Analysis: How Oracle might change its business under new co-CEOs Safra Catz and Mark Hurd.
Oracle’s database business could take a backseat to its burgeoning applications division in the wake of CEO Larry Ellison’s retirement, it is claimed.
The billionaire founder resigned late last week to become chairman and CTO just a fortnight before the tech giant’s annual conference, leaving deputies Safra Catz and Mark Hurd to become co-CEOs.
And the switch in management could see Oracle quicken its shift in focus from databases to applications, according to analyst firm Quocirca.
Analyst Clive Longbottom told CBR: "It does give Oracle an opportunity to change direction. It has been moving from a database company to an application one, although Larry is still wedded to the database side of things.
"Catz and Hurd now have the opportunity to leave the database discussion a little to the back of the argument, focusing more on what Oracle does at a business level in dealing with processes and information."
While Oracle recently announced Database In-memory, its data-processing add-on for Database 12c, it has updated Oracle Cloud with KPMG’s financial processing, analytics and reporting tools today under a join endeavour called KPMG Powered Finance.
The firms hope FTSE 350 companies will use the core financing processes in the cloud, and Capgemini UK’s alliance director, Anne Cave-Penney, believes cloud apps are where the new CEOs must focus to update the firm’s offering.
"Oracle is in need for some radical changes and if Ellison does truly hand over the reins to his co-CEOs, this could be just what the business has been looking for," she said.
"Oracle’s traditional revenue streams, namely hardware and on-premise enterprise software, are not performing as well as they once were, and so for the company to alter its current trajectory it will need to grow its cloud revenues quite aggressively."
But Longbottom thinks the shift from database to applications will hit Oracle’s hardware business.
"It could be either the making or the losing of it," he said. "Hurd should have the knowledge of the hardware market (via his tenure at HP) to be able to see that the old Sun hardware is no longer capable of competing with equivalent offers from IBM, Dell, HP and others.
"He could, therefore, decide to divest Oracle of that side of things and just focus on the applications and information management side of things."
He instead predicts Oracle will save its hardware by selling it along with applications and its cloud platform under what he calls "Big Red Stack", a product targeted at service providers.
"Here, the buyer is not that interested in what chips are being used or what badge is on the front – speeds and feeds, manageability and functionality trump these, along with price," Longbottom said.
CIC analyst Clive Howard predicts Oracle may struggle to keep up cloud competitors, but is so firmly established in the enterprise market that it will be difficult to shift.
"It will be interesting to see how [Ellison’s departure] affects Oracle," he said. "They will face some challenges, perhaps around cloud, but fundamentally they have become well entrenched in the enterprise market."