A few months back, Oracle CEO Larry Ellison went on an impromptu rant in front of Wall Street Journal reporters talking about Cloud Computing.  His basic theme was that Cloud Computing is just a buzzword for everything that people have already been doing for the last decade or so with the Internet.  Some people seem to think that Larry’s on to something – that software-as-a-service (SaaS) and Cloud Computing are buzzwords and recycled concepts.

Ellison recently made yet another dig against Cloud Computing, this time with a particular brand name in mind.  During a meeting with financial analysts yesterday, Ellison mentioned that Oracle’s most recent quarter’s success was notable for it’s “series of competitive wins versus Salesforce.com [including] our largest deal ever of salesforce-on-demand, or cloud computing, or whatever you want to call it.”

There are several things that are rather interesting about Ellison’s rants against Cloud Computing and SaaS. 

First, there’s no question that Ellison knows that Cloud Computing is not simply a new buzzword.  It’s more plausible that it’s a part of his strategy to continue to drive sales of Oracle applications, including Oracle CRM.  Larry also knows that most SaaS providers have poor margins – it’s generally more profitable for software companies to sell licenses and consulting services than it is to host and rent software.

Second, Ellison owns a large stake in Salesforce.com.  When he’s not winning a fight, he doesn’t hesitate to acquire the challenger.  Witness, for example, the Seibel story.  Tom Seibel was an Oracle executive for a number of years, even helping to build the software that drove Oracle’s marketing department.  When sales of Oracle CRM remained flat against Seibel, Ellison made a wise move to acquire the competition.

Finally, between Microsoft, Oracle, IBM and SAP, Oracle is probably the least experienced and prepared to launch a scalable SaaS offering.  Microsoft, for example, has had years of experience with the consumer web, building out services like hotmail.com and msn.com for over a decade.  IBM can build its own customized servers for scalability, optimized for performance and virtualization.  And SAP already has experience and market exposure with its on-demand offerings. 

Oracle has some limited SaaS offerings, and is partnered with Amazon’s EC2 Web Service to allow customers to deploy Oracle software, including Oracle Database and Oracle WebLogic Server onto Amazon’s EC2 platform.  Oracle could potentially leverage their partnership with HP, but they don’t build hardware themselves, which puts them at a slight disadvantage.

There’s no question that Oracle is preparing to build out SaaS offerings, despite Ellison’s amusing comments that seem to indicate otherwise.  Ellison’s comments are likely a part of his overall SaaS strategy: defame SaaS until it proves profitable, and then acquire the right team to deliver it.

Filed under: Cloud Computing, Enterprise Web, Product Management, SaaS