Ladies and gentlemen, please welcome to the stage Oracle Senior Vice President, Ken Bond.
Hello, good afternoon. I never get tired of watching those videos. I don't know if any of you noticed, that's from Bermuda. The competition's already started for the defense of the cup in 2017. Just out of curiosity, show of hands, who was here two years ago in 2013 when America won the America's Cup, Team Oracle? Yeah, a lot of you. Most of you were here for Open World in that week. Many of you may not have been here the week or two leading up to that. I remember moments in time when you would read all the press coverage about Team Oracle USA was out. They were down one-eighth. The Kiwis were so much better. Game over.
Then we had actually the very good fortune, the America's Cup, the race 19, which was the deciding race won by Oracle, that took place the day before our meeting. I remember we had Larry here, I was telling people he's probably going to talk about the America's Cup, so I'd advise one of you to just ask about the America's Cup and try to weave in an Oracle business question. He did. One of the things that he talked about was that we knew, he knew, I should say, Team Oracle USA knew they had designed the superior boat. They had the technology. The real question was, would they be able to catch up? They knew they had the faster boat, and it was just a question of hanging in there, but they were going to win.
Well, history told how that played itself out. Team Oracle USA defended the America's Cup after the win in Europe and is now looking for a three-peat as we go to Bermuda. I can't help but think of the comparison between the world's most regarded boat race and why we're here today. I'm not going to say it's one-eighth, like it was with the America's Cup, but I think certainly I've spoken with many of you many times and understand that the answer is not as clear as it relates to the business as it now is with the America's Cup. I think that settles itself over time. We're very happy to be here with you today. What I'm hoping to do is basically walk you through some of the most exciting slides of the day because I know you always love these. First of all, welcome.
Thank you for being here. Obviously, it's been a very busy week with a tremendous number of announcements. We're very exciting. It seems like you mostly have found yourselves to the food. Thank you. The bathrooms, as usual, are as where they always are. We have Wi-Fi and a lot of cords and cables. The last thing we want to make sure is nobody kills themselves tripping over. We have mic runners when we get to the Q&A portion of the meeting that will be running up and down, bringing microphones to you. Their request is anybody in the aisles, please keep your bags out of the aisles. Let me talk through our safe harbor slide. We have a little bit of a syncing issue, so I'm going to be speaking to the last slide you just saw.
As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates, or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, the statements are also subject to risks and uncertainties that may cause our actual results to differ materially from those statements being made today. Throughout the discussion today, we're going to attempt to present some important factors relating to our business, which may potentially affect these forward-looking statements. As a result, we caution you from placing undue reliance on these forward-looking statements, which reflect our opinions only as of today. As a reminder, we're not obligating ourselves to revise these forward-looking statements in light of new information or future events.
We would encourage you to review our most recent reports on forms 10-Q and 10-K and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price for our stock. Just for quick reference, that slide. Also want to make sure everybody understands the presentation that we're making today is being made for informational purposes. There's a little bit of syncing issue with my speaker notes and the slides. We'll also be using non-GAAP financial measures, as you can see. In terms of the presentation and the agenda for the day. It's going to be structured as follow. I'll be stepping down in a moment. Mark will come up here and speak with you a little about why cloud. We'll then from there, we'll go to a video.
We basically recognize that a lot of you don't get the chance to come in for the full week. We know it's a big commitment of time. We did a mash-up between Larry's presentation of what he talked about on Sunday, talking about cloud. Larry also talked about security on Tuesday, and Thomas spoke on Tuesday as well, talking about a lot of our platform things. It's a short 12-minute video talking about the elements of what's going on a lot of part of our business. Following that, we're going to have three of our key executives come up and speak with you in a little bit more detail. Steve Miranda will be talking about the SaaS layer. That's the applications that are now in the cloud. Following that, Inderjit Singh will speak with you on the platform.
Lastly, Edward Screven will come up and speak with you about security, which is a very key theme in Larry's discussion on Tuesday. We think this is ultimately a differentiator that separates Oracle from many of its competitors and a lot of the ones that you talk about with us. We'll get to break. That'll be right around 1:45 P.M. We'll go to break. Coming back from break around 2:00 P.M., we'll bring Mark back up to the stage. Mark will then spend some time talking about a lot of the experiences that we've seen from this application to the SaaS transition.
He'll talk a lot about the experience that we've seen and what we think we see here will give you a lot of sense of how we expect the business will continue to go in the future and the prospects that we have not only for that transition as well as technology to PaaS. At that point, Mark will invite Safra to come up on stage. They'll take some of your questions. We'll do a Q&A for a bit. We'll have another break around 3:00 P.M. Following that, we'll have Larry here where we'll do a Q&A, and that will conclude the day somewhere around 4:00 P.M., 4:15 P.M., and that's essentially the breakout of the day. With that, let me bring up to the stage Mark Hurd, Chief Executive Officer.
Thank you. I see the left side was clapping more than the middle, let's get started. To Ken's point, just in flow, we're going to talk a little bit about what we see in the market. When we open up, I'm going to talk to you a little bit about what I did in my opening keynote, really directed at the customers, what our customers are seeing, what our customers are feeling. Then we're going to have the discussion that Ken raised. We'll have Larry and Thomas talk about sort of how our portfolio has evolved, and then you'll hear from the presenters Ken described. We do get back up after break, just to supplement a bit of what Ken said, we're going to talk a fair amount about numbers.
We're going to talk a fair amount about numbers as it relates to our applications business, both on-premise, our support business, and what's happened from a SaaS perspective relative to that. That's sort of the flow we'll go, and then Safra and I will take whatever questions you have. Okay. My gosh, I have a safe harbor statement, too. I'm actually not going to read it. Dorian, are you okay if I don't read it? Thank you very much. All right. First, should I get a second safe harbor statement? I'm going to tell you a little bit about not just what I care about, but what the CEOs care about from a customer perspective, our customers, the customers that we have that are running companies. Our customers are under a lot of pressure.
I'm going to try to explain to you sort of the context of what we hear from our customers and the issues that they're dealing with. First, numbers that probably should be familiar to you. Over the last several years, when you look at the S&P 500, revenue growth is basically flat. Little less than 1% revenue growth on a compounded basis. Earnings growth, roughly 5%. That's the backdrop that we sell into. Our customers' earnings are going up, revenue really not. What's happening? Cost is coming out. That's how most of our customers are actually making their earnings numbers. Some of that cost is coming out of IT. You have a situation where IT budgets, and you can see these numbers, and these are analyst estimates of IT, and you can see they range from flattish sort of performance, 1% growth, this year even down 5%.
By the way, you guys see this in some of the companies you follow or some of the people you own stock in. You see these revenue numbers that are put up by our competitors. I'll talk about that in a second. As it relates to our customers, they're putting a lot of pressure on their overall spending, and IT is feeling that. In the end, I'm going to talk a little bit more about asking CIOs, do more, but do more with less. Now you see it show up. I always love the estimates that you'll see from analysts. At the end of the day, when you just start adding up companies in IT, you can see here $16.5 billion has come out of I only put up six companies. I don't do that to take a shot at any company.
It's no other than just to give you some context of the amount of revenue that's coming out of the industry. Oracle, as you can see, last quarter grew 7% in constant currency. At $40 billion annualized, we get $2.8 billion. It's certainly not making up for the decline that's coming from some of what you might think of as our traditional big cap peers. Lot of change. Here's what's happening to our customers, and this is based on us doing This is a lot of customer contact, a lot of research. You can imagine how many customers we have coming in through our CVC, our customer visit center, how many customers we talk to, and what the pressures they're facing. First of all, applications as a set. Think of applications, on-prem applications, as an industry. Average application today, 21, 22 years old. Very old applications.
22, many of you are numerate, maybe not all, many. 22 from 2015, 1993. You've got applications that are built pre-search, pre-internet, pre-mobile, pre-social, pre-cloud. The ability to get those applications from where they are today to where they need to be, very, very difficult. Many of those applications, again, remember, when you think of the applications market, you may think of that market as Oracle, think of that market as SAP. 40% of all applications that are in use today, these old applications, are homegrown. They're not commercial applications. You have homegrown applications, very old, very difficult to maintain and keep up. Many of the people who wrote the applications are gone from the company. At the same time, when you look at IT infrastructure, IT infrastructure has been aged. You've heard this term, sweating out the assets.
You've got a 15%-30%, depending on what industry, what geography, elongation of the lifespan of existing IT infrastructure. You've got an elongating life of infrastructure, system failures, and by the way, I didn't go into detail about some of the systems failures that you all see get reported. There's a reason for some of those. Some of it, frankly, is there's a lot of creaky infrastructure that's out in the market today. You have the additional problem in several industries that flat spend. Think of that flat spend that I talked about, and now a bigger percent of that flat spend has to be spent on compliance. You all see that and some of you that are in financial services companies. Security.
Money that perhaps could go to innovation, modernization, that now has to be spent on something else. Against the backdrop of our customers, our customers are under pressure then complicated by the fact that their market is changing. Our customers that are B2C, business to consumer, are under a level of pressure they haven't seen before. You all have heard of this change in the demographic. If you're at the conference and you're in customer meetings, this drives our customers thinking. It's about two things, the change in the employee and the change in the consumer, the change in the customer, the change in the buyer. When you survey millennials. By the way, millennials, 50% of the U.S. economy by the time you get to 2020. They buy differently. They work differently. They're much more likely to complain. You see that, right?
You see that through technology, just in this city alone. A millennial's desire to jump on Yelp, to jump on Tripadvisor and make a clear description that, "I don't like this," and communicate that broadly, is a level none of us, at least let me say it this way, in my generation, as suppliers, we never had to deal with this. Same way from a hiring perspective. In the old days when I used to hire somebody, most of what they would know about Oracle would be from me. I would tell them, "What a great place to work. Exciting. We're doing so many great things." Five minutes after that, now they're on the web thinking, "I don't know if that was true." They're going to find out from 500 people now instead of just me.
We're now entering a level of transparency or an era of transparency that none of our customers have had to deal with before. They now have customers who want to deal with their customers the way they want to be dealt with, either through a personal device. They want immediate gratification to whatever question they've got to. I could go on about this, and usually I do. Let me give you one other point. Have you all heard about this now, this issue with the gig economy? Is this a familiar term to you? Let me try to explain if you haven't heard. This is really, I use the example up here of Uber, but this is where people really aren't taking jobs. They take a gig, and the gig might only be two or three months. Then I leave, and then I go into another gig.
The implication IT is extreme, though, because most of the companies, when you come on to onboard to a company, I know it's hard for you all to believe, but not all of their processes are perfect. Most of their processes have fragilities. How are those made up for? By managers, tribal knowledge. I learn as I go, and I learn how to get things done. That doesn't work in a gig economy. You have to be able to onboard an employee in something measured in minutes and hours. They have to be productive right away because they're gone in two or three months. Most companies, it takes two or three months just to learn how to get things done in a company. By that time, this employee has come to the company and they left. The pressure that puts on IT is extreme.
Remember, when you talk to a millennial, by the way, we hire a lot of millennials at Oracle. We have pretty good data. They tell us the number one thing that drives them is flexibility in job. To which, of course, I don't even know exactly what that means. The answer isn't pay. Pay comes out fourth. I'm sure they'd rather have flexibility and more pay. The reality is, I tell you this because this is what our customer deals with. Our customer deals with a whole set of dynamism going on in the employee experience, the ability to retain employees, train employees, motivate, prepare, and they don't have the tools to get it done today because they've got 23-year-old apps. At the same time, the customer is changing. Their ability to deal with that customer has become more challenging than ever before.
You've got to do that against this backdrop that I described to you. Now you have to be able to come to the customer and help the customer get through these issues. I could have taken you through a lot more detail with the whole, but that is what drives this phenomena called cloud computing. I remember back several years ago, somebody told me the most important thing about cloud computing was you could now turn CapEx into OpEx. I think that has nothing to do with it. What has to do with it is this. The fact is it simply costs less. It is less complicated. It is actually more reliable, it's more secure, and it drives much faster innovation. The ability to have to feature string and modernize 23-year-old applications to deal with the dynamism I described is virtually impossible. You can't modernize that infrastructure.
