Oracle (Nasdaq: ORCL) CEO Larry Ellison is a brilliant guy. He has led his software empire to eye-popping numbers like $36.5 billion in sales over the past four quarters along with $9 billion in GAAP earnings and $12.8 billion of operating cash flows. Oracle's $153 billion market cap is a hard-won trophy. You don't notch achievements like these by setting unreachable goals.
Yet Larry's logic defies explanation sometimes.
The latest example comes from last night's earnings call. After presenting a fine first quarter with 12% year-over-year revenue growth and 14% higher non-GAAP earnings per share, Ellison fielded questions with analysts. One of them pressed the issue of Big Data tools such as the Hadoop data-handling system that Yahoo! (Nasdaq: YHOO) has championed for years.
Hadoop is free software under the auspices of the Apache Foundation, but billion-dollar businesses have also grown up around mangling enormous data sets. Teradata (NYSE: TDC) and TIBCO Software (Nasdaq: TIBX) are perhaps the best-known examples, but don't forget about Qlik Technologies (Nasdaq: QLIK) or even salesforce.com (Nasdaq: CRM), both of which attack this rapidly growing market from very specialized angles. If you need to catch up on why this market is so important, read more about the Big Data opportunity in this free report. When you come back, it should be abundantly clear that these newfangled tools are presenting a huge challenge for traditional database systems like Oracle's eponymous software suite.
But Larry doesn't see it that way at all. In fact, he assured us that Big Data actually represents a growth opportunity for Oracle.
"Hadoop [along with other Big Data tools] is going to be one of the feeder systems to the Oracle Database," he said. "We have announced interfaces that allow you to take your Hadoop systems and connect them to Oracle systems so you can load your Hadoop data into Oracle. So we think it's going to increase the usage of Oracle."
In my eyes, that usage example would make Oracle a secondary part of the data-handling tool chain -- an easily replaced link that must play second fiddle to Hadoop, or Teradata, or Tibco, or whatever software is doing the heavy lifting. If the formerly so central database system is relegated to simply presenting the findings from other tools, what's stopping data-heavy customers from downgrading that expensive Oracle Enterprise license to Oracle's cheaper MySQL package, to IBM's (NYSE: IBM) DB2, or even the completely free PostGreSQL alternative? That can't be good for Oracle's margins or customer loyalty in the long term.
If Big Data is good for Oracle without Ellison diving deeper into the software stack, I don't see it.
If you didn't check out that free report yet, I suggest you do so right now. Big Data is a very big deal, and Oracle seems to misunderstand its place in the food chain.
