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11/18/2010
08:04 PM
Charles Babcock
Charles Babcock
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Benioff Vs. Ellison: This Round Goes To Salesforce

Salesforce.com CEO defends cloud computing as a better economic model, contrary to Oracle's appliances.

At Oracle OpenWorld, Larry Ellison went to great pains to define Oracle-endorsed cloud computing as something other than Salesforce.com. At the CTO Forum and Web 2.0 shows Wednesday, Salesforce CEO Marc Benioff gave as good as he got. He said in a morning keynote that Salesforce "wants to warn people against the false cloud." In a panel appearance later in the day, he said Ellison shouldn't describe Oracle as a cloud computing vendor.

"Because of Google and Salesforce, everybody today wants to be in cloud computing, wants to be a pioneer. So everybody is renaming the company and saying we're the leader in cloud computing, we're this, we're that. That's why we want to warn people about the false cloud," Benioff said in his CTO Forum keynote in San Francisco.

At the afternoon panel, he made it more direct: "Cloud computing to me is something that's economical, it's democratic." That means you can eliminate million-dollar Oracle Exalogic Elastic Cloud appliances; those who use the term cloud with such things are speaking for "the false cloud," he said.

It was another page turning in the ongoing Ellison-Benioff relationship. I remember seeing Ellison call a young Benioff out of a group of Oracle executives 10 years ago to address a questioner's point. He watched approvingly as Benioff commanded the stage in a way that reflected lessons learned at Larry's knee. That's the problem. Benioff has the skills to do some of the same things Larry does, and perhaps outdo him at his own game.

When it comes to appliances, "You can basically fool yourself into thinking it's cloud computing. But it's not. It's not efficient. It's not democratic and it's not economical. If it costs a million dollars for a box, it's not a cloud," Benioff said to the CTO Forum.

In his 2009 book Behind the Cloud, Benioff portrayed Ellison as his mentor and himself uncertain that he should leave Oracle, even with Salesforce.com well off the launch pad. Then again, when Ellison later financed the majority share of a Salesforce.com would-be competitor, NetSuite, Benioff was furious and tried to fire Ellison from the Salesforce.com board of directors. In this relationship, Ellison performs as the mentoring elder one moment, Big Brother the next. It's a binary thing, sometimes off, sometimes on.

Does the Exadata or Exalogic hardware cost a million dollars? Actually, it's the amount of Oracle software you stack on them that's going to drive up the purchase price, and they are designed for a deep vertical stack of Oracle database, applications, middleware, and management software. There are a lot of CPUs in the appliances, and Oracle software is priced either by the number of processors or by the number of named users. The appliance approach packs a lot of software license fees into the box as well as disk drives, memory, and CPUs.

A competitor put together a likely Exalogic appliance based on Oracle's published price list and came up with a price tag in excess of $2 million. An Oracle white paper, when it addresses the cost issue, said the ability to quickly install Exalogic and run it without a lot of detailed IT staff configuration, while getting high throughput, results in a 60% savings over a comparable free-standing set of servers. Either way, Oracle never claimed it was competing on price.

Nevertheless, Benioff is striking new and fertile ground in defense of the cloud as he responds to Ellison's jibes. Cloud computing is about economics -- sharing economies of scale with the customer. It's about a more democratic distribution model, where scalable computing and high-performance computing is available to those who decide they're willing to pay for it on an hourly basis. Because it's available for a few hours at a time, if the customer chooses to buy that way, many can afford it. And Salesforce.com has pioneered the multi-tenant application, where many users pay monthly fees to share an online set of servers and software.

Ellison, in his Sept. 19 Oracle OpenWorld address, defined the approved cloud as Amazon Web Services EC2, an explanation that still leaves me scratching my head since the Exalogic Elastic Cloud has so little resemblance to EC2. At the same time, he attacked the safety and legitimacy of the Salesforce multi-tenant application.

In responding, Benioff is beginning to find his stride and striking sparks on where cloud computing's real value lies. It is a more democratic form of computing. It is about efficiency and economics, not pricey appliances. In this dance of the disputatious elephants, Ellison may have taught his combative mentee more than he realizes.

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