REDWOOD SHORES, Calif. (AP) — Founded 35 years ago, Oracle Corp. remains one of the world's most successful software makers. But it is facing a new challenge as many of its corporate and government customers embrace "cloud computing" — the concept of storing software applications in remote data centers so they can be accessed on any Internet-connected device.
Cloud computing poses a threat to Oracle's traditional approach of licensing its database and application programs to be installed on individual machines, setting the company up to collect more revenue from maintenance fees. In clouding computing, customers pay monthly fees for online access to the applications without having to worry about upgrades and maintenance.
Like a lot of longtime software executives, Oracle CEO Larry Ellison has occasionally mocked cloud computing in the past. But he has been adding more cloud computing services to Oracle's product line, an expansion that has included a several acquisitions costing Oracle more than $3.5 billion during the past year.
Ellison discussed Oracle's determination to adapt to cloud computing in response to a question during a conference call Thursday about the company's fiscal first quarter earnings.
QUESTION: Oracle was been through many technology platforms shifts. It would be great to get your perspective on what you can draw ... from that experience, what you think is different and are the key things Oracle has to do to win in this round with the cloud market?
ANSWER: As you know, a lot of companies have a difficult time adapting to the next generation of technology. And those with the most (difficulty) are also with the most to lose. You have to be willing to change the way you were doing business in the past and adapt to the new opportunities and exploit the new opportunities.
We actually decided almost seven years ago to develop ... a new generation of applications. There was no term called cloud then .... You have to first recognize the change is coming ... and then do the really hard thing , which is say 'OK guys, these are our old competitors, these are our new competitors, this is what we used to push, now this is what we are pushing out, which is a cloud service.'
... There's a lot of inertia in a big company. We have 120,000 employees and it takes a lot of management focus to move people from business as usual to pursue these new opportunities. That means retraining and doing things differently. It's not easy but it is essential. We have done it before, we have done it before successfully and this is no different. It's just that we're a lot bigger than we used to be.