Larry Ellison's cloud tirade: Why he's so scared

Oracle's CEO dismisses cloud as vaporware and says it's nothing new. He's partially right on the history, but wrong where it matters

Oracle CEO Larry Ellison has railed against the cloud computing hyperbole in the past. Thus, it was not a huge surprise when he provided a bit of a cloud computing rant during an appearance at the Churchill Club on Sept. 21. Ellison unloaded on cloud computing in response to an audience question. (If it doesn't appear below, watch Ellison's rant on YouTube.)

I actually agree with Ellison around the origin of cloud computing. SaaS (software as a service) has been around for years, and before that were ASPs (application service providers). So the notion that cloud computing is anything new is not considering history, even recent history.

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What is new are the recent innovations around cloud computing and new players, such as the rise of infrastructure and platform technologies. Amazon, Google, and Microsoft are always on the top of the list, but there are dozens of other infrastructure and platform providers to consider as well. The problem is that "cloud computing" is so inclusive of everything and anything that's Internet-delivered, the innovative value of "cloud computing" is diluted. Thus, perhaps I'm agreeing with Ellison to some extent.

The point where Ellson and I depart is around the impact to the enterprise software business. While indeed clouds will need hardware, software, databases, middleware, and so on to drive their own services, they typically don't and won't use the more traditional proprietary players. They are opting instead for lower-cost open source software and commodity hardware. Thus, guys like IBM, Microsoft, and Oracle will find their market tougher and tougher to expand as cloud computing becomes more pervasive.

The larger issues is the sharing aspect around cloud computing. While IT assets will still be required for use within the cloud computing model, as Ellison asserts, those IT assets will be shared much more efficiently through the use of multitenant architectures and virtualization. Therefore, we won't need as many pieces of hardware or as many enterprise software licenses. Those selling enterprise software and hardware will find that this is going to have an effect on demand eventually -- if it hasn't already.

Perhaps I would be ranting as well, were I selling enterprise software. Things are changing.

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