You’ve got to hand it to Larry Ellison. At a time when everyone in the enterprise is excited about data analytics, the consumerization of IT, and anything mobile, he’s found a way to keep us writing about his database and middleware company. The secret? Legal filings chock full of colorful copy and tantalizing redactions.
When the week is over, Oracle World will have been bracketed by two events. One: the unveiling of Oracle Exalytics, a beefy in-memory appliance dedicated to large-scale analytics, during Larry Ellison’s opening keynote. Two: the undressing of Oracle’s cloud computing initiatives by Marc Benioff, SalesForce’s CEO, and the unceremonious cancellation of his keynote this morning.
Both events highlight that when it comes to Big Data, analytics and cloud computing, Oracle is on the wrong side of history.
To glimpse the future of the data stack, Oracle need look no further than its own backyard, to what Silicon Valley start-ups are embracing: the distributed processing ecosystem of Hadoop, NoSQL data stores like MongoDB, and cloud platforms like Amazon’s web services. As Marc Andreessen said last week, “Not a single one of our startups uses Oracle.”
The challenge for Oracle, which did billion in revenue last year, is that they sell to big enterprises and selling technology to start-ups doesn’t move the needle.
Worse, Oracle’s support for the kind of technology stacks embraced by startups — open-source software, elastic architectures, commodity hardware grids — cannibalizes revenue from their existing lines of business.
“I don’t care if our commodity X86 business goes to zero,” Ellison said in Oracle’s last earnings call, “We don’t make money selling that.”
This commoditization wave may have sent others, including HP, fleeing from hardware, but it has driven Oracle into the breach: they are attempting to capture higher margins on sales of their Sun-acquired SPARC architectures.
The buyers of these big boxes are enterprises struggling with sharp increases in data volumes, and willing to pay top dollar for what Ellison dubs a “100 percent upwardly compatible migration path,” referring to the SuperCluster T4-4.
But history is not on Oracle’s side. Today’s startups are tomorrow’s Goliaths, and soon they will have to confront a future that, as William Gibson quips, “is already here… just not evenly distributed.”
Here are four realities that Oracle must face to maintain its unassailable position as the world’s leading data firm:
“Lots of little servers everywhere, lots of little databases everywhere. Your information got hopelessly fragmented in the process.” – from Matthew Symonds book Softwar (p. 38).
This is how Larry Ellison described the technology landscape of the 1990s, and his personal jihad against complexity has deepened Oracle’s distrust of distributed computing.
But the tide of data isn’t turning back, and the scale is too large to contain in any box; Big Data, on the scale of hundreds of terabytes to petabytes, must be distributed across “lots of little servers.” The most viable tool available today for processing and persisting Big Data is Hadoop.
Whether at the data layer — or a level above, at analytics — firms must adapt to this distributed reality and build tools that enable parallelized, many-to-many migration of data between nodes on Hadoop and those on their own platforms.
Metal server boxes don’t bend or expand; they are inelastic, both physically and economically. In contrast, the needs of businesses are highly elastic; as companies grow, they shouldn’t have to unpack and install boxes to meet their compute needs, any more than they should install generators for more electricity.
Computing is a utility, compute cycles are fungible, and firms want to pay for what they need, when it’s needed, like electricity.
The ability to scale storage and compute capacity up or down, within minutes, is liberating for individuals and cost-effective for organizations, but it is impossible with a “cloud in a box.” It is only enabled by a true cloud computing infrastructure, with virtualization and dynamic provisioning from a common pool of resources.
Despite that Oracle developed the first pure network computer in 1996 (or perhaps because of this), far too many of Oracle’s supporting business applications are delivered via the desktop, rather than via web browsers.
By comparison, Cloudera has created a rich web-based application for managing and monitoring all aspects of Hadoop clusters; Amazon Web Services has a fully-featured web console for interacting with its offerings; and Salesforce’s products are almost exclusively web-driven.
The expressivity afforded by web browsers has risen dramatically in the last two years, particularly with the emergence of Javascript as the lingua franca of web application development, and improvements in Javascript engines.
The same trend from desktop to browser also extends into mobile devices. An increasingly large fraction of computing occurs on smart phones and tablets, and forward-thinking firms, like Dropbox, have built applications that cater to this reality.
