-as-a-service (PaaS).
“As part of Oracle’s shift to selling more cloud software, the company broke out revenue for its cloud infrastructure-as-a-service products, which allow companies to store and run applications on the Internet. The company said it had $128 million of sales in that category. In two other cloud categories combined, software-as-a-service and platform-as-a-service, the company said sales rose 25 percent to $322 million.”
Transition is hard, due respect to Oracle
Without a doubt changing corporate DNA is extremely challenging. We have previously shared our thoughts on the difficulty of this change, as well as the financial implications, and even poked a little fun at Larry Ellison on ‘Subscriptions – Adobe and Oracle’ (http://saasisafad.com/subscriptions_adobe_oracle/), ‘Amazon Web Services (AWS) leading IaaS providers’ (http://iaasisafad.com/amazon-web-services-aws-leading-iaas-providers/) and ‘Software Subscriptions welcomes Oracle to the party’ (http://saasisafad.com/software-subscriptions-welcomes-oracle-to-the-party/).
Cloud Is A Fad?
As Oracle now tracks these categories of IaaS, SaaS and PaaS in their financial results we’ll monitor the outcomes and comment on the trends. However we are very interested in your opinion. What do you think? Is IaaS a Fad? Is SaaS a Fad? Is PaaS a Fad? Is BigData, Mobile or Cloud a Fad? Please comment below.