It is simply too old. The best approach is to leapfrog it. When Steve gets up and Steve talks about sort of what goes on in today's applications world, Steve's team is probably releasing two to three releases of applications per year, 300, 400 features per release. That whole programming staff. I mean, Steve, I think we have what? Probably 2,000 people, engineers in HCM alone. Imagine that. We have 2,000 engineers in HCM who are building features for our HCM application every day. If you're a customer, that is your IT staff. There is no possible way to compete with that for our individual customers. The speed of innovation is unparalleled. At the same time as, to be very frank, you do no work. We do the hard work. We do the operating system. We do the database. We do the middleware.
It's in our physical location, in our data center, managed by our people, no heating, no air conditioning. We do the upgrades. We do the patching. All the work is transferred to our R&D budget away from their IT budget, and they get the innovation that I just described. There is no chance to compete with that from today's status quo, and that's what drives this. When Edward gets up, and you'll hear about this, he'll talk about security too. This is one of the other big things that I think is getting better understood in the industry. Our cloud is encrypted. It's more secure than it would be running your application on-premise. Edward will talk a lot more about all that. When you look at these attributes, this is a fundamental shift in the industry.
Listen, I'm not going to see it again, I know, in my career. This is a fundamental shift, and we're in the very beginning of this. It's driven not just by OpEx to CapEx. It's driven by macro and microeconomics, and driven in the end by the speed of innovation to be able to deal with the dynamism that our customers feel. Us. What I've told you so far is really about the industry in general, and it could have come from really several companies, although I think there are many companies who wouldn't want this to be a reality, frankly, because the only company that's in a position to deal with today's, and I think it's an important thing to take away. We'll talk about this a bit later.
There is virtually no other company in a position with the depth of on-premise knowledge that we have, at the same time as the thorough and complete portfolio that we have in the cloud. I did not do this. I could not do my whole keynote here because of time. When you look at the amount of workload that will move to the cloud, while we predict it will be an extreme amount of workload that will move to the cloud over the next five, six, seven, eight, 10 years. For a very long time, there will be an on-premise space. The need for those two environments to work together is critical. Most of the people you see in the market are cloud companies or other on-prem companies. The ability to bridge those two worlds is a unique differentiator. We're in a class alone.
This week was a big week for Oracle. We have talked about our vision for the cloud for the last several years. Larry's going to do it when you see Larry's video about our vision for what we were going to do in SaaS, our vision for what we were going to do in PaaS, infrastructure. I think we released 42 or so energy, might know 42 PaaS services this week. We had almost over 100 releases of SaaS apps and/or PaaS services and/or infrastructure services during the week. This is really the culmination of years of work to get what is now our complete portfolio, roughly complete portfolio, is now available in the cloud, that's available on-premise. I want to say that again. Complete portfolio that's been rewritten, re-engineered, and modernized to work in the cloud, but is available on-premise. No one else has done that work.
Our strategy is to be best of breed in each individual SaaS application, but also to be a suite. Both. Each app to be best of breed, best of breed in ERP, best of breed in HCM, et cetera, but a suite built on standards. A platform designed for extensibility, not only just to do dev test, development and testing of applications, but the ability to extend an application. When you talk to any SaaS application provider, ask the question, how would I possibly extend this application? I think you're going to get a lot of answers like, "You're not." With Oracle, you can. A platform designed for extensibility. I talked about IT company capable of coexisting on-premise or in the cloud. We're in a position now with the work we've done to lead this transition over the next decade. Okay.
What I'm going to do is stop there, and then we're going to have Larry and Thomas. We've pulled out pieces of each of their keynotes to get you a deeper flavor for the technical direction and the releases this week, and then we'll come back after that. Okay? Here's starting off with Larry, then Thomas.
We are in the middle, and I really do mean in the middle of a generational shift in computing that is no less important than our shift to personal computing when mainframes and minicomputers dominated our industry. Lo and behold, after giving it a bit more thought, we eventually came to realize and understand that if we were going to be in the PaaS business, we also had to be in the Infrastructure as a Service business because if we wanted people to use our database in the cloud, they weren't going to use our database in the cloud with just our applications, just our SaaS applications. They had a lot of existing applications. They wanted to write applications of their own. They wanted to write them not all in Java, but in Java and new programming languages, Python, Ruby, scripting languages, programming languages, whatever you like to call them.
Here's the irony of it all. We went into the SaaS business and came to understand that required us to be in the platform business. We went into the platform business and came to understand we had to be in the Infrastructure as a Service business. That's how we got to where we are today. In this new world of cloud computing, everything has changed and almost all of our competitors are new. This is how much our world has changed. Our two biggest competitors, the two companies we watched most closely over the last two decades have been IBM and SAP. We no longer pay any attention to either one of them. It is quite a shock. I can make the case that IBM was the greatest company in the history of companies. They're just nowhere in the cloud.
SAP was certainly the largest application company that has ever existed. They are nowhere in the cloud. We are, as I explained earlier, in every layer of the cloud. Most cloud companies are not. We are the leader in database and with the world's most popular programming language, Java. As I said, we are now starting to compete aggressively in Infrastructure as a Service, as well as in the Platform as a Service and applications. In order to be successful in SaaS and PaaS, we have to do infrastructure, and we're doing it. Okay. As we look at our cloud business, we have certain parameters, certain design goals that we focus on regardless of whether we're building an application, whether we're building a platform service, or whether we're building an infrastructure service. These design goals, again, permeate the stack in the cloud. Low price.
In every business, you want to be a low price provider. In computing, it's a bit tricky because there is the acquisition price, how much you pay for it, and then what does it cost to own? How much labor is associated with owning it? Are there a lot of hidden costs? Reliability. As we migrate to the cloud, this is now a compute utility, just like telephone service is a utility or electricity or water is a utility. People get very upset when their utility goes off. These things have to be continuously available. Performance. Performance, in a way, is the other side of cost. The faster you run, the fewer resources you use to get something done. Performance and cost, sometimes called cost performance, are closely related. On the other hand, peak performance is sometimes a requirement on certain kinds of applications. Standards.
In the early days of the cloud, the early SaaS providers didn't worry a lot about standards. The cloud was brand new. They built a lot of stuff that was proprietary. They were pioneers and there weren't a lot of standards around the cloud. Security, I think if I had to order these design goals, I would put security on the top. Security, which might be something we ignore-- Not ignore is too strong a word. Pay some attention, some but not enough attention to now, is to become a bigger and bigger risk as we move vast amounts of data to the cloud. Here are a couple of rules of thumb for you on security. Database security is better than application security. What I mean by that, you should always push your security features as low in the stack as possible.
If the bottom of the stack is silicon and the top of the stack is applications, an application runs on a database, a database runs on an operating system. An operating system runs on a virtual machine, which runs on a server, which has the silicon-based microprocessor. You should always be pushing your security as low in the stack as possible. Silicon security is better than OS security. The last time I checked, even the best hackers have not figured out a way to download changes to your microprocessor. You can't alter the silicon. That's really tricky. We've speeded up encryption and decompression, which is kind of related to encryption. We've speeded that up in hardware where there's basically zero cost. It runs at memory speed. There's basically zero cost in doing that. You can encrypt everything all the time, turn it on, leave it on.
In fact, we turn it on. You can't turn it off. It's on all the time. It's all built into this new microprocessor called the M7. Oracle is really focused on engineering cost, performance, reliability, compatibility, security, standards into all three layers of the cloud. Along with Microsoft, we're the only ones that are working in three layers of the cloud. The oldest business that we're in, again, the one started by NetSuite and Salesforce.com more than 15 years ago, is Software as a Service. Right now, we have many more cloud applications than any other cloud service provider by a huge margin. We're always adding more. I'm not talking about little, itty-bitty feature applications. I think major applications. We are announcing here today two major new applications, manufacturing and e-commerce in the cloud.
I believe we're the only ones with a comprehensive suite, discrete manufacturing in the cloud, period. We're the first and only one to offer this in the cloud. This current year, the year we're in right now, Salesforce has a plan where they expect to sell about $1 billion worth of new business this year, and we expect to sell at least 50% more than that. This is surprising numbers. We expect to sell more new business in SaaS than any other company around.
We've had a really busy year. We've introduced major new releases of our applications product lines. We have a brand-new release of Fusion Middleware. We're in beta now with a new release of the database, and we have a lot of capability. What we want to show you is how we're making that capability reachable by any person, anywhere in the world with just a browser. Any person, any place in the world with just a browser can access our cloud and get access to all these amazing new product innovations we've delivered. How do you build applications? First, from a programming language point of view, last OpenWorld, we showed you Java EE. This year, we've introduced multiple language support, Java SE, JavaScript, Node.js, Ruby, Python, PHP, and we'll show you that in just a minute. The combined stack is vastly more productive.
We did an actual study creating a two-node RAC database, a two-node middle tier cluster, and a web tier in front of it. We counted how many keystrokes and how much time it took to do it on an on-premise system, on another cloud, and using our PaaS. I think you'll see the productivity benefits and the speed advantages. Not only do you get these advantages once during the install and config process, but from a management point of view, you don't have to patch. You don't have to back up. You don't have to do any of these things that you do day to day if you use our PaaS. For analytics, this year, we introduced three new capabilities in the cloud.
For data scientists, we introduced Oracle Big Data Cloud Service, a high-performance Hadoop 2.0 service where you can simply load your data into a Hadoop cluster, you can spin up multiple Hadoop clusters, and you can use all the familiar tools that you use with Hadoop. To integrate your applications to the cloud, we introduced a variety of integration cloud services. We have an integration cloud service that provides the ability to connect two different systems, route data between them, and map and transform your data from one system to another. You can also add orchestration and API management, all delivered to you in the cloud. In application software as a service, we introduced 183 new modules and new services between the last day of last OpenWorld and last Friday.
Not only do we do ERP, EPM, human capital management, talent management, marketing, sales, service, e-commerce, configure price, quote, and order management, we now offer supply chain and manufacturing in the cloud. It's the only full suite of cloud services.
Ladies and gentlemen, please welcome to the stage Oracle Executive President, Steve Miranda.
Safe harbor. Okay. We're going to go through a series of discussions on the different layers of the platform. I'm going to start off and cover the applications or the SaaS portion, as well as the data as a service portion. What I'm going to try to focus on is not only give you maybe a reminder of what we have in the application suite, an update of what's been added this year, but I'm going to especially focus on the customer adoption. I'm going to try to give you some examples of why it's critical that we have the breadth of suite, and I'll give you three different examples.
First, obviously, it gives us both the combination of the breadth of the suite and the cloud deployment, the ease of deployment, the lower cost, the lack of IT necessity, et cetera, has allowed us to go after markets, and particularly middle-market customers that we never could reach before. Second, the fact that we have a complete suite of SaaS applications allows our customers to move to the cloud in the spot that makes most sense for them as a business, either on the business refresh cycle or where their particular pain point or opportunity is. Meaning you can start off in CRM if you need to have a brand-new marketing campaign. If you're a heavy retail customer, you need recruiting as a primary example, you need to move to recruiting online.
If you're a small and medium business and need to start off with an enterprise-class ERP system, you can move your financials to the cloud. By having the breadth of choice, you can choose what makes most sense to you in the cloud and move that first. Third, once you start off with our cloud-based applications, you're able to extend. I'm going to give you examples of customers who started in one component of the cloud or one pillar and expand beyond that. Not only within a section, if you're in marketing to add sales, or if you're in sales to add service, but also if you're running HCM first, the ability to add financials.
The ability to have a complete suite and best of breed, as Mark pointed out, allows us to have customers the choice and flexibility on where to start and then gives us a better opportunity how to expand within those same customer base. Let me first start off by covering ERP. We have a complete set of ERP applications from planning and budgeting, financial consolidation and reporting, procurement, sourcing, project management, and GRC. The typical apps that you might think of, these are your general ledgers, accounts payable, accounts receivable. These consolidations, the statutory reporting, the management reporting, this is what allows companies to really run their business. This year, at this same time last year, I probably announced a number somewhere around 100, 200, 300 customers in ERP. This year, we've grown to over 1,300 customers in ERP alone. A tremendous growth.
We're seeing the speed of go-lives on this. We've got over, in that growth, over 300 of those customers have gone live. Which in and of itself, if you just think of roughly 1,000 customers added, roughly 300 live, that means in less than a year, 30% have gone live, which is probably fast historically for an ERP. It's actually better than that. Because if you think about the ramp throughout the year, we added customers in increasing fashion quarter by quarter. Most of those customers or many of those customers just bought in the last three months aren't live yet. It's actually much closer to 40, 50% of the customers that are live in less than a year. It's not uncommon for us to see customers go live in financials in four-month, six-month, seven-month cycle increments.
A couple different classes of the uptake that we're seeing, and again, this is an illustration of what I said at the beginning, the type of customers we can address. The one class in financials is where you have the ERP refresh cycle. An older version of financials needs to modernize, needing better reporting. Even the largest companies in the world. HSBC, the fourth-largest bank, moving to centralize all their operations, have picked the complete suite of Oracle Cloud Financials to go live in the cloud. That's a big bang, everything included, global corporation go live in our Cloud Financials. A second flavor that we commonly see for the largest enterprises, one of the largest multinational manufacturing, and now they are changing from manufacturing to, I think they're calling it digital manufacturing company in the world.
They've spoken on our behalf many times here. You can guess what they're called. They are choosing a different flavor because they're transforming their business. They are actually going live by line of business and by country. They are already live by line of business in Canada and Mexico, and they are now using that Cloud ERP or Cloud Financials as the template so that when they do future acquisitions, instead of moving acquisitions into their corporate instance on-premise, which was typically their practice, an Oracle customer, are now going to move those acquisitions into that template. Simultaneously adding country by country, line of business by line of business, as they move to the cloud, a combination of a technical transformation to the cloud as well as a business transformation to the cloud.
The last two companies is probably what's really the big growth of a lot of the transactions, not necessarily the dollar volume, is companies like Bongo and Pandora, which are smaller pre-IPO or when they started with us, now post-IPO companies that are looking to get on that enterprise class financial applications ERP for statutory reporting, process controls, as they plan for growth in the public market. Those companies are choosing, instead of traditionally, they've gone to E-Business Suite, are going directly to the cloud. These companies especially are where we're seeing the tremendous, where they have brand-new processes starting really with us to the process and don't have that change management exercise, tremendous benefits to the cloud and speed. There's a couple classes both on ways they're getting to the cloud and some new type of customers or smaller customers that we see examples of.
Next area is HR. With HR, complete global HR. This is kind of your statutory record keeping org charts and transfers and titles and responsibilities. Workforce rewards and payroll, different types of payroll compensation. Workforce optimization, things like succession planning, recruiting and onboarding, talent management, which includes things like performance reviews and ratings, goals and succession, and then a brand-new module introduced this year, which is learning, which is at least a year ahead of what our top competitor announced they're coming out with next year. This is modern learning, not only compliance type learning. When you come onto a job, there's certain statutory learning, but it's also real-time learning or just-in-time learning, where we're able to surface video content of the learning capability within our applications or within another application to help train your employees.
For example, you have a sales force. You need to train the sales force on a new application or a new promotion or new pricing. You can create the video within our learning application, surface that anywhere within our applications, and track that so you understand who in your staff has been trained, either from a statutory or from a go-to-market perspective. Again, tremendous growth. We announced here at this conference over 1,000 core HCM customers. That's our core HCM, meaning that does not include our Taleo customers from acquisitions, which puts us well north of 5,000 customers in the cloud today. Again, tremendous growth. Some examples. Global examples, mostly large multinationals. AXA, very similar approach to the US manufacturer, started in a regional towards a go live country by country, region by region, actually probably more appropriate, towards a global unified HR. Over 80,000 employees.
British Telecom, another one, over 50,000 employees, gone from a heavily customized HR system to a vanilla cloud-based HR system as they centralize their capabilities. I'll skip down to Schneider Electric, another core HR, another centralization of process, another customer greater than 80,000 employees, gone live in the last year with us on our HCM cloud. I skipped over Macy's because Macy's is not only core HR, but where their real sweet spot is, or their real business challenge, is recruiting. Macy's recruits 80,000. That's actually understated because that's how many people they hire for their seasonal employees. They actually have to recruit and interview much more than 80,000 people, but they hire 80,000 people within an eight-week period, and they do this every year seasonally, both onboarding and then off-boarding for their Christmas season for the holidays.
It's not only live on a 100,000-person size of scale of company, we have the recruiting capability to recruit on the scale of 80,000 in an eight-week period annually, which is clearly like the stress case for any company anywhere in the world for recruiting, all cloud-based, all vanilla. Next in customer experience. Here we have a wide portfolio of applications, and it really takes you everything from content or personalization, which I'll describe in a minute, into Data as a Service. Multi-channel marketing, modern marketing. Not only email, web advertisements, social advertisements, be it Facebook, Twitter, ability to help our customers purchase AdWords and targeted AdWords. If you go onto Google, you can actually bid higher on words for people that you know about or care about.
Right on through to Salesforce automation, if you're a business-to-business type of approach, or to e-commerce, if you're more of a business-to-consumer type approach. At this OpenWorld, we announced our cloud-based e-commerce system, really completing the suite across CX. Configure price quote to actually take the order, and once you have the order, service, including this year, field service in the cloud, if you have to schedule remote repairs and that sort of thing. A host of customers here. Again, if you just include the SFA that we built internally, none of the acquisitions, over 800 customers in the cloud announced this year. Some examples. A large multinational retailer, you can see the flag has a very similar logo and colors to the flag that you see there, implemented the CX suite of applications in a multi-channel for commerce anywhere. It was a traditional B2C type of company.
Not only the advertising and marketing, but also right on through to e-commerce capabilities. KPN, both a B2B and B2C, giving you a complete multi-channel, both online and offline. Avaya was a development partner of ours. They are actually more of a B2B, and they do a lot of indirect selling. Here we added to our Salesforce automation a capability called Partner Relationship Management. Basically, their sales reps are not only employees of Avaya, but in fact, they sell through partners and channels. You have to add and treat the partners and the channels in a similar way that you treat your internal employees, a whole set of capability around Partner Relationship Management for Avaya and go live. Southwest Airlines uses our social capabilities for social listening, which is both service and for marketing.
If you have a Southwest flight, you have an issue with your flight, you tweet to Southwest Airlines, they have social listening, which takes that to their "call center" to be able to respond, reschedule your flight, answer your questions online, real-time. Huge customer satisfaction benefit to Southwest. What we talked about previously and just announced, Larry said the first supply chain manufacturing set of products available in the cloud, full stop. In previous discussions, I've talked about how we have a nearly complete suite for service customers. Now we've added it for supply chain manufacturing customers. Sourcing, procurement, product lifecycle management or product design, planning, the core manufacturing and quality, order management, and logistics or transportation management.
Though we just launched part of that at this conference, six months ago, we launched transportation management early, and in the first six months, we already have over 45 customers that have picked our supply chain management or transportation management in the cloud. You kind of see this pent-up demand for customers waiting to move even supply chain and manufacturing to the cloud going forward. You see for these examples, some of the largest customers in the world, Dell, GE Appliances, to some of the smaller companies. Ainsworth Pet Nutrition was actually here. It's a family-owned, 80-year-old, privately held company using our supply chain in the cloud today.
Again, as an example, not only having a choice of where to move to the cloud for companies like Dell and GE, but markets that we couldn't really get to before because of the speed and cost of the cloud-based deployment, like the Ainsworth Pet Nutrition or pet food. With this now, we are able to cover the complete set of business flows. I gave you examples of if a customer has a pain point in recruiting, like Macy's, if they are a pre-IPO customer like Pandora, or now a post-IPO who need a robust financial system, if you have a core HR refresh like AXA, if you have a supply chain transportation problem like Dell or GE. In addition to that, we can cover cross flows. From your CRM order taking to actually taking an order and booking that in ERP.
Once you're live on HCM, moving forward to HCM and financials integrated. Here are some examples of our customers who started in one pillar or one product family and have expanded. Here's a slightly different view. We're seeing flavors of customers who start in CRM with our configure price quote or sales force automation, and actually add the accounting piece for that once the orders are created. We have folks who have ERP, who are using our budget planning area or supply chain. Other customers who are using CRM and HCM, innovating around their core ERP systems as they're going to move to the cloud at ERP later, or very commonly, having ERP joined with HCM.
Giving you a number of different ways to, that the breadth and the best of breed allows us to not only tackle the hardest problems in the world in each area, but to broaden the addressable market in many different directions. Now, the last part I want to cover is our Data as a Service, which is, I think, probably the least understood of our applications, but I'll try to put it in a way I think all of you actually see this as a consumer today, and it's likely powered by our Data as a Service. Very likely. Quite simply, it allows us to enable marketing to target messages to customers, personalize those messages, and then measure the outcomes of marketing.
This is just the beginning area where it's starting in marketing, but I think it'll have an effect and be the long-term differentiator for our SaaS suite. First, what do we do? We collect, in an anonymous fashion, a tremendous amount of data in a centralized way, and then we partition that data in a number of ways. Let me give you an example. As I go online, and if I was going to go visit a customer in New York, and I book my trip to New York, there's a cookie that gets created in that activity. Now, I've also maybe went shopping for a Dell computer, and maybe I went online and searched for a movie ticket or a play. We develop a profile, and that profile includes online and offline data that we gather and aggregate and use a matching capability.
While we don't collect Steve Miranda or my email address or my Twitter account, we collect my profile information, age and demographic, male, over 35 years old, over 40 years old, certain income level, certain credit rating, interested in automobiles and technology and certain sports teams, and going to New York today. What that allows us to do is then combine that or not with our customer's first-party data. Say I'm a loyalty member to a hotel in New York or a hotel chain where they can target advertising. Again, not necessarily to Steve Miranda, but to this category of person who's traveling today. Allows them to much more accurately and personalize the message. Then you combine that with our marketing cloud that I talked about before, the multichannel, really address that in a multichannel way. Email, social, web.
When I said many of you probably see this today, if you visit some of these websites, or if you've ever bought anything online or searched for anything online, or maybe you actually booked your trip here to San Francisco from out of town, you started to see on your Facebook page or your Twitter stream, or frankly, any website you went to, advertisements for hotels, rental cars, plays in San Francisco, et cetera, is very likely our data cloud and our marketing cloud behind the scenes that's actually servicing those advertisements directly to you in a flavor that's targeted directly to you. Marketing is the first example of Data as a Service really underlying our complete set of cloud applications. Why SaaS? The first and only complete suite of applications from financial accounting all the way through to the CRM applications.
The deepest, or as Mark put it, the best of breed applications in core ERP, serving the largest companies in the world and some of the smaller companies who are small and growing and new and innovative companies. Deep HCM, not only in core HCM, but talent management recruiting, again, best in class towards the hardest problems there. Deep in CRM, not only complete e-commerce, marketing, sales force automation, but when you combine that with Data as a Service, capabilities that nobody else has in CRM, and introducing what is the only and first marketing supply chain manufacturing suite available in the cloud. Thank you very much.
Ladies and gentlemen, please welcome to the stage Oracle Executive Vice President, Inderjeet Singh.
Thank you. I'd like to start with something quite simple. It's quite an exciting time to be at Oracle. From an engineering point of view, you'll see the halls buzz with excitement. There's a lot of innovation coming out of Oracle these days. In this OpenWorld, you will see all of our engineers actually can't wait to share the excitement, can't wait to share the innovations that they've developed. Of course, we start with our safe harbor statement. I will cover the platform as a service part of our offering. One of the most strategic things that we are doing, one of the most innovative things that we're doing at Oracle are at PaaS. It's a complete suite broken up into 8 major categories, and I'll go over each one of them.
Starts with data management, our database infrastructure, application development, business intelligence, big data, mobility, a very new area for us, mobility development and analytics, content and social, enterprise integration, which is becoming a huge issue as the application footprint for most of our customers gets fragmented, and systems management. The pattern for the presentation is going to be very simple. We're going to tell you about the innovations done in each area, the traction that we're seeing, and the customer examples, real usage of these services that we've seen. Last year, we started with database in the cloud. Huge adoption for this. This year, we've actually taken it far further. We have Data Guard, Real Application Cluster in the cloud, in-memory database, NoSQL, and of course, Enterprise Manager to be able to manage all of this database infrastructure on-prem or on the cloud.
Tremendous amount of traction that we've seen in our database. Overall, from a customer count perspective on our PaaS, we have over 5,000 customers using our PaaS already. Last year at this point in time, we had about two or three cloud services live and ready. This year, we have over 40. It's a tremendous amount of traction and tremendous amount of usage as well. Let's take a look at some examples. Cerner. This is an example of a company that's an ISV. In fact, they're a healthcare software provider, and they're using development and test infrastructure, one of the most popular usage and easy for most of our customers to do, entirely done in the cloud.
It's a large consumer packaged goods company in the U.S., there's only a few of them, that are using Database as a Service and Big Data as a Service running entirely in our cloud. Application development. Last year, we introduced Java EE in the cloud. In fact, later in the presentation, I'll share with you the cost-benefit analysis of why it makes sense to have Java EE in the cloud. This year, we've taken it far further. We've introduced Java SE, so a lot of our customers are experimenting with microservices running on containers like Tomcat. You can use our cloud for that. Node.js, Ruby, Python, what we call a polyglot development environment. In fact, the demos that we did on stage were specific to Node.js development. Mobile. We've introduced Mobile Cloud Service, one of the coolest things that we've done.
A lot of our customers are experimenting with mobile projects, some internal to the organization, some to their consumers. Mobile Cloud Service allows you to do both back-end development, expose APIs, and have only, all you need is a browser to be able to do development for iOS, Android, and Windows. Brand new this year, we've introduced Application Builder Cloud Service. Some of our competition have introduced products like this. We've actually taken it far further. Application Builder allows you to extend our SaaS applications, I'll share with you some examples in a minute, but also do custom objects in the same infrastructure. Unlike our competition, this is not just about creating single-page extensions, simple things. This is about creating sophisticated extensions, and a lot of our customers have done that as well. Tremendous traction in the application development. Let's take a look at some examples.
The first one comes to mind is Burger King. In fact, Marcelo, the IT lead from Burger King, actually spoke with me at my keynote. They were able to get a key project that was about, if they did the analysis first, about two months of work. They were able to get it done entirely in two weeks. A regulatory requirement, very quickly, nothing to install, entirely done on the cloud. JDS Uniphase consolidated the entire applications footprint to the Oracle Cloud using our PaaS. Real usage. Big data. We have the world's most comprehensive big data platform. Starts with the infrastructure. That's Big Data Cloud Service. That's what it takes to run the big data jobs. HDFS, Kafka, HBase, Spark, all of them are supported natively. A lot of our customers that have actually used big data also realize it's garbage in, garbage out.
The cleanliness of the data that you store in their big data infrastructure is quite important, and the level of expertise involved in cleaning the information needs to be brought much closer to the business user. That's big data preparation. Brand-new offering this year. It's a new space that we call data wrangling, where all the consumer needs is a browser. They're able to create and modify the data that's sitting inside without bringing it out of the cluster. Let's say you want to do a de-duping job. Internally, it's producing a MapReduce or a Spark job to do it without the business user requiring the skill sets to code those things. We do it for you. The last one is to do with big data discovery. Most of our customers are quite intimidated by the alphabet soup of technologies in the open source here.
What the market is looking for is a discovery tool, a visualization tool. You simply look at a catalog of data sets, you bring up BDD, Big Data Discovery, and you start analysis. It's an iterative way to look at a data set, perhaps find a pattern, perhaps find some anomalies, fix the data set, share it with others. That's big data discovery. By far the most comprehensive big data cloud services in the market today. All you need, as Thomas said, a browser. Analytics. We've been very strong in data integration. BI has been a core business of ours, but this year, we've introduced something brand new and very exciting. It's called Data Visualization Cloud Service. A lot of our customers are no longer waiting for IT to produce a curated data set or a cube.
Gone are the days where a business user calls IT, and six weeks later, a cube shows up and they start doing their analysis. They would like to get the spreadsheet or a data set, load it up into a tool, and immediately start analyzing and deriving insight. We've actually taken even one step further. Instead of installing this tool on your desktop, you can simply do it in our cloud. In fact, Larry demoed it himself. I use it myself. In fact, Mark's staff uses it to manage their pipelines. Very, very easy to do. Tremendous traction in Business Analytics Cloud. I'd like to talk to you about an example of Skanska. This is a customer here at OpenWorld as well. Real usage. It's a construction company. They built their first analytic application from scratch in seven days.
Thousands of pages of PDFs are replaced with an analysis and insight entirely done in the Oracle Cloud. Identity, integration, and monitoring. Identity management in the cloud is a giant opportunity for us. A brand new offering from us as well, and we are quite comprehensive in this. Starts with a directory. Imagine not even having your directory on-prem. With access management, this is commonly known as single sign-on across your on-prem applications, your cloud applications from a single place. Imagine a salesperson that leaves your organization, without single sign-on, you might have an ID on your CRM application in the cloud that remains active for the next three days. How big of a risk that is? That's the opportunity for access. We've taken it even more towards governance, permissions, and the governance and onboarding processes associated with identity, entirely done in the cloud with federation.
This is not a rip and replace. Perhaps you want to keep your directory on-prem. We can federate your access through that so you don't have to rip and replace your existing investments. Integration, Platform as a Service. One of the most exciting things that we've done. Like it or not, IT is losing control over their applications. It's getting fragmented. Some are in the cloud, some are on-prem, some are controlled by corporate IT, some are controlled by line of business. The integration between these applications is where a lot of the value lies. Instead of having a Java skill set to do integration, we've taken it to a level of a business user in what we call a citizen developer. All you need is a browser. The last one, very exciting, monitoring. The market for monitoring has been fragmented, right?
There's application monitoring, and then there's log management. You figure out what's happening with your application in one infrastructure, and when you diagnose, you go do something else, which is your log parsing. Usually, both are on-prem, usually very hard to parse and very technical skill sets. We've combined both into one service. Brand-new service entirely delivered in the cloud. This was a very exciting announcement Larry made as well, which is a private cloud machine. What we've tried to do is not just having an infrastructure layer, but we're delivering our PaaS innovations on-prem and on appliance. Now, why is that important? It's actually a direct impact to our targeted addressable market. You might be in a geography in Europe or in Asia where you have data residency concerns.
You might be in a particular vertical that you might have some data privacy concerns, yet you want the benefit of the innovations that we've done in the cloud. This is not simply taking an on-prem product and installing it onto a VM. This is the actual service, JCS and ICS, Java Cloud Service, Integration Cloud Service, and so on and so forth, delivered on-prem. Tremendous amount of traction for integration and identity service as well. Let's take a look at an example that Steve mentioned, Avaya. Why is that important and exciting, right? Avaya was a partner relationship management application. In fact, they were a customer of a competitor of ours for CRM. CRM is different than partners because if you look at their business, it's a two or three-tier distribution system. To be able to manage their partners is a completely different set of functionality.
They found about 80%-90% of what they needed within our SaaS portfolio. They needed some extensions. They needed some customizations. What are you going to do with that? One option with our competition is custom scripting, custom skill sets. More expensive, very hard to find. With us, it's point-and-click and very easy to do. The gap between what they need and what they already had from us is done with out-of-the-box point-and-click tools on our cloud. Calix is a provider of unified access for broadband communications. They built 26 integrations in three weeks. I have a lot of background in integration, guys. These projects would take years to do. Point-and-click ease of use entirely done in a browser is a monumental achievement. Most of our competition still has downloads. Download an IDE, start with coding, bring in custom programmers. None of that.
We've taken almost to the level of an Excel macro. That's how we call a citizen developer. That's what we mean by extending a SaaS application, and there's multiple dimensions to extending a SaaS application. Not just a simple webpage. It's mobility. It's analytics. It's social integration to other SaaS applications or on-prem applications. Creating an API catalog that is consumed internally and outside the enterprise. An example, Generali is an insurance company in Italy that consolidated data from multiple on-premise workforce systems into Oracle HCM, entirely done using Oracle IPaaS, Integration Platform as a Service. This was a very interesting comparison of where the value generation comes from. If you look at what it takes to run our PaaS on-premise products, we did a study. In fact, we know this because we have our own hosting business.
It's about $1,200 per core per month, and we broke it down by what is the facilities cost, which is your real estate, your power, your hardware cost. You're still paying for the software licenses. The interesting point is the majority of the effort is in operations. The people that our customers hire to watch the software, to patch it, to maintain it. If you look at the same graph on our PaaS running in the cloud, you'll see that's the value creation opportunity. We've invested so much in automation that it takes less effort to maintain. I'd like to just go over why Oracle infrastructure and PaaS is such a compelling value proposition. In my own teams, I like to call it the sum of parts is compelling and the part itself is competitive.
By far, this is the broadest and complete infrastructure and PaaS available in the market today, all engineered to work together. Each one of these parts can be consumed by itself. That's what we mean by best of breed, and that can be competitive to their own market. Larry's right. Even in individual parts, we're not competing with SAP or IBM anymore. It's a far more fragmented market, we are competitive. Automation is the name of the game. We can reduce costs by 30%, the total cost of ownership, by simply moving to PaaS running in the cloud. You saw our strategy to do private and public, seamless portability, and a huge advantage, just like the customers like Avaya did. It's pre-integrated with our SaaS applications.
In fact, when you log on and try to create an integration on our IPaaS, because we know from our identity that you have access to HCM and you have to have access to supply chain management, by default, you already see the integration drag and drop capabilities right there on the browser. Easy to use. Just to give you an operational summary of our progress. More than 50,000 devices, 800 petabytes of storage, 19 tier 4 data centers, new ones in Toronto, Frankfurt, Calgary, and Munich, and over 36 billion transactions per day. That's a median number. Just to give you a sense of usage, we've thought about what's the metric for usage, right? We could give you customer usage, customer counts all day long. This is a graph of actual transactions occurring on our cloud.
You see from Q1 FY 2014, where it was about 17, it's grown over 210%. This is the power of the Oracle Cloud. Security and compliance. A lot of our customers ask about particular certifications, and we've spent a lot of effort in making sure our cloud is certified in all these particular regulations. Just in summary, I think I'd like to just make that point again. It's an exciting time to be here because of the innovation that we're doing. We are extremely competitive on each one of these services, but the combination of PaaS associated with our SaaS is extremely powerful. Thank you.
Ladies and gentlemen, please welcome to the stage Oracle Executive Vice President, Edward Screven.
Thank you. Okay. All right. I'm going to talk to you this afternoon a little about security and the way Oracle thinks about security and why we think security is a very important driver pulling customers into the Oracle Cloud, and how it is that Oracle's cloud is more secure than what our competitors can hope to create. First, I think it's very important to understand that the threat environment has changed significantly over time. It used to be, 10 years ago, 15 years ago, mostly what you faced were persistent doorknob rattlers. What they tried to do is they tried to rattle a doorknob, see if they could find a lock that was loose, come in through the front door, and access systems. It's very different today. Attackers are highly skilled, often much more skilled than the IT staff of our customers. They're well-financed. They're very organized.
They can overwhelm the capacity easily of our customers. Many of these attackers are associated with states, with governments. The IT infrastructure of our customers is turning into a battleground between nations. Some of the folks who one day come in as criminals trying to steal information, trying to steal financial data, trying to modify systems for financial gain, the next day are working for a government. That means that the amount of focus that we have to put on security, both in terms of processes and technology, has to go up. The attacks today bypass firewalls and other border security mechanisms. The favored way to gain entry to sensitive information is to actually do things like phishing or social engineering, or more subtly, come in through affiliated networks.
You may have read about an incredible credit card breach of a company in the U.S., a retailer. The attackers actually came in through a network attached to that retailer's network, because they were a contractor. There was a company providing refrigeration maintenance services. They had a connection between their two networks. Didn't go through the normal border protection mechanisms. That's how the attackers got in. The attackers are patient and persistent. The very first thing they want to do is they want to establish a command and control island within the target network, then they very slowly explore the network. Once they find the interesting sensitive data, they begin slowly exfiltrating it, slowly pulling it out. They act slowly and judiciously because they're trying to avoid, actually very often successfully avoiding, things like IDS, intrusion detection systems.
At Oracle, we have two very important principles that we apply when we think about the security that we're engineering into our products, especially the security that we're engineering into our cloud. The first is security features need to be pushed down the stack. I think the traditional way that a lot of folks build applications and the way many of our competitors build their SaaS applications today is to try to put security at the application level. You need security features at the application level, but it is a gigantic mistake to rely on security at the application level. If you are implementing security at the application level, that means you're relying on hundreds, maybe thousands of programmers to do the right thing as they code the application. I guarantee you, they will not all do the right thing.
You have to push security features down through the stack, down into the middleware, down into the database where that sensitive data needs to be protected, and we'll show you later, down further, down into the hardware. The second most important thing here, maybe not the second thing, actually not less important in any way, is security features have to be always on. You have to always use the security tools that you have at your fingertips. That sounds like a strange idea. Why wouldn't you always use security, right? The truth is our customers don't. If you go and you look at companies out there, they've acquired some collection of security capabilities. Many times they've bought security options from Oracle.
If you go and take a look at the systems where they're running those applications that have suffered breaches, we've gotten the opportunity to see many of them because Oracle customers, they suffer a breach, they often bring us in to try to help them pick up the pieces. What we find is those customers had not turned on security features that they had bought from us, that they owned. Security features that would have actually stopped the breach. I can tell you, it's not only private companies where this happens. It also happens at governments. The United States government has suffered severe, awful breaches that would have been prevented if they had just turned on security features they owned. You see the result. You see the result of this changing threat.
You see the result of failing to apply and use the tools that you have at your availability. It seems like every week you read about yet another major credit card breach. I have one credit card I've had to replace three times, right? Because one large retailer after another has their credit card database breached, so I get a new one. You see really large-scale vulnerabilities. Really large scale because they are vulnerabilities in open source software that is just deployed in millions of servers around the world. You see Heartbleed, which was a vulnerability in OpenSSL. You see VENOM, which was a vulnerability in something called QEMU, which is a part of Xen. The result of these vulnerabilities is that, of course, data is taken, data is stolen, but actually even worse, right, even worse is that the data can be changed.
You think about that. A lot of critical systems, they control real-world processes. They control things like power plants. They control things like refineries. They control things like air traffic control systems. If I am an attacker and my goal is not financial gain, my goal is destruction and disruption, the ability to change data in these systems is actually pretty terrifying. Now, it's not like Oracle just turned its attention to security. We've been focused on security for many years. We've built a large set of very compelling, very effective security mechanisms at every level of our stack. This idea of, "Hey, you should push security down through the stack," it's not a new one, right? We've been pursuing this for years. The thing that's different now than, say, a few years ago is the cloud.
We're bringing more and more of our customers into the Oracle Cloud, we can make sure that this broad set of security features that we've had for a long time are always on and are always used to protect our customers' sensitive, critical data. Now, if you were at OpenWorld, you heard an announcement of something called M7, the next version of our SPARC microprocessor. Now, M7 has got a lot of very compelling features. It's much faster. It has really interesting silicon features for running database really quickly. It has some excellent capabilities for doing encryption. It has the most important feature, though. The most compelling thing is something which is security in silicon, Silicon Secured Memory. What Silicon Secured Memory is a feature to detect when programs attempt to read or write memory they're not supposed to. Now, that sounds like a simplistic thing.
It sounds like something which, of course, you imagine computers must already do. In fact, they do not. They do not. A very large portion of security vulnerabilities in software have the following form. An application, and I use the term application broadly, could be database, could be middleware, could be operating system, is tricked into reading or writing a memory address space that the application, that program, was not expecting to read or write, and thereby causing data at that memory location to be pulled out, sent to an attacker, or changed, modified. You often hear that kind of vulnerability referred to something as a buffer overflow. What that means is the attacker has convinced the program to read or write memory it's not supposed to. Silicon Secured Memory stops those kinds of attacks. Silicon Secured Memory is always on in the SPARC microprocessor. You cannot turn it off.
It has zero performance impact. It's just the way the SPARC microprocessor works. It doesn't slow you down. It's not something which is like the program has to be modified to use it. It just happens. I'm going to try to explain how it works. Memory on a SPARC M7-based system has bits which don't store data. They're alongside the bits of memory that actually store data. What those bits do is they tag the memory. In this diagram, those tags are illustrated by colors. When a program goes to allocate a piece of memory, that memory is assigned a tag, a color. The pointer to that memory, the address of that memory, also has a tag. That tag on the pointer, the address, matches at allocation time the color, the tag of the memory.
As long as the program is reading and writing the bytes in that memory through a pointer, through an address with a tag that matches, in other words, the reference to the memory has the same color as the memory that's being referenced, the SPARC processor is happy to carry out the operation, read the data, write the data. If the color of the memory does not match the color of the address, then the SPARC processor signals a fault. Why does that result in increased memory? Remember, buffer overflows, one of the just most basic kinds of security vulnerabilities that get exploited. The way it works is I read or write data bytes through a pointer of memory that it's not supposed to point to. The processor recognizes the tags don't match, signals a fault, does not carry out the operation.
This is an incredibly powerful feature that stops one of the most fundamental kinds of program errors that results in very significant security vulnerabilities. I should say at this point too, if you're a programmer, then you'll realize right away this has another benefit, which is when I'm developing software, when I'm testing software, one of the very hardest kinds of bugs ever to find is the very occasional memory corruption. Every once in a while, because I made a mistake in my program, I write data I shouldn't have written. I subtly corrupt memory, and 99.9% of the time, that results in no incorrect behavior by the program, so my testing doesn't catch it. That 0.01% of the time, I get a terrible problem, a terrible bug.
What this feature does, in addition to catching and stopping security vulnerabilities, it also lets me find bugs much, much faster. The way the VENOM vulnerability works, one of those widespread vulnerabilities in open-source software, was that there was installed in a typical Linux distribution, if you can believe it, a floppy disk driver. No one uses floppy disks anymore, but the drivers are still there. They exploited a buffer overflow in the floppy disk driver, which caused and allowed the attacker to write memory. In this case, they actually wrote memory down into the hypervisor. In other words, they actually were able to inject code into the core thing, which is actually providing the execution environment on the physical server. That meant that the attackers gained control of the physical server, thereby gained control of all the virtual machines that are running on the server.
M7 Silicon Secured Memory would have detected VENOM in real time at zero cost. Heartbleed, another really wide-scale security vulnerability. By the way, this was a vulnerability that had to be fixed on millions and millions of servers around the world. I would bet you could probably go out there and still find hundreds of thousands or maybe still millions of servers where it has not been fixed. It would have detected this vulnerability in a way very similar to Heartbleed. The way this thing worked is that there was a bug in OpenSSL that caused a certain message, a heartbeat message. The heartbeat message does the following. I send the message from the client side to the server side, and I expect some data back. Okay?
It turns out that there's a length parameter on that heartbeat message that the client sends, and if the length parameter was actually longer than the data that it's actually referencing, OpenSSL was happy to send the excess data back. That excess data might have things like the private keys of the server. What an attacker could do is basically poll the server, "Show me some other interesting piece of your memory. Show me some other interesting piece of your memory." On a SPARC M7, this vulnerability would've been detected immediately because the pointer into the buffer on the server side, the tag on that pointer would not have matched the tag of the memory containing the private keys. You might be wondering, "Hey, okay.
That sounds good, but most processors out there in the world are not SPARC processors, at least not yet." Even if I have only some subset of my server estate installed with M7, I am still protected because the way these attackers work is, of course, they try them over the vast sea of servers I've got installed in my infrastructure. If you have some M7 at least deployed in your cloud environments, like Oracle soon will have, then you notice these kinds of attacks. Once you notice these kinds of attacks, you can then go patch the rest of your estate. One other major problem that customers have, of course, is that it's very hard for them to go out and patch thousands and thousands of servers. Cloud providers have tens of thousands of servers like Oracle does.
Very hard to patch all of those things. Very hard to patch all of them in a timely fashion. Many of these vulnerabilities, when they're discovered, they're discovered when they're being exploited, which means you have to patch them right now. What do you do? Do you take down tens of thousands of servers for some gigantic patch window? No, that can't happen. That's not realistic. What Oracle has done is we have developed something called Ksplice. Ksplice for Linux lets us patch running Linux systems without taking them down. We've been able to do this with the kernel of the operating system for a few years. We now can do that on the user space side. For example, a test case for us is could we have patched Heartbleed in running Linux servers, patch runtime OpenSSL without taking down the applications?
The answer is yes. Using Ksplice, Oracle in our cloud, and our customers who have Oracle Linux can patch and repair vulnerabilities without taking the applications down. Oracle has been developing security facilities for a long time. Many of them are particularly relevant to the cloud and particularly relevant to the way that Oracle and our customers jointly manage their data in Oracle's cloud. One very important feature is something called Transparent Data Encryption. It is a way to simply declare at the database level what I want to have encrypted. I don't need to change my application. I don't need to change my queries. I don't need to change anything about my programs. All I have to do is say, "I want it encrypted," and it just happens. That encryption, of course, using SPARC M7, is incredibly fast.
The reason is that we have worked hard to put extremely high-performance encryption subunits within the SPARC M7 processor. When you encrypt data, of course, you have to be worried about keys. Where do I store the keys? That's actually something where customers actually have a lot of trouble managing that. If I don't do a good job managing the keys, there's essentially no point in having encryption, right? The first thing attackers going to try to do is get the key. We have a product that we call Oracle Key Vault. Oracle Key Vault manages your encryption keys, stores it, of course, in a very secure way. Our customers use Oracle Key Vault today.
The most interesting thing about Oracle Key Vault is that we have arranged so that customers can run Oracle Key Vault on premises in their own environments and store keys which encrypt data, which is in the Oracle Cloud. Oracle does not persist the keys. We have access to the keys at runtime because we have to run queries, but we do not persist the keys. Customers have full control of their encrypted data. We also have mechanisms, something called Oracle Database Vault, which ensures that database administrators can do database administration operations, but they cannot access the application data. That's very important, again, for the joint management of data in Oracle's cloud. Using Oracle Database Vault, Oracle can have access to administration of your data without having access to your data. We have mask and subset features.
I think it's pretty well understood that one of the first use cases of cloud for customers is development and test. Well, all right. I'm going to use Oracle Cloud for development and test. The problem is the test data often is really based on production data. I'm going to upload my production data to Oracle. A lot of customers will trust us to do that. A lot of our customers will just run their production systems right in Oracle Cloud. They can use encryption, they can use Key Vault. If they don't want to upload that production data to the Oracle Cloud just so they can test, they can use masking and subsetting so that you have a representative data set to test against, which actually does not reflect real-world values.
You have all of those mechanisms that prevent Oracle from getting to the data, but how do you know Oracle is really doing the right thing? Our products have comprehensive logging built into them for all kinds of security and administration-related events. If Oracle collected all those logs and we stored all those logs for you, how do you know that we're not changing the logs? How do you know that some bad actor inside Oracle isn't stealing your data and then deleting the log records that show it? Well, what we have arranged is for a product that Oracle calls Oracle Audit Vault that securely stores logs. We've arranged that Oracle Audit Vault can run on your premises in your data center collecting log records generated by the Oracle applications and Oracle Database and Oracle Middleware. That you can go review that data.
You can verify that Oracle is acting in your best interest, that there's not some bad actor inside Oracle accessing data where you shouldn't. Finally, one of the key technologies that we have developed over time is something called Database Firewall. Database Firewall monitors the SQL queries that are running against your Oracle Database, the update operations, and other actions to filter out things that look suspicious. In SQL, there's a sort of an analog to buffer overflow, which is something called SQL injection. You trick the database into running the wrong query, and Database Firewall can actually filter that out. I think, the fundamental takeaway here for Oracle Cloud and security is that Oracle Cloud makes security easy. The data that customers put in Oracle Cloud can be secured from Oracle itself. You can keep the keys yourself. You can audit what we do.
I think for many of our customers, the most fundamentally valuable thing is that we are providing the security pushed down through the stack, security at every level, but most fundamentally important at the lowest levels, and it is always on. It is always on. Thank you very much.
Ladies and gentlemen, we will now take a short break and resume at 2:00 P.M. Thank you.
Ladies and gentlemen, the meeting will resume shortly. Please take your seats. In a perfect world, the whole would be greater than the parts. Business would be better because all the parts work together seamlessly. In a perfect world, that's how your business would work. Every part of your business would have intelligence from every other part, enabling you to find and identify your customers. Your workforce would be empowered to innovate. Business would function faster, smarter. Security would no longer be a challenge. It wouldn't matter where you were or what device you used, your data would be there. It would be standards-based, helping you make the most of your existing investment while still priming you for the future. All of this would be simple to make happen. It would be flexible, expandable, predictable, unifying your applications, platform, and infrastructure, driving your business further and faster.
In a perfect world, the whole would be greater than the parts. This is the integrated cloud. This is Oracle.
Ladies and gentlemen, please welcome back to the stage, Mark Hurd.
Okay. Thank you. I really appreciate that side of the room. Thank you. We're building up here. What I'm going to do is take you through some material. I'm actually going to show you a fair amount of numbers. Safra Catz is going to come up, and we'll do Q&A for whatever time we have available. Okay. That's the plan. Go in? Do I have to go through this again? Okay. Thank you. Non-GAAP. Let's talk about cloud. I'm going to focus a lot on SaaS. We've been in the SaaS business a while. We've made some significant changes. If you went back to 2013, fiscal 2013, we made some significant changes in how we went to market. Steve, I think did a great job telling you what's happened to the evolution of our portfolio, and we've been in the business a while.
I'm going to talk to you about our SaaS business, which is big, it's growing, it's accelerating. I'm then going to tell you a little bit about our on-premise apps business, both in the context of our new software license business, and talk to you a little bit about our support business. I'm then going to combine it all together, so you look at the entire apps ecosystem and how that's evolving at Oracle. PaaS, we're still in early days. Inderjeet Singh talked about the number of PaaS services we released. We basically have had two. We released 40, over 40 this week, so we now have our portfolio, as I talked about from on-premise now available. Our PaaS bookings have been superb in terms of quantity of PaaS bookings. Our usage has been very strong. Our pipeline is very big.
That's the current state of our PaaS business. I'll talk to you a little bit more about it, but that give you a context for it. There were early days. The first PaaS bookings we took, or PaaS booking we took was a little bit less than a year ago. We've been in this business from a bookings perspective just about a year now, and now have the bulk of our portfolio available for sale. Some numbers. This is our Platform as a Service business. I'm sorry, this is our SaaS business and our SaaS revenue. I'm going to take you through various parts of our SaaS business, but as you can see, from 2013 to 2014, we grew 23%. We grew 36% from 2014 to 2015. You'll see as we go forward, and I'll talk to you a little bit more about this, that our growth will accelerate.
As our SaaS revenue has gotten bigger, our growth rate has gotten bigger. You don't really see that much in this part of the business. Usually, as the revenue goes bigger, the growth rate declines. This is a phenomena driven by a couple things. One, Steve's point about we simply have more products for sale, not just new releases of products, but some of those things that we've released now being for sale in more geographies. We literally have more opportunities to sell with new products and then the prior release. Imagine a release like release nine, releases a bunch of products, most of the time in English-speaking countries. When you get another release, those same things that were in that release now get available to more countries.
You get a phenomena of not new product and new modules, but you get the phenomena of them being available now globally. In addition, we simply just have a more experienced sales force. We have more references, and we'll talk about that in a second. I'm going to switch you to deferred revenue. You all see this, it's reported. It's a big number. It grew 21% from 2013 to 2014, and then you can see the growth from 2014 to 2015, bigger than the revenue growth number that you saw. 81% growth. There is a number that is not in here. This would not include promotions. This would be, think of it as contracts we have that are unbilled.
Those actually, if you look at our history of promotions, in our early days of SaaS, we were obviously very interested in building a reference base, and we would promote. Promotions are a very, very important tool for us. What we did early was we did not want to lower the contracted price because that's very important for us at renewal time. If I have a choice to be aggressive on a price and I needed references, and at a price for $1, I could just discount. And at the end of our average contract, the price could be $0.80, and then we would renew from the $0.80. Another alternative would be say the price is still $1, but you get a period of time free to use the product, and then you renew against the $1.
Those promotions over time, meaning the time of the promotion has declined. Used to be longer, now it's shorter. It's a little different by product based on the maturation of the product. Much of those promotions are coming off in a period of time that generally revolves around, like, now. That will actually cause a revenue acceleration, and now being really more defined as the second half of the fiscal year. This deferred revenue, as big a number as it is, and as high as the growth rate is, there is a bigger quote, unquote, "backlog" based on what I just described. Legal will not let me give you the backlog. I blame it completely on legal. Thank you very much, Dorian. That is the situation as it relates to deferred and our promotions. Bookings are growing substantively.
You can see bookings growth 41% in 2014. Let me just make sure I'm clear on bookings. Bookings to us, because people talk about bookings a little differently, our bookings are simply new bookings, brand-new booking, or an expansion, meaning an addition to an existing customer. It is not renewals. New and expansion bookings. You can see the growth at 106%. Again, as the number has gotten bigger, our growth rate has increased. Our last trailing 12 months of bookings, you've heard Larry get on talking about bookings for fiscal 2016. I'm going to give you a TTM, trailing 12-month number. That number would be a Q2, Q3, Q4, and the Q1 we just finished. That trailing 12 months, slightly under $1 billion worth of bookings.
As we talk about this prognostication of 2016, fiscal 2016, Larry talked about one of our SaaS competitors and their projected growth rate on a calendar basis. Our trailing 12 months is roughly at that level today. I don't know if you all remember last year at this time, I made a statement. I had a chart that talked about our SaaS pipeline, and I think I said something like, "Our SaaS pipeline is really big, and I predict that based on the size" because I would hear from people, they were surprised at the speed and the acceleration of our bookings last year, particularly in the second half of the year. Just to be clear, I wasn't, and I wasn't based on what I told you a year ago. We saw it in our pipeline.
We saw the growth, we saw the growth by pillar, and we saw the behavior of our conversion rate, conversion rate being our ability to convert something from the pipeline into a booking. The better news is when you look at that red bar to your right, it's not only really big, it's actually growing faster than the growth rate we saw from 2014 to 2015. We've had an acceleration not just in scale, but also in growth rate. It's affected by those same factors I described earlier. We have more salespeople, although frankly, we don't have near the scale of incremental sales growth that we had. We're actually quite comfortable with our capacity levels. Doesn't mean we won't add some, but in general, we've built up a lot of capacity. We've also trained that capacity. We've educated that capacity.
We've now brought more customers live and we now have more references. The ability now for that capacity to get more productive and build more pipeline. That's sort of what's happening here. These are customer count numbers, SaaS customer counts. 1,339. From where we started, I just go back to when we started this thing in FY 2013, really started, really got our engine moving. I think back on what we knew then versus what we know now, and Safra and I talk about this a lot because we didn't know that much. We only now know we didn't know that much. We've learned a lot. 1,339 customers, Dawson, FY 2013, from a standing start seem pretty good. Seem pretty good. You see what's happened.
We've had sort of almost a geometric expansion of our customer base to the point now today we're at almost 6,600 customers. Let me go back. That's at the end of FY 2015. As we reported, we didn't quite have 1,000 customer adds in Q1. Less than that. Add that to 6,596, you're in a level where we're now over 7,000 customers that we've got. I thought I'd just pick on one pillar only because when we look at ERP has such a dramatic impact on our position with our customers. It's so core to what they do. I thought, to Steve's point, and I'll try to elaborate on it. When you sell ERP, the connection, for example, to HCM is very high. The more we sell ERP, the more customers tend to bundle as a sort of a back-office process decision.
It's very strategic to us to win the ERP battle. You can see what's happening. We've been in this market a very short period of time, even shorter than we've been in the SaaS market. 210 customers just getting started. That was really almost one quarter worth of work. We had some pilots, as you can see from the early days in FY 2013, but we really went GA at the end of 2014. You can see what's happened. 1,300 customers, and that is at the end of FY 2015. We had a pretty good ERP quarter again, almost a couple of hundred in Q1. Now you're at a point where we are beginning to get critical mass in this one key strategic pillar.
Go lives, references, the talk of having HSBC and a, I don't know what word Steve used, a very big company in the U.S. that's out of the financial services business, that's a manufacturing, big industrial company. You have that to mid-market. We have a breadth of references from some of the biggest banks, biggest manufacturers in the world to mid-market. We have a very, very strong position. Now what I'm going to do is, that gives you sort of a flavor of our SaaS business. Before I go into the on-prem business, the SaaS business, I would say that from a data modeling or forecast, we're just growing. It doesn't mean we're perfect and we know everything. I'm certainly not going to tell you that. We know a lot.
The business has gotten big enough that it starts to behave the way you would think a big business would behave. Our forecasts are quite good in terms of the ability for them to make them. Obviously, they're very dynamic because we're in a hyper-growth mode. The fundamentals of the business have grown quite strong. Let me talk a little bit about our on-prem business. I thought I'd first start by talking about our horizon. We use the term horizontal apps. Let me try to tell you what horizontal apps mean to us. This would be the exclusion of our GBU apps. Okay, our industry businesses, we would extract them because they're obviously growing. Maybe that's not obvious. They are growing.
Really talk about a perception that perhaps the apps and those apps would be things like Siebel, PeopleSoft, Oracle E-Business Suite, JD Edwards, EPM, those set of products are declining. You can see what's happened to support in this. From 2010 to 2015, the support business for that category of products has grown more than 25%. Our support business is bigger in 2015 for these products than it was in 2014. I've now switched on you to look at the license business for apps. This is the same set of products, but now I'm looking at the new software license for those products and the %, if you will, whatever that color is, the orange. The orange is the % of the business that has now moved to SaaS. What this chart tells you is 48% is now SaaS, 52% is new software license.
You can see what's happened to the mix as we entered in FY 2012. The mix has changed dramatically and quickly. This is what's happened in the North America slice of that. Now what I've done is I gave you a global view. I've now clicked North America now is materially, this is an FY 2015 number, is now bigger in SaaS revenue than it is in new software license revenue. If I were to click on 2016, which I'm not, just as a heads up, it would be a lot bigger because they've had strong bookings. As you know, the beauty of this model is that the 54% comes back again the next year. You build off that base and the bookings, some of which actually were FY 2015 bookings because they're either promoted or they've yet to be provisioned, adds to that base.
We have a percent of our FY 2016 bookings that actually provision and turn to revenue in FY 2016, the combination of that makes this number big. In one of our regions, here being North America, we are now really, in apps, a SaaS company. I'm not going to show you each region, although I'm sure, show me Europe and Latin America, show me. I'm not doing that. You would think of our other regions four or five quarters behind this model. Europe, virtually on the same trajectory, but a little behind. Of course, because we started North America first. This is what it looks like all together. The entire apps ecosystem at Oracle is gaining share. When you look at the apps market totality, include on-prem, include SaaS, the entire market.
I talked to you a little bit about the age of applications, most there's probably 85, 90% of all new apps now in big companies are being deployed in the cloud. We are gaining market share when you add the ecosystem together, that is going to accelerate because of the growth of our SaaS revenue. Let me take you down a different path. It's not really a different path, but I think it's just in case you say, "Okay, I got it. You're going to take that support, it's all going to move to SaaS, this thing's going to be terrible." Because I've actually heard that from one person or another. I just want to make sure I'm really clear on what's happening here. Application support, by the way, that's the chart I started with when I went to the on-prem business.
My first on-prem chart is greater than $5 billion. It's growing. The renewal rate is unchanged. It's not really essentially unchanged. It's roughly the same. Support converted to SaaS, meaning as a percent or a piece of that $5-plus billion, how much really did you lose that converted to SaaS? That answer is less than $50 million. This is a very important thing I want to make sure you understand. The bulk of our bookings in SaaS are not coming from our user base. I say this on the conference calls, I'm never sure how much this stuff sticks. We cover a lot of ground in a quick period of time. Over 60%, 65%, depends on the quarter, of our bookings come from somebody that did not have that app category in on-premise.
Of the support of that did come from our support base, the multiple on that, meaning the conversion of that support revenue to an ARR or eventually a SaaS revenue number, is roughly 3x. I had $1 of support. I then bought a SaaS app. Now roughly, it's a little different by pillar. I roughly pay $3 per year in SaaS revenue. At my attempt to connect a bunch of dots simultaneously, I just thought I'd build a little model. $1 of on-prem support with this gross margin of 94%. We had to make it 90%. We could have made it 95% to make the math easier, but chart maker wanted to make it harder on me. We get $0.94. If everything converts, let's pretend it all converted next week.
Safra and I would actually be happy. We'd get $1.20 worth of net margin dollars. That's at the current 40%. We're 39% in Q4 or 40%-41% in Q1. We've said our margins are going to head to 80%. We've built capacity. We are not spending a lot of incremental CapEx because we put down much of this infrastructure. That revenue we've described falls on top of the model and margins go up. Just because I know there's so many optimistic people in the audience, and if you said, "Wow, I just don't believe you. I don't believe you, or I just think you're confused, you're wrong," whatever word it is you want to put in there, and let's say we hit 60%, we're going to double our margins. We're going to double our margins.
When you hear us talk about the evolution of this business, we know the model. We know how it works. Frankly, one of the issues in the SaaS business is we've had to invest to be able to get these bookings. You can't go into the market and say, "Please give me a bunch of bookings before I build the infrastructure." We've had to build it to be able to sell it. I always use the hotel example. It's hard to say, "Make a reservation in the hotel that I haven't built yet." Like, I don't know if I want to do that. We built the hotel. People are now staying in rooms. This is sort of my summary. Pipeline's big. It's double where it was, roughly. It's a little less than double where it was a year ago. Bold prediction. We're going to sell more.
It's a bigger pipeline. It's very broad-based. It's across geographies. It's better. Our sales force is bigger. I want to make sure I'm clear with you. I said before, I want to reemphasize, because I know I've told this audience, or at least people who've been here multiple years, given the model we had, we did not have the capacity to execute several years ago what we're executing today. We had to go in to specialize our sales force in areas like HCM. We had to have salespeople who called on CHROs. As an example, our model four years ago was Mark was a salesperson. I called on the CIO. I sold our entire suite of apps. Okay? After a lot of careful analysis, that model wasn't going to work. We had boutique competitors who would go directly to the functional leader.
They'd go to the head of marketing, they'd go to the head of HR, and they would just know more about the subject matter. Because it's cloud, the buyer, so to speak, got democratized. The way the CIO would control the apps decision is the CIO would say, "Hey, it's my infrastructure. It's my server, my operating system, my database, my architecture, my standards. You got to buy what I let you buy." Now that it's cloud, I'm the CHRO, I'm the head of marketing, I'm saying, "I get a vote because I don't need your infrastructure. I'm getting it out of the cloud." That meant we had to be able to have this dialogue with customers and talk the way they talk, understand their issues. That caused us to ramp up capacity. We did it.
Doesn't mean we have all the right capacity yet in every market, but the relative amount of change now is de minimis compared to what we had to do as we moved into this model. In addition to that, there's more people, but they're ramped. They're trained. They've been through a lot of training. We needed to do it because our people didn't necessarily come from a background of selling to a CMO, selling to a head of HR, selling to a CFO, selling to a sales organization. It doesn't mean they were not capable of it at all. It just wasn't the way we trained them. They're now through multiple years of training. Our competitive position, Steve, I thought, touched on it well. We have several markets where we're just the leader. In ERP, we sort of feel like we don't really have a competitor today.
There's no one selling supply chain in the cloud, marketing in the cloud of scale. Our nearest competitor in financial reporting says they've got, I can't follow their lead, 100? You've seen our numbers. We not only have a product lead, we have a brand lead. We've made incredible progress. I know you all see this in HCM, in terms of our customer counts, our market position, marketing. We have very, very, I say competitive in this chart, we lead now in most of these markets that we compete. I've talked to you about how many customers we now have. The go lives now and the references have kicked in. I don't think that was an unruly person. I think it was just an important phone call. This is what happens, though. You get just rough crowds. Thousands of customers now, lots of go lives, lots of references.
The need for us, which we had three years ago, was we not only had to sell, we had to get them live, and we had to get them references because frankly, customers buy from other customers. I mean, you all know that, but if you don't, I'm here to tell you That it's great. I had a meeting with Mark, I had a meeting with Safra. Boy, it sounded good. First question is, "Let me talk to a customer." References are critical and we've now built a very large reference base in every pillar. We reported our bookings in Q1. I'll say one more time, I predict the rest of the year will be strong. I didn't comment a lot on PaaS. I think it will be I don't want to commit because I'm not allowed to make any forward-looking commitments.
I would predict a year from now, we'll probably do the same type of presentation for PaaS. We go into PaaS with, frankly, a better hand. As well as I think we've done in SaaS, my opinion. We go into PaaS with a much bigger user base, a much stronger market position, a much stronger brand, and in a lot of cases, a less competitive environment. With already an existing scaled sales force. The speed that our engineering organization has been able to move products to get them available in PaaS. I've told you, we've gone from two services to over 40. Our pipeline is full. I'm not yet in a position to give you the depth of clarity of exactly how this will work the way that we can now, I think, in the SaaS business. Okay. I gave you a lot of numbers.
More numbers than I gave you last year. A lot of insight into our apps business, our support business, how we see the overall margins working. What we'll do now is, Safra's going to come up and join me. We'll do Q&A for however long Ken lets us. I'm going to take any questions you got. We'll take a break before we get to Larry.
Sounds okay.
If I ask a question, please raise your hand while we get
situated.
Thanks for hosting. It's Brent Thill with UBS. Safra and Mark, can you give us a little sense of the database business and the tailwinds and headwinds that you're seeing right now on 12.2? I think there's been maybe some of us that have watched the company for some time that thought this would get to GA sooner. Is there something you're doing in terms of the finishing touches that maybe took you a little bit longer than you thought? Can you maybe give a little more color on 12.2?
12.2 is a massive release. I know, I'm sure you all saw on Sunday the advance that it is. Over 4,000 virtual private databases. It's truly a database built for the cloud. It's a massive release. It's about the same timeframe that we usually release the .2 release, actually. I, myself, think it will be very important. There are, of course, some customers that 12 comes out, 12.1, wait for 12.2. This is, without a doubt, the release, I would say, worth waiting for. I'm very optimistic because it has some incredibly important features that I think are going to be uptaken very well.
Brent, listen, if you look at our numbers, we've said this on calls. The uptake of 12c is faster than the options than anything else we've ever had. Now, granted, it's a .1 release. I think we're very optimistic. Let me add to it. The fact that now the services that we have from a platform perspective, you've got now the availability of 12 in the cloud. One more time, and I think we said this a bit. We think this is a huge advantage. The fact that you can use the same database in the cloud that you use in production or use behind your firewall, use in your data center, huge advantage. We don't feel like we're late, and yet, let me flip it around. We actually feel quite optimistic on 12.
I think it's had a very exciting early ramp with In-Memory and multi-tenant.
Hey.
Hey. Raimo Lenschow from Barclays. Quick one. Larry talked about the changing competitive environment. The one that makes a lot of noise at the moment and is out quite a bit is AWS.
Who?
AWS.
I missed that.
Can you talk a little bit about when you have to position a Salesforce against them. They seem to be making a lot of noise around database as well. How do you see them and how are you positioning against them? Thank you.
Yeah. I don't know. Inderjeet, are you still? Maybe Inderjeet could talk a little bit because we get this question. I've heard it once before. Maybe Inderjeet could get a little bit into the technology a bit of the difference sort of between the two.
I'd like to address it in a couple of ways. One is to do with, if you look at the breadth of our platform versus what AWS does, we address what we call four personas. There's actually four consumers of the platform. There's developers, there's integrators, there's line of business users, there's business analysts. What most of our competitors, including AWS, do, is actually address part of the developer persona.
That's one aspect of things. We are far broader, and the total addressable market of our products is far bigger. Second thing I'd like to talk about is if you look at their business, they're actually growing from infrastructure up, and they're growing specifically in smaller companies. They would like to get into enterprise. I would encourage you to actually look at some of their conferences. The sessions that I most heavily subscribe to will be the ones that are in the enterprise, the guy that's talking about the enterprise usage of. You'll see the amount of work that is being done by the enterprises to actually get it to work on AWS.
The chart that I had put up specifically for cost-benefit analysis is specific to this, is even running our infrastructure on Amazon sometimes is more expensive and more time-consuming than running the same thing on-premise. Forget on the cloud. Our cost advantages for platform as a service on our cloud is quite starkly competitive.
I want to just put a little bit of a business context around this for all of you, using really as a model what we knew in the old on-premise business. I just want to break this up a bit for you. First of all, in the old on-premise business, there is the commodity layer, the compute guys, the Dells, the Hewlett-Packard, the used to be IBMs, now Lenovo. There's that gang of commodity guys. Those guys compete on price, basically. Above them, as you know, and we ourselves, we do sell x86s ourselves, but it is not the bulk of our business. What we sell is some of these commodity parts, but with our differentiated intellectual property, whether in our case, it's PaaS, all the different parts, Oracle Engineered Systems in the on-premise world. Of course, we sell our applications above that.
This market, the Infrastructure as a Service of bare metal, those folks require a lot of technical work to make them perform anywhere close to what we provide in our systems. Though, as Larry very, very clearly said, we sell SaaS, we sell PaaS, and we sell infrastructure, and we'll be very competitive. From a customer point of view, for them to duplicate what we do in our PaaS and even in our management of the infrastructure, but just generally in our PaaS, just to match it, as Inderjeet was saying, they have to do so much labor that it isn't worth it. Our compelling proposition is, if you're using our SaaS, you're going to want to use our PaaS. If you're using our PaaS, right next to it, you're probably going to want to use our infrastructure.
The infrastructure market, what you're seeing is you're seeing AWS do very, very well in this area. Our market is far, far broader. Even when you see, I guess, Amazon has Aurora, which I think is MySQL. The reality is that this is not, under any circumstances, a substitute for the Oracle Database. It never has been. When we acquired Sun, we got MySQL as part of it, and it is incredibly complementary. No one is going to rewrite their Oracle applications to put them in MySQL. They simply won't work. They'd have to start from the ground up, and they would not even do what our product does.
It's funny, the juxtaposition of the two questions as we're talking about 12.2, the most advanced database ever with so many features as compared to Aurora and what is offered on Amazon, which is simply the most simple system possible. There's plenty of room in the market, just like there was in the on-premise market. There's plenty of room for the commodity guys, whether it's Amazon or Google rolling around in that market. As I said, we too sell x86 in that commodity world. We also have everything else, and that is the high value to our customers by having them let us do the work for them, by letting them benefit from our automation and from our massive economies of scale. There's plenty of room for all of us to do very, very well. Yep.
Hi. This is Mark Moerdler from Bernstein Research. I'd like to drill in on the revenue lift comments. When you talk about $1 of on-premise application maintenance revenue going to the cloud, you say that you're going to receive $3 of SaaS ARR. Just like to confirm, maybe get some more details.
That's not what I said. What I said is that's what's happened.
That's what's happening. Okay. Maybe I'd ask, so you're saying there's a 3x lift to what the equivalent revenue would receive if a client were to move to maintenance from maintenance, but they're not moving from maintenance right now. For that type of economics, in order for us to understand how much more valuable the cloud is as a revenue stream, is that number something that would be across all of your different horizontal products? Is it including whatever differentiation in sales discounts? How close is that to an apple-to-apple in terms of how we should think about it?
No, it is apples to apples. Remember, I'm simplifying it because what we do in the cloud for our customer is we actually run their hardware. We do the operating system, we do the database, we do the middleware. It's on our premise. We actually run it. It's our operations people. We do the heating, we do the cooling. We do more of the job as we do it. It's really not a fair thing from a TCO. I sometimes think when I give this number, somebody says, "Gee, that sounds high." The reality is it's low. My view is, over time, we'll get better and better at selling the value. Now, the customer's clever, too. The customer would like to convince our salesperson that this is a comparison between the support price and/or the license price and the SaaS price.
This is part of the point I made earlier about training. We have to go in and say, "Please don't get in that conversation." We need to get into the conversation about the entire stack, because it isn't just that, it's the entire stack that has now moved over to Oracle, and we're doing a lot more work. The TCO for the customer is really, really attractive. I think it's great because the room in between their price and that multiplier that I'm giving you on our support is we actually come in at that level lower cost than many of our SaaS competitors.
Great. Heather Bellini with Goldman Sachs. Mark, I just had a question, you had some slides.
Where are you, actually?
Right here.
I have no idea.
I'm short.
Oh, hey.
I'm over here.
No. Hi, Heather.
There's some people that would say your SaaS billings merely represent.
I really love the some people.
Yeah. You got to be PC here.
I'm sorry. I watched the Republican debate. Yeah.
Exactly.
Yeah.
Some people would say your SaaS billings represent customer shifting merely from on-premise over to the cloud for the same app they were using prior. You were sharing a little bit of this, but I was wondering if you could share with us how your net new customer base has expanded, which is what we've been hearing, and if there's anything you could share with us just in terms of SaaS billings that Oracle's getting that they didn't get before. Kind of maybe a net new SaaS billings number from, like, just to give us a ballpark so people could see if this is merely customer shifting from on-premise to the cloud or if it's actually net new customers coming on.
I love it, Heather. This is one question with 12 parts, and I've got to keep up and remember. Maybe Safra can remember some of them that I can't cover. I tried to give you a lot of information, and this is why I'm always gun shy, because when I do, it never stops, the request for more. What I think I tried to say, but let me try to say it again, that over 50%, 60%, 65% of those customers that we acquired, let me make sure I'm clear with it, not necessarily the customer, but the application we received was from a new application user for Oracle. Doesn't mean they didn't have Oracle Database, doesn't mean they didn't have Oracle Middleware or something, but they did not use that application from Oracle.
The bulk at 65%, 70% are customers that didn't have that application on support from us. Okay? Those are new customer acquisitions in terms of the rate of growth. A lot of those come from, as you can imagine, mid and upper mid-market who we didn't have business with before. I think I've laid out the amount of support. You made the comment about the support. I've really given you the number.
Yeah. No, that was right. No. I think you answered the first part of the question. Just the second part is, I think, to the extent you could give people a sense of how sizable the billings are from those net new customers.
Oh, I see what you're saying. Okay. Your point is now translate that into a revenue number as a % of the revenue coming from the new customers. You could probably do the math. I don't have it right off the top of my head, but I could invert the math. I could take the $50 million, do the math, and then take that as a % of revenue. It's not going to be huge. By the time we get through two more questions, I'll have done the math in my head.
Hi, it's Katherine Egbert from Piper Jaffray. You guided for modest on-prem software growth for FY 2016. Mark, you made a prediction that most apps, like 80% of apps are going to be in the cloud. Maybe to put a timeframe on the two previous questions, when does that crossover happen? You mean if 80% of apps are going to the cloud, can on-prem continue to grow? When did that happen?
The comment I made was that, I think it was on Monday, that 85% of new apps.
Right
were going to the cloud. I made a prediction on 2025 on the % of apps that'd be in the cloud, and I'm sticking to my statements.
Okay.
Thank you.
Can I ask just a quick follow-up? As you roll into new markets and new geographies, are you going to continue to use the same sales methodology, meaning the same promotions.
Can you do it to me one more time?
As you roll it, the cloud offerings into new markets.
Yeah, we go to Europe or we go to Latin
Geographies. Right.
Are you going to use the same sales methodology, meaning the same sort of sales incentives, the same promotions? Just talk about that a little bit.
Well, we use the same sales incentives. In terms of tactics that we might decide to use, I don't think I want to talk about that. I think at the end of the day, to be very frank with you, I think we've been thoughtful and clever about the tactics we've used when we needed to. I've attempted to be very transparent today. I don't think I want to predict how we'll behave in a market. What's important to us is we're going to win this battle. We're going to win it, and We've done what's been necessary to transform the business, and it shows up in the numbers that I've described to you. We have an opportunity now because we're actually stronger on a relative basis globally because most of our competitors have infinitesimal businesses outside the U.S.
By the time you get to some parts of Asia, many of our competitors aren't even in the market. They don't even have their banner or their logo in the market. Our need to do things, in many cases, is materially lower. That said, depending on what pillar, depending on what market, and depending on the speed by which we want to build that reference base, because reference bases aren't just by product, they're sometimes by product by geography. In the case where we would need to introduce a promotion, we might. Remember, I don't want to make that the message I leave you with. Much of what we've done is behind us. We needed to build references, we have.
It was a very, very strong tactic for us that one of the reasons I'm more comfortable talking about it now is we're doing much, much less of it.
Over here. Thanks very much. It's Kirk Materne with Evercore. Mark, earlier this week, you talked about you think 100% of dev test by 2020 goes into the cloud and-
2025.
2025. Excuse me.
I'm amazed. You guys quote me so much, and that's just not what I said.
Just pushing you.
Yeah.
You're obviously very upbeat about how PaaS has gone in this sort of first year of being commercially viable. When you think about the PaaS business and middleware in general, moving to the cloud, just two quick questions. One, when you think about the economics from an on-prem to a cloud shift like we've seen in SaaS, is there any real difference when you get into middleware and PaaS versus what we've seen in SaaS? I guess secondly, on SaaS, you've had some of your competitors sort of leading the charge, right? You've had Salesforce sort of plowing the field to a certain degree.
What charge are they leading?
Getting people to move or adoption of cloud computing in general, meaning understanding of it. In middleware, I think you guys are sort of the ones leading the charge. The question is really, can you see the same level of adoption, or is the adoption curve any different with PaaS than you've seen with SaaS? Thanks very much.
Yeah. I think Larry really It's really, by the way, bothersome to the two of us how right he is. It's almost annoying to a degree. We got into this dev test discussion a couple of years ago, and we got into the economics of dev test, and they're actually very interesting because the dev test is roughly 30% of all of IT in terms of the spending, and it's a very expensive process. It's a very expensive process that inside many of our customers doesn't have a lot of governance. You've got a lot of programmers. They make decisions on their own. The standards within many of our customers aren't nearly as strong as what they are in the production environment. Eventually, all of that gets converted, whatever's done, to their production environment.
The economics, Inderjeet, I thought, showed a pretty clear chart about the power of the economics in an example that really is a dev test-like example. It's SaaS-like plus sort of opportunities in that sort of TCO that Inderjeet showed. I think you're right. We're the leader. We're the first mover. We also bring the customer the benefit of not having to do the conversion I described earlier. You can actually build in the tools that you actually then run in production. That is a huge advantage versus anybody else in the market, if there really was anybody else. The only other company that's really got a platform that you can build on is Microsoft. They've got .NET and SQL and Windows, and we've got Linux, Java, and Oracle. We feel good about our position.
I think it is early days, though, and I think, well, you're going to see us working hard on both the developer community and at the same time on the CIO. The CIO's got no incremental budget coming. The CIO historically is risk-averse. Why is the CIO risk-averse? Most of the time, the CIO is fired because the CIO has let down a line person, has let down somebody running support, has let down somebody in a region, couldn't get a product shipped, couldn't close the books. These become issues that get CIOs fired. In dev test, their only real risk is within their own organization. You'll see them take more risk in dev test because the arbitrage of the cost is extremely high.
That's why it's so important for us to seed the market today and win, and we're out with lots and lots of trials. Inderjeet gave you, I thought, some very strong and powerful examples of what customers are actually now getting done. As those references move across the market, we have a wonderful opportunity.
One more question. Mark, stand up.
Hi. Phil Winslow, Credit Suisse. Got a question for Safra right here in the middle. You've talked a lot about just the halo of cost around the database on-premise, patching, et cetera, tuning and so forth, and how you can take those out in the cloud. It seems like you almost think that the costs that can come out in the cloud are bigger with PaaS and database than even in the SaaS world. If you translate that into sort of what you can charge customers and how you think about the relative profitability of the PaaS business longer term than the SaaS side. How just do you think about that sort of at a high level, both revenue and then profitability?
Sure. I actually don't think necessarily that the cost for our customers in maintaining a database is higher than maintaining applications. Okay? I just want to correct you. Meaning, because when you are maintaining applications, you're maintaining both applications and middleware piece related to that and the underlying infrastructure. However, even that being so, there is no question. During Oracle OpenWorld, it's really one of the chances that I finally get, since I'm usually back at headquarters in development meetings and day-to-day operations. I finally get to see a lot of customers all at the same time from around the world. I can tell you one thing. No matter what they're doing in the application side of the world, they know one thing for sure immediately. They are maintaining their databases exactly the same way from one customer to another.
They know another thing, that we will maintain their database way better than they could ever do it. It's not even a complicated question. Whether it's in Latin America or it's in Africa or it's in the Middle East or in the U.S., they know one thing, that the just plain old economies of scale and the expertise we bring to the PaaS market, to the maintaining a database is so overwhelming, even when you don't even include what Edward Screven was talking to you about on the security side. The truth is, because I got into some really deeper technical conversations with folks about what their security situations were and who they thought could do it better. There's no question. You have to understand that the applications business for Oracle is a small fraction of our worldwide database market share.
Our worldwide database, there are not hundreds of thousands of databases out there at our customer sites. There are millions of them. There is no question, no matter how good they are, whether you are one of the largest industrial operations in the world. That company, by the way, sent hundreds of people here for Oracle OpenWorld, and they actually meet here on Sunday, starting at 7:30 A.M., before all of you show up. They all meet amongst themselves with Oracle from morning till night. Here they are, I'd say one of the best industrial operations in the world with tens of thousands, maybe hundreds of thousands of Oracle databases, in fact.
They know that we can run their systems better, and that we can run them for less, we can secure them better, and we can give them a much simpler operating plane than they have themselves. The opportunity for PaaS, what Mark was commenting on, that annoys us about Larry, is he doesn't need to see 500 spreadsheets. He knows it. He sees it. He feels it. You know why? He recognizes the pattern as it's laying out. To the extent that we move the databases and the middleware markets to our PaaS, that number will probably dwarf our SaaS numbers and the entire SaaS market, just like our database business dwarfs pretty much the entire applications business.
It's not only our applications, but it's all the custom applications, and it's going to unleash a development frenzy, frankly, as companies, as developers no longer, for every new app they put up- Do they first have to spin up a database and then the middleware? They can just get started. As you can hear, and I know I'm talking to analysts and shareholders, I don't want to sound too optimistic. It never pays. I'm just going to tell you, we are generally very optimistic about our prospects in the SaaS market, the PaaS market, and the matching infrastructure market. We believe this is going to play out exactly as we expect, and it is so far doing so.
Anything else?
Oh, I think we're in break. We're going to go to a break, and then after us, Larry, questions. Okay?
Good.
Thank you.
Great. Thanks.
Ladies and gentlemen, please take your seats. The show will commence shortly. Thank you.
Hi, everybody. Am I on? I am on. Okay, great. Thank you. I really always wanted to play that ding-dong thing, thank you for indulging me. The problem was they wanted to take it away, I had a little of a disagreement, they won, I had to give it back. Larry is imminently close here. There's a lot of construction traffic out here you may or may not be aware of. They say he's three, four minutes away. What we're going to do is basically we've got a couple three more minutes here, as soon as we have him physically in sight with the car, I'll get the cue. We'll roll a video, what I'm going to actually do is then come up afterwards and give a little plug.
We have a modern finance event going on concurrently with this. We have in excess of 1,000 finance professionals here, with about two-thirds of those attending being at the finance director or above level. These are not IT professionals. These are finance professionals attending that. Safra did give a keynote yesterday, as did former Secretary of Treasury Hank Paulson. It's been a very good turnout, it's a kind of marquee event, similar in the way we've got these HCM Worlds and the Customer Experience Worlds. As these events are rolling out, they're getting bigger and bigger. The following is getting stronger. What we'