The decades of disappointment with business intelligence tools isn’t due only to their lack of brains (such that they’ve now fled to the fresh moniker of “business analytics”), but also the absence of beauty. Data is beautiful, as any reader of Edward Tufte can attest.
When visualized thoughtfully and artfully, data has an almost hymnal power to persuade decision makers. And when exploring data of high complexity and dimensionality, the kind that lives in Oracle’s databases, tools that accelerate the “mean time to pretty chart” are essential.
In addition, analytics tool users are right to expect a smooth user experience on a par with other tools, whether photo editing or word processing, when they are creating and exploring data visualizations.
Yet amidst all of Oracle’s presentations and marketing materials about big data and analytics, one finds not a single dashboard or visualization to stirs the senses.
While Spotfire and Tableau are notable exceptions to this critique, on the whole, the tools that dot the Oracle landscape lack either brains or beauty.
Enterprises will be slow to wake up to these realities, and Oracle will continue to profit handsomely from their slumber.
However, the opportunities abound to chip away at the massive market share that Oracle now holds, providing data services to start-ups who refuse to pay Oracle’s prices, or helping medium-sized businesses migrate to new solutions.
Michael Driscoll is the CTO of Metamarkets (see disclosure), a data analytics firm.
Disclosure: Metamarkets is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.
Image courtesy of Flickr user crazytales562.
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Exalytics, a high-end server appliance for near-real-time business intelligence applications and a big part of Oracle’s big data response, debuted Sunday night at Oracle OpenWorld 2011.
The Exalytics box–the younger sibling of the Exadata database machine and Exalogic middleware-and-application server–was front and center during Oracle CEO Larry Ellison’s opening keynote.
“I’ve been reading about this [unstructured data] in the press,” Ellison said. “I’m proud to say our Exalytics machine not only handles relational data, not only multidimensional data [but] also analyzes unstructured data at the speed of thought. Nothing is faster. There is no response time.”
Ellison’s mantra was “parallel everything” when it came to Exalytics, as well as Oracle’s recently announced Sparc Supercluster, which brings Exadata and Exalogic perks to the Sparc/Solaris universe.
While there was no explicit mention of Hadoop or NoSQL per se, Exalytics–and its promised ability to handled unstructured as well as structured data — is clearly a big part of Oracle’s big data play. Oracle is expected to talk more this week how its database and middleware can coexist with and complement those big data technologies.
Exalytics is powered by 40 Intel Xeon cores and relies on Infiniband pipes to connect it as needed with Exadata. The secret software sauce is in-memory database technology that came with Oracle’s acquisition of TimesTen six years ago and the multi-dimensional database expertise from Essbase, which Oracle acquired with Hyperion two years later.
“When you have [an] in-memory database working in parallel it’s important to get the right data in memory. We have a heuristic adaptive in-memory cache… that tracks this. As different people ask different questions, it migrates different data in-memory. It keeps popular query results in cache,” Ellison noted.
In-memory databases, and their fast response times, are a battleground as Oracle, SAP, IBM and others try to claim supremacy in the burgeoning realm of business intelligence. There is no shortage of huge data stores, but a huge demand remains for tools to help companies better parse and apply this data profitably. That’s why SAP bought BusinessObjects and Oracle bought Hyperion.
Accessing data in standard relational databases can be slowed by disk I/O issues. If the data remains in memory (or in cache), access is much faster. SAP is pushing its HANA technology to address speed-sensitive BI applications and SAP also bulked up its in-memory capabilities by buying Sybase.
Given Oracle’s huge database market share, it’s hard to bet against the company in this arena although both SAP and IBM are strong contenders. And Ellison has said Oracle’s ability to incorporate new data types into its core offerings is a key advantage.
On Oracle’s first-quarter earnings call two weeks ago, Ellison told analysts object-oriented databases were supposed to replace relational databases years ago. “What actually happened is that object database capabilities got integrated into the Oracle database,” he said.
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Autonomy’s impending acquisition by Hewlett-Packard is nearly done.
The .3 billion deal was cleared by regulators in the U.S. and Australia on Thursday. Autonomy shareholders still have until Monday morning 10 a.m. U.K time to weigh in, according to a company spokeswoman cited in reports.
