What Does the Future Hold for Oracle’s Booming Cloud Computing Business?

By Bruce Harpham Monday, September 21, 2020

Many small businesses suffered losses in Q2, while technology firms like Oracle are landing more customers. According to their fiscal Q1 2021 report, Oracle earned $9.3 billion in revenue in the last year, which exceeded analyst estimates of $9.19 billion. Overall, the company increased quarterly revenue by 2% on a year-over-year basis. That might not be the kind of hockey stick growth that startup founders dream of, yet it is still a significant accomplishment during a time of record unemployment and economic disruption.

How Much Did Oracle Earn From Cloud Computing?

In Q2 2020, Oracle earned over $6 billion from cloud computing or 70% of total revenues. For a company that launched its first cloud computing product in 2012, Oracle’s growth is remarkable. The company’s success at growing revenue during a global pandemic shows that Big Tech’s strength extends far beyond the big four: Google, Apple, Amazon, and Facebook.

In addition to its cloud computing line of business, Oracle has a diversified business model. For example, the company earned approximately 8% of its 2020 revenues from professional services. Further, the company also earns approximately 9% of its revenue from selling hardware products like servers, storage, and specialized database products. While services revenue is more difficult to scale than pure software revenue, it tends to increase customer loyalty.

However, Oracle is far from satisfied with its current position. Recent comments from management suggest that Oracle has set its sights on the king of cloud computing: Amazon.

Is Oracle Going to Eat Amazon’s Lunch?

Consumers know Amazon best for its e-commerce operation, which ships millions to products in hours. However, the business of storing and shipping products is expensive, with challenging profit margins. That’s why Amazon has invested so heavily in digital services like Amazon Web Services (AWS).

According to Gartner, Amazon currently enjoys a 45% share of the global public market as of 2019. Microsoft is in second place with a market share worth 15% of the market. The top five companies in the public cloud services market earned tens of billions of dollars in 2019. While Oracle doesn’t yet have infrastructure style offerings like storage as a service, the company’s expertise in corporate databases makes it a formidable player.

What Is Oracle Selling to Zoom, McDonald’s, and Others?

If there was any doubt about Oracle’s focus on the cloud, consider one of its newest customers: Zoom. On the other hand, Zoom is spreading its risk between multiple cloud providers by keeping some of its cloud business with Microsoft and Amazon. Oracle’s reputation for reliability and handling sensitive corporate data may increase confidence in Zoom, which experienced significant security problems in early 2020.

Even as Oracle makes moves to companies like Zoom, it is not neglecting the bread and butter of its business: large established corporations. In 2020 alone, Oracle has announced significant new projects with United Breweries of India (which produces Kingfisher beer, one of India’s best-known beer brands), McDonald’s, and Safaricom PLC (the largest telco company in Kenya).

Thousands of Experts Are Deeply Trained in Oracle’s Products

Oracle has a stronghold on consulting firms and IT professionals. Corporations can call on armies of specialized consultants from Accenture, Deloitte, and other firms. Furthermore, tens of thousands of IT professionals have earned Oracle certifications. As of September 2020, Oracle offers more than five levels of certifications ranging from Associate to Expert. This multi-tier approach means that employers can use these certifications to distinguish between novices and experts during recruiting.

In addition to equipping people with technical skills, Oracle’s certifications also give it an army of advocates. Technology professionals who have spent years developing skill in Oracle products are probably motivated to keep using these products. As of 2020, more than 150,000 professionals mention Oracle certifications on their LinkedIn profiles. Only a handful of companies like Microsoft and Cisco come close to Oracle in terms of IT certification popularity.

About the Author

Headshot of Bruce Harpham

Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.

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