Database giant Oracle faces an uncertain future in a rapidly changing technology industry following the death of co-CEO Mark Hurd on Friday. But even before his passing, the company was struggling to keep up.
Under Hurd, Oracle embarked on an ambitious strategy to compete with tech titans like Amazon and Microsoft in cloud computing, in which companies sell on-demand computing to business clients. However, Oracle has failed to gain significant traction, analyst firm Gartner said in July, describing Oracle as a “niche player.”
In 2009, Oracle founder Ellison ridiculed cloud computing, referring to it as a passing fad. Fast forward a few years, and he changed his tune and cited cloud computing as instrumental to Oracle’s future.
One reason for Oracle’s reversal with cloud computing is Hurd, said Constellation Research founder R “Ray” Wang. Hurd, who joined Oracle in 2010, preached Oracle’s shift to cloud computing, and acted as the company’s public face for the strategy, taking the occasional interview about the topic with reporters instead of Ellison or the more press-averse co-CEO Safra Catz.
“He was basically the big evangelist for cloud,” Wang said. “He made Oracle more approachable.”
Hurd’s death will require a major adjustment for Oracle and Ellison, a personal friend of Hurd’s, Wang said. “They were tennis partners,” Wang said. “Larry gave Mark a home after H.P.,” he added, referring to Hurd joining Oracle in 2010 after leaving Hewlett Packard following allegations of an inappropriate relationship with a contractor.
One of Hurd’s biggest responsibilities at Oracle was overseeing its sales team, including recruiting staff and creating sales bootcamps about how to sell cloud products and services, Wang said. Previously, Oracle had no such training programs.
Still, Oracle never managed to seriously seize market share from competitors like Amazon or Microsoft. In September 2018, long-time Oracle executive Thomas Kurian stepped down to become leader of Google’s Cloud computing unit, which has greater market share than Oracle.
Oracle now appears to be shifting its strategy from selling computing on-demand to selling cloud versions of its database technologies and business software, as Bloomberg News reported in October. Instead of competing with Amazon and Microsoft, Oracle is copying the playbook of business software rival Salesforce by selling cloud-software rather than computing infrastructure.
“They are now working on some of the industry cloud solutions,” said Forrester analyst Liz Herbert in an email. “Mark has stated that industry solutions represent even more potential revenue for Oracle than the horizontal ones.”
Some financial analysts are pleased with the new strategy, despite one Credit Suisse analyst describing Oracle’s latest quarterly results as mixed. Although Oracle had $9.22 billion in first quarter sales, missing analyst estimates, Credit Suisse said that cloud-versions of its enterprise software and database services could one day be a source of major sales.
But Morgan Stanley analysts were less enthusiastic, saying that a recent reorganization of Oracle’s sales team and Hurd’s leave of absence in September “add execution risk, adding to our fears revenue could continue to disappoint versus consensus expectations through the year.”
Under Hurd, Herbert said that Oracle is “now talking more about being a partner who can help their customers transform business.”
“Time will tell if Mark will get credit for this major transformation but clearly it began and was announced under his reign,” she added.
It’s unclear whether Oracle will replace Hurd as co-CEO. If it does, it could choose among several internal candidates including executive vice president for worldwide sales and marketing Dave Donatelli, chairman for Europe, Middle East, Africa, Asia Pacific, and Japan Loïc Le Guisquet, and chief corporate architect Edward Screven, news site Business Insider speculated in October.
Wang added that Oracle may also chose executive vice president of cloud infrastructure Don Johnson, a former Amazon Web Services executive, or Steve Miranda, the executive vice president of the company’s applications unit.
Regardless of whether it fills the co-CEO role, the company needs growth. In June, Oracle said that its overall sales for fiscal 2019 were $39.5 billion, slightly down from $39.8 billion in 2018.
In the rapidly changing technology landscape, and with fast-growing competitors like Amazon and Microsoft, Oracle can’t afford to sit still.
Oracle declined to comment to Coins2Day about the possible shift of its business model or whether it will stick with it’s Co-CEO strategy.
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Update: Oct 22 with Oracle declining to comment.
