Where Does Oracle Corporation (NYSE:ORCL) Stand In The Cloud?

There a time when Oracle Corporation (NYSE:ORCL)’s cofounder Larry Ellison came close to dismissing cloud computing. He was of the view that his company was already offering cloud computing and he didn’t think there was another way of doing it.

But Ellison changed his tune at some point. Perhaps he realized that there was more to cloud computing than what Oracle was already boasting about in the space. That was when Oracle started claiming that it was the only software vendor with a richer portfolio of software delivered over the Internet or Software-as-a-service (SaaS).

Perhaps because Oracle’s chief dismissed cloud computing early, the company is only struggling to catch up on that front. The question that analysts are asking now is whether Oracle can transform into a cloud power. The company thrived in selling on-premise software licenses, but that business is being shaken by cloud computing.

While Oracle is working to put its software in the cloud, the company might have a difficult time undoing the likes of Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc (NASDAQ:GOOG) in the cloud, especially public cloud.

Competitive pricing

Late on the stage, Oracle Corporation (NYSE:ORCL) is hoping to use competitive pricing to undercut rivals. The company last year said its cloud prices will always be lower than those of Amazon’s Amazon Web Services (AWS). For company struggling to catch, aggressive pricing may help, but it might not do everything it needs. Too much price cut to boost adoption may hurt margins and ultimately profits.

$1.5 billion cloud revenue

Oracle says that its cloud business generates about $1.5 billion in revenue. That’s sound big until you realize that Oracle generated annual revenue of $38 billion in 2015 and that $1.5 billion is just about 4% of the total. That is not only quite low for a company seeking cloud transformation, but also significantly dwarfed by AWS, which not only generates more billions in revenue, but is also already profitable unlike most of its cloud competitors.

Looking at Oracle Corporation (NYSE:ORCL)’s action and listening to the management’s sentiments, you get the impression that the company has leaving no change to boost its cloud position. However, while the company might become a cloud power, it will be tough breaking successfully into public cloud space, which is the coveted market for cloud companies.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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