Why Oracle is about to take a serious beating...

Oracle has built its empire on data. Times have changed and so has the amount of data, the velocity of change, and the amount of unstructured data. As Oracle "pivots" to the cloud with "non existent" infrastructure rife with vendor lock in and price gouging...

The customers are moving off of the legacy database product... Here is another interesting article on how the company that employs you is shooting itself directly in the foot.

https://www.techrepublic.com/article/oracle-ceo-hurd-thinks-the-database-market-is-about-features-hes-dead-wrong/

Oracle has got features. So many features. It has so many features, rival databases would be crazy to try to compete. Because, after all, features always win, right?

That seems to be the view of Oracle co-CEO Mark Hurd, who believes that Oracle and Microsoft have "got too many features" for an upstart competitor like MongoDB to match. He's right that MongoDB can't (or won't) reach feature parity with Oracle anytime soon. He's also correct that MongoDB's $100 million in revenue is "a long way to becoming meaningful" relative to Oracle's billions.

But Hurd is absolutely wrong in his belief that "features" provide an indomitable barrier to would-be database competitors like MongoDB or AWS. Dead wrong, and the hubris could cost him.

What could possibly go wrong?

Let's not get ahead of ourselves. For all the bluster of a MongoDB or AWS, neither is yet making a dent in Oracle's database dominance. A few hundred million in revenue here or there is the sort of pocket change Oracle founder Larry Ellison leaves between the sofa cushions on his yacht.

Hurd's primary complaint about supposed rivals like MongoDB and AWS isn't so much about financial performance, however, but ultimately about features. This is where he demonstrates a profound misunderstanding of market dynamics (and a lack of familiarity with The Innovator's Dilemma). In Clayton Christensen's view, it's precisely those vendors that serve their best, most demanding customers with feature-packed, sustaining innovations that lose sight of emerging market needs and over-serve that market with expensive, out-of-touch products.

Which is a pretty good description of Oracle right about now.

SEE: Oracle, NetSuite and the future of SaaS ERP (Tech Pro Research)

The market no longer needs or wants a gargantuan, scale-up approach to data management. Instead, as one JAXenter survey indicated, a world awash in big data is interested in databases that offer the flexible schema and serious scale-out performance of a MongoDB or Amazon Aurora:

See Oracle on the list? It barely squeaks by Microsoft SQL Server. Both manage to dominate the "Not interesting at all" space.

Building the future

Not that Oracle is going to be snuffed out anytime soon. Far too much enterprise data resides within Oracle databases for that to happen next year, or even next decade. It's going to be a slow rot, one that Oracle's almost complete non-existence in public cloud isn't helping.

That rot will be fed by developers.

Databases are incredibly sticky, yes, but developers are the new kingmakers and they're not handing out crowns to Oracle. As AWS chief Andy Jassy recently stated, AWS has "hit 40,000 database migrations for AWS Database Migration Service." That's significant, but even more so, he continued, the "Pace [is] quickening." Partly this is because, as Jassy said in a separate interview, "Customers are sick of [Oracle]." It's not hard to find enterprises to corroborate this claim. Companies buy Oracle because they have to keep feeding the beast upon which they built the last two decades of data infrastructure.

SEE: How to build a successful data scientist career (free PDF) (TechRepublic)

Developers, however, have plans for their future data infrastructure, and those basically never include Oracle.

This shows up in new software license revenue, which Redmonk analyst Stephen O'Grady picked apart back in 2013. (Since that time, the picture for Oracle's license revenue has only worsened.)

The punchline? "Oracle's ability to generate new licenses is in decline, and has been for over a decade....Oracle's software revenue growth is increasingly coming not from new customers but from existing customers," O'Grady wrote.

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7 replies (most recent on top)

Oracle is clearly not going to recover. The only question is how long will the stock stay afloat and when is the right time to bailout.

Oracle neglected the ISV partners for several years. They are trying to regain back but most of the ISVs have moved on, aggressively poached by Microsoft and AWS. The free cloud trial program for ISVs ended as a huge disappointment. Hardly any ISVs signed up for the trial program.

@Q8YwCJM-1uvk You're partially correct. If you want to do analytics on large amounts of data, instead of NoSQL, you would use a Hadoop based solution. If you want machine learning, you use Spark. All of these work well together. The market has passed dinosaurs like Oracle by as more become aware of the new technology as it achieved critical mass.

Best post and best comments I’ve read so far. Explains the situation very well. Thank you .

Oracle's database captured the top end of the relational market because it could do things that others couldn't, especially at high volume, so it ended up supporting the largest transaction systems for the biggest customers. At the top end of the market, this still is the situation. For things like ERP, CRM and HR systems, the transactional database underneath is often Oracle.

However, for all the other systems that a business runs or develops, there are some problems that Oracle's database is facing:

"Good enough". While other, competing databases can't match all of Oracle's capabilities, they don't need to. They are good enough for the majority of workloads that need an underlying relational database and the competition keeps advancing thereby becoming "good enough" for even more applications. Oracle's market share is being stolen by competitors.
The unstructured data is where the growth is. Oracle long recognized that structured data was about 20% on the total market. This is the kind of information that works well with a relational database and where Oracle focused all of its effort. It ignored the fact that relational databases struggle to scale and the rigid nature of relational databases are a thorn when data requirements change. With an internet connected world and the exponential growth of data, handling huge volumes effectively is key and that is where NoSQL databases shine. Oracle missed out because it was adamant that relational was the way to go.
An architecte that scales out globally. Oracle's database architecture is a shared one that scales up well (Exadata) and can scale outward (RAC) largely in the same data center or, to a degree, within a local region (25 miles). It wasn't built with the thought of massively parallel operations or the needs of operating in the Cloud where data centers are globally distributed. It was built when patching/failover windows of an hour plus were ok. It requires expensive shared storage and the complexity of configuration and networking has bitten many customers. Oracle specifically extolled the virtue of its architectural approach, but is now finding that it needs to bolt on additional (and expensive) tools like GoldenGate to try and handle the demands of a 24x7 availability required by internet-facing solutions. NewSQL databases along with Cloud-oriented development approaches are now finding ways around the challenges with a total solution cost that is a fraction of what Oracle can offer.
Oracle knew it enjoyed a unique position on top of the relational database market and, accordingly, priced itself at a massive premium. It then leveraged its sales, audit and legal teams to extract every penny it could. Customers felt like they were getting screwed, but didn't have any viable way out. Now they are finding that "good enough", NoSQL/NewSQL and Cloud-native approaches give them the ability to move away from using Oracle's database in many circumstances.

There was a time when Oracle was king of the database market and that translated into massive profits which meant that employees shared in those gains. However, the market has changed as I outlined above and one can feel it inside of Oracle -- the shrinking benefits, the layoffs and the effort to move more work to cheaper labor (e.g. India and college grads). Oracle's database isn't going to disappear, but it isn't going to enjoy the level of profitability that it once did.

Oracle isn't unlike the IBM mainframe -- too embedded to just get ripped out and replaced (and, therefore, will continue to pull in revenue for years), but not what the vast majority of developers are creating future systems on.

Oracle, the company without a future

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Why Oracle is about to take a serious beating...

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