Mumbai: Way back in September 2008, when Oracle Corp. chief executive officer Larry Ellison told financial analysts, “I have no idea what anyone’s talking about. I mean, it’s really just complete gibberish,” he was referring to the various definitions of cloud computing and reports underscoring it as a new trend.
Four-and-a-half years later, Oracle executives are leaving no stone unturned to demonstrate how that very cloud—a method of delivering information technology (IT) services over a network—is emerging as a key constituent of the company’s growth strategy.
At Oracle’s first CloudWorld global event series in India on 2 April, Sandeep Mathur, managing director, Oracle India, said the company’s cloud offerings extend to every level of its product portfolio, including applications, database, servers, storage and networking, and span public (Internet-based) and private (on premise) clouds.
“Companies spend only around 20% of their money on driving growth. The rest is spent on maintenance. We believe they should spend more on growth and our cloud solutions are aimed at helping them do so by incorporating modern features such as social, mobile and analytics, which are in demand across industries as chief information officers gain greater control over IT budgets and decision-making,” Mathur said.
Oracle’s focus on cloud computing could help boost its overall business globally and in India despite the stiff competition in its various segments from companies like International Business Machines Corp., Hewlett-Packard Co., Amazon Web Services Inc., Microsoft Corp. and Google Inc., say analysts.
Research firm Gartner Inc. in February forecast the global public cloud services market will grow by 18.5% to $131 billion in 2013. The highest growth rates for cloud services come from emerging Asia-Pacific countries (led by Indonesia and India), China and Latin America (led by Argentina, Mexico and Brazil), it said. Research firm Zinnov pegs the cloud computing market in India to rise to $1.08 billion by 2015 from $110 million in 2010.
While the $37 billion Oracle does not break up its India figures, industry estimates peg its revenue from the country at around Rs.10,000 crore.
Dataquest, a CyberMedia publication, estimated Oracle India’s revenue at Rs.9,208 crore for fiscal 2012. Oracle continued to be a driving force behind the relationship database management system market, having clinched a 62% market share in India, according to Dataquest Top 20 list of technology companies, which ranked Oracle eleventh in 2012. “Thus, it left IBM and Microsoft far back in the race,” it said.
Oracle’s services business is estimated to account for 47% of its total revenue in India, while its technology (including databases) business contributes 29%, according to industry estimates. Systems, applications and middleware account for the remaining business revenue.
Presently, more than 25 million individuals and at least 10,000 organizations globally use Oracle Cloud, Mathur said, counting Indian firms Wipro Ltd, HDFC Bank Ltd, Flipkart Internet Pvt. Ltd, Tata Sky Ltd, MakeMyTrip India Pvt. Ltd, Bigtree Entertainment Pvt. Ltd that runs Bookmyshow.com, and Mahindra Logistics Ltd as clients.
The company has about 30,000 employees in India working for its global services and research and development divisions, about 10,000 for Oracle Financial Services Software Ltd (formerly i-flex Solutions Ltd), and about 1,500 for its domestic operations.
In September, Oracle announced what it called an “engineered systems”-driven strategy to strengthen its position in India’s analytics market, and introduced its Exalytics in-memory machine. In-memory computing enables user organizations to speedily develop applications that can run advanced queries on very large datasets.
Analysts say Oracle can make up for lost ground in the cloud services segment due to its strength in the enterprise segment. This, despite the fact the company’s new software licences and cloud software subscriptions revenues fell 2% to $2.3 billion in its December-February quarter.
Oracle will continue to service its “on-premise existing clients” while “sharpening focus on providing its cloud services to Internet-facing customers who do not have a heavy IT legacy infrastructure,” said Siddharth Deshpande, senior analyst with Gartner.
As a result, Oracle will not be affected much by competition from other vendors offering low-cost cloud services, he said.
One of the reasons that Oracle was “late to the cloud party is that its core customers are large enterprises who were themselves late to demand cloud/SaaS (software as a service) offerings, often struggling with legacy investments and return on investment, unlike small- and medium-size enterprises, etc., who switched to SaaS offerings rapidly,” said Prasanto Roy, editorial adviser to CyberMedia.
He added, though, that Oracle has “now ramped up to a wide range of cloud offerings”.