Ellison said that Oracle has to build 100 additional cloud data centers because there are billions of dollars more in contracted demand than it can currently supply. “Cloud infrastructure demand is huge and growing at an unprecedented rate,” he said.
Ellison said Oracle expects the OCI growth rate to be over 50% for a few years. And yet OCI’s share of the worldwide CSP market remains at 2%, and all of Oracle’s investments “didn’t move the needle much over the last year,” said John Dinsdale, chief analyst and research director for Synergy Research Group, which tracks the CSP market. By comparison, the three market leaders in the last quarter are Amazon, with 32% of market share; Microsoft at 23%; and Google at 11%. Over the last four quarters, for every dollar that Oracle has invested in data centers, Google and Microsoft have each invested about $4 and Amazon even more, said Dinsdale.
Also, for the third consecutive quarter, Oracle’s capital expenditure has decreased rather than increased, Dinsdale said. “None of these metrics point to Oracle substantially closing the gap between itself and the big three cloud providers,” he said.
However, Ed Anderson, distinguished analyst and vice president with Gartner, struck a more optimistic tone. Gartner is doing a market share assessment for the cloud service providers, which should be out in the second quarter of the year. As of December 2022, Oracle had just 2.6% share, but Anderson said the signs are there for growth. “I don’t know what their share will be. But I anticipate that they will have a high growth rate and are likely to capture some market share, and to increase that number this year. We’re seeing increasing demand for Oracle Cloud infrastructure,” Anderson said.
Oracle has a few things in its favor, Anderson said. First, it has the most flexible pricing model among the CSPs, and for a lot of customers that makes OCI look like it’s less expensive, he said. Second, Oracle has its legacy in on-premises software as a hook for migrating customers to the cloud. “So, for companies that have a dependence or a preference for Oracle Database, to support whatever application, Oracle’s really the only place to get that advanced database technology, and particularly to get it at a price competitive point,” he said.
For the quarter, Oracle reported $12.94 billion in revenue, up about 4% year over year. Cloud revenue was $4.8 billion, up 24% year over year. Infrastructure-as-a-service (IaaS) brought in $1.6 billion, up 50% year-over-year, while cloud applications and software-as-a-service (SaaS) brought in $3.2 billion, up 14%. That puts Oracle’s cloud businesses at nearly a $20 billion-dollar annual revenue run rate, Catz said.
