Cloud // Software as a Service
02:45 PM

Guide To Cloud Computing

The market is getting crowded with Web-based software and storage offerings. Here's what you need to know about the cloud computing strategies of Amazon, Google, Salesforce, and five other leading vendors.

Despite its sometimes-contradictory signals, Oracle was an early proponent of the on-demand model, launching Oracle Business OnLine in 1998. At that time, CEO Larry Ellison described the new Web-based delivery model as an extension of the company's existing software business. Today, it's clear that Oracle's destiny lies in the cloud, even if the company has been reluctant to switch its lucrative on-premises software license business over to a subscription model.

Speaking to financial analysts last September, Ellison downplayed the SaaS movement, saying there's no profit to be made in delivering applications over the Internet. (He's obviously wrong on that point.) President Charles Phillips has said Oracle plans a "stair-step" approach to the cloud, gradually moving on-premises customers over to Web-based software.

Oracle got into cloud computing in one fell swoop with its 2005 acquisition of Siebel Systems for $5.8 billion. At the time, Oracle executives called the deal a beachhead against SAP, but it's clear in hindsight that Siebel's on-demand CRM applications were every bit as important to Oracle's long-term strategy. Oracle On Demand comprises much of the vendor's software stack, including the company's flagship database.

Oracle has developed a "pod" architecture for its on-demand data centers. Pods can be configured for individual customers, in clusters for large companies with multiple departments, or in multitenant versions for shared use.

Oracle's on-demand business generated $174 million in revenue in the fiscal quarter ended March 26, up 23% from the same quarter last year, and it's on track for $700 million for the year. While On Demand represents only about 3% of Oracle's revenue, it's the fastest-growing part of the business, with 3.6 million users.

To support growth, Oracle, like other cloud service providers, is building a new data center. This summer, it will break ground on a 200,000-square-foot facility in Utah and puts the initial investment at $285 million.

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