Oracle Cloud to Match Amazon.com's Pricing, Ellison Says

Bloomberg News

said its cloud service will match rival Amazon.com Inc.'s pricing as it competes to help companies operate databases and software over the Internet rather than at their own data centers.

Oracle will 'have the same pricing as Amazon or any other infrastructure provider,' Chairman Larry Ellison said at the Oracle OpenWorld conference in San Francisco.

Ellison, also Oracle's founder and chief technology officer, is leaving the day-to-day running of the company at a time when the industry he helped champion has been disrupted by the delivery of software and services via the Internet. He said the company's newest cloud product includes tools for building analytics, mobile, identity and social features into software.

'We have a new, much-upgraded cloud platform,' Ellison said today in his first public speech since stepping aside as chief executive officer and promoting Safra Catz and Mark Hurd as co-CEOs. 'We are just getting started. We launched our real platform this month.'

The cloud products intensify Oracle's competition with Amazon.com, which offers database products via its Web Services business unit.

'Instead of babysitting your own database, you have Oracle babysit for you,' said Brent Thill, an analyst at UBS AG who has a buy rating on the stock.

Cloud Bet

Cloud-computing products are a departure from Oracle's traditional business model, which makes money by selling customers hardware and software to run and manage within their own data centers. The transition to Web-based computing could allow Oracle to raise efficiencies by running everything itself.

Oracle has said revenue has been hurt as customers transition from buying services to subscribing to them, a shift that's also happening at software makers such as

'As the movement to the cloud grows, we expect this transition will affect our revenue to the positive,' Catz said on an Oracle conference call this month. 'These customers will essentially replace their software-support payments with a cloud subscription, which will mean substantially more revenue to Oracle.'

Catz also made her first remarks as Oracle CEO at the conference when she introduced Intel Corp. President Renee James, who also spoke. Catz described her as a 'close friend.' Intel is developing a new security firewall product for Oracle which it will introduce in the first half of 2015, James said.

Profit Transition

Oracle reported fiscal first-quarter profit and sales and a second-quarter forecast on Sept. 18 that missed analysts' estimates. Sales climbed 2.7 percent in the first quarter that ended in August. New software licenses shrank 2 percent, while its cloud-computing divisions saw double-digit growth.

The shift to the cloud is putting 'a lot of duress on the financial statement,' Thill of UBS said. 'The new software license has been stunted because it is going to recurring and to cloud. Oracle needs to get in front of investors and say if the majority of our business went to subscription, here's what it would look like and here's the margin structure.'

Ellison also announced new Oracle hardware products for flash storage and data recovery. One storage appliance is faster and cheaper than EMC Corp.'s, XtremIO products, Ellison said. He also announced a new 'M7' microprocessor, which will be available next year and has been designed to speed up and better secure Oracle's database software.

To contact the reporter on this story: Jack Clark in San Francisco at jclark185@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Dave McCombs, Subramaniam Sharma