Oracle Co-Ceo Mark Hurd On Amazon, Microsoft, Google And Things Steve Jobs Told Him

Hurd In The Hot Seat

Oracle Co-CEO Mark Hurd touched on topics ranging from Oracle's cloud transition to its biggest rivals during a question-and-answer session delivered in front of members of the press at Oracle's Media Day on May 4 at its headquarters in Redwood Shores, Calif.

Hurd gamely fielded most questions, especially those that allowed him some shots at competitors. The one area in which he ducked prodding was politics, both declining to share his impressions of the Trump administration and keeping mum on co-CEO Safra Catz' involvement in advising the new president.

But Hurd wasn't shy when discussing Oracle's cloud strategy, and sizing up the competition, including hyper-scale heavyweights Amazon Web Services, Google and Microsoft. For good measure, he threw in his two cents about SAP, Salesforce, and Workday and offered a not-entirely-enthusiastic take on the startup landscape.

Hurd also recounted a discussion with Steve Jobs in which the late Apple CEO compared the duties of executives in the consumer and enterprise tech businesses.

Here are some highlights from that discussion.

On whether Oracle has taken too long to develop its cloud business:

Our industry is a couple trillion dollars of spend, half of it's consumer, half of it's everybody's-not-a-consumer companies. Of that trillion dollars of spend, it's hard to get to even $50 billion of it yet in the cloud, so as a percent of total enterprise spend, it's still relatively small. So, if someone asked me a baseball analogy, I would say we're in the first inning.

That said, the cloud revenue, albeit small compared to the enterprise revenue, is growing roughly 50 percent a year. [The] traditional on-premises world is in decline. So, if you look at our numbers, we're doing awfully well.

We're roughly at a $5 billion-plus run rate. We've talked about getting to $10 billion shortly given the growth rate we've got.

On the Big 3 cloud providers: Amazon, Microsoft and Google:

I would say all these companies get described in the same bundle, but all really do different things.

At the infrastructure layer, basically compute and storage, you would have somebody like Amazon. If you went to the application layer, which would be called SaaS, you would have companies like ourselves, you'd have Salesforce, you'd have others.

There's a second tier called Platform-as-a-Service. Platform's basically everything that's not an application and not compute or storage. We and Microsoft would be probably the two most complete platforms. Microsoft would have Windows, .NET, SQL Server. We have Linux, Java, the Oracle database. Those would be the two probably most dominant.

Then if you went to the infrastructure layer, you've got Amazon, Google to a degree -- although not quite as scaled at the enterprise layer -- you have people like ourselves and Microsoft, but we're coming in with more of a complete stack: applications, platform and infrastructure.

On his assessment of Oracle's performance in shifting to cloud:

We assess our performance on numbers. Our view was we went after this hard, but we went into this with a very discreet strategy—which was we were working on apps. This company was working on apps moving to the cloud before I got here. So this has been 10 years.

When Evan Goldberg founded NetSuite with [Oracle Chairman and CTO] Larry [Ellison], this was an idea before they even used the term "cloud," so this idea is not a new idea. We started this 10 years ago and it was really to get a best-of-breed suite of applications. The next thing to do was to really get the platform right, and now what we're very focused on is bringing the infrastructure in place to support that platform and support those applications and incremental commercial workloads for customers.

If you look at our applications business, forget whether it's on cloud or on-premises, the applications market I would guess is growing 1 percent. Our applications business is now growing double digits. Almost all of that growth is coming from the cloud.

On how you transition a company that's still successful:

It's hard. The quickest innovators if you look at history are those companies that historically innovate and those that are in deep trouble because they have to. In our case, you could have made the argument we don’t have to, let's just keep doing what we're doing longer.

We made a decision to go at this hard, three or four years ago, to changing virtually everything in the company. We made this decision to build all of these global data centers, to deploy this technology and do it fast.

Our strategy was let's do this right, but let's do it right and as fast as we can do it right, and get this behind us and that's what we've done.

On how Oracle's practices are adjusting to the new reality:

As much as I'd like to pretend were' as a nimble as a startup, we're not. We're big.

I'll give you one example: the way we write contracts. We historically used to write contracts with big companies and the contracts were big contracts. Now we're going to do a contract with a company that's a startup, we're going to go contract with Lyft for financials.

Lyft doesn't have a procurement department, they don't have even an IT department per se, and now they want a contract. But we can't show up with a bunch of lawyers and a big thick document, so we changed our process to go to click and accept.

Going back now and trying to take all of the friction out of the processes is a lot of work. The new world for us is different.

On who Oracle sees as its major rivals:

Our competitors have shifted.

Let's talk about applications business. Historically we would compete most often with SAP. The two biggest categories of software over last 20 years or so were ERP and database. They've really not rewritten their applications for the cloud.

Now who do we compete with? Not clear yet. One company built HCM application, Workday. They've tried to do financials, but haven't really had much success with that yet. Our competitive landscape has changed in applications.

In platforms, probably not a lot of change. There always has been a lot of talk about different databases that come into the market. But not a lot of change. The three biggest databases in the world today are Oracle, SQL Server and IBM.

Infrastructure, a lot of change. You've now got the movement of what had been Dell, HP, IBM, operating system companies that would support them. And some percentage of that now beginning to move to the cloud, and those competitors would be who we've described, Amazon and others.

On whether Amazon's rise has been a surprise:

Like most retailers when they started, they built an IT organization that unfortunately had to be built for the bubble of the holiday season. The original thesis was, "I got this excess capacity in the early part of the year, why don’t I rent that and leverage the infrastructure that I've got that I had for the bubble of the year?" And that became the process of starting AWS.

I think they've done a good job of creating a frictionless acquisition environment for customers, not so much enterprise companies but the individual developer, making it easy to spin up and provision a job and get to work, and that's been the key piece of innovation they've delivered.

On Google:

I don't see them much. When I go to customers I don’t see them much.

When you're a consumer company, becoming an enterprise company … I remember very much Steve Jobs telling me many years ago that he would never want my job.

"Do you actually get on airplanes and fly to see customers?" He says, "Customers come to see me."

"Do you do special things for these customers?" He says, "That doesn't sound like fun."

When you're in the consumer business, it sounds really easy to go work with these big companies. Yet all these big companies have special needs, special strategies they want you to adapt to. And they have contracts and procurement departments and all of this. So it's not the easier move.

On Microsoft:

Again, a good company. In some ways they're similar to us. They have a very strong position on-premises. They have some applications, very different applications from what we have. They've got Office and so forth, and their focus is trying to get Office from on-prem into the cloud. They support that with a platform, they're supporting that with infrastructure.

Their strategy, as I read it, makes a lot of sense to me.

On Oracle's acquisition strategy and its view of the startup landscape:

We're serial acquirers. We spend over $5 billion on R&D. But we buy in a lot of innovation. So we're constantly looking.

It's interesting. In the cloud market, if you look through all companies participating today, and you talk M&A, if you start to look at specific companies, there aren't many out there to go acquire who are really born-in-the-cloud and have any level of scale, even at the $20, $30, $40 million mark, which isn't obviously big-scale company. You don’t have that many today.

If you thought about just the companies in the applications market, the SaaS market, that crossed a billion dollars, I mean a year ago there were only four of them. There was Salesforce, Workday, ServiceNow and NetSuite, and one of them [NetSuite] is gone. They've gone to us.