Autonomy’s enterprise search capabilities could be a boost to HP’s big data strategy and the purchase itself was a cornerstone of former CEO Leo Apotheker’s grand plan to build HP’s enterprise software and cloud services portfolio.
There was some question last week after Meg Whitman succeeded Apotheker as CEO as to whether his whole strategy would prevail, but it looks like the Autonomy piece of it is proceeding as planned.
The Autonomy buy was controversial from the moment it was announced on HP’s Aug. 18 earnings call because of the price. The next day, in a show of disapproval of this deal and HP’s decision to shop its PC business around, Wall Street lopped more than billion off of HP’s market cap.
The whole pricing question sparked an escalating war of words between Oracle CEO Larry Ellison and HP/Autonomy. That controversy flared again today when Oracle posted a statement about the matter again and Autonomy responded.
Oracle and HP, once fairly tight partners, have been at odds since Oracle bought Sun Microsystems and its hardware business, putting the two companies in direct competition in the data center hardware market. That contention ratcheted up after Oracle hired Mark Hurd, HP’s deposed CEO, last year as co-president.
Today there was more speculation that HP’s decision to replace Apotheker with Whitman was made to shore up HP’s share price so that Oracle could not buy the company.
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One of the justifications that Google provided for former CEO Eric Schmidt’s move into the chairman role and the re-emergence of co-founder Larry Page as chief executive was the need to become more flexible by speeding up decision-making at the search giant. BusinessWeek magazine looks at that issue in a new cover story on the company, which describes how Google is trying to save itself from “the ossification that can paralyze large corporations.” But what if Google’s biggest problem isn’t a lack of flexibility or the speed of its decision-making, but a fundamental cultural inability to create new lines of business that can keep the company growing? What if it’s just a gargantuan one-trick pony?
When asked about this possibility last year, Schmidt effectively said that Google might be a one-trick pony, but it’s a hell of a trick (as Oracle founder Larry Ellison once put it). In other words, if you’re going to be a company with just one “trick,” it might as well be one that has revolutionized the world of online advertising, stolen billions of dollars in revenue from traditional media entities and pours vast rivers of cash into Google’s coffers every month, regular as clockwork.
Obviously, Google is doing pretty well with just that trick — it has a market value of 0 billion, and just reported revenue growth of 26 percent for the most recent quarter. Although its search results still need some work (which could cause problems for newly-public Demand Media, even if the content producer disputes this), and there is some competition on the search front from Microsoft’s Bing, no one is going to be writing the company’s obituary any time soon.
But is that enough? It might be enough if all you want is a company that dominates the search-related keyword advertising business. Google will likely fill that role for the foreseeable future, and that’s worth a certain amount — but how much is it worth? Does it justify the price-to-earnings multiple of 24 times that Google’s stock currently trades at? Maybe not. This has been the issue with Microsoft over at least the past decade: The company generates huge amounts of cash, and is profitable as heck, but what investors are willing to pay for has continued to decline. This is why many have started to ask the question: Is Google the new Microsoft?
Google’s biggest problem is that it has consistently failed to produce any new lines of business apart from keyword-related advertising, which still produces over 90 percent of its income. It’s true that — as the company took pains to point out during its recent earnings call — Google is making money from display advertising, YouTube views, mobile, etc. But this is (comparatively, at least) peanuts. The web giant is famous for giving its employees “20-percent time,” and these projects can turn into great services, such as Gmail and Google News — and there’s also the company’s expanding Android efforts and other initiatives. But do these generate new revenue or profits for the company? To the extent that they help drive search traffic, yes. But that’s still just a variation on the same trick.
Even Microsoft has been able to create a new — and profitable — business that wasn’t really related to its core software business: namely, the Xbox consumer-gaming system. Google repeatedly acquires companies like Dodgeball then smothers them, or fails to take advantage of what they bring to the company, or takes their engineers and makes them do other things. And as a result, it has failed to produce a Foursquare competitor, or a Twitter competitor (unless you are one of the five people who use Google’s Buzz regularly), and it has certainly failed to produce anything that has a hope of competing against the social-networking wave unleashed by Facebook.
Is Larry Page going to help the company do any of that? No one really knows. But just getting more “flexible” — whatever that means — or making decisions more quickly isn’t necessarily going to do it. And it is a growing problem, at least for anyone who is (or wants to be) a long-term Google investor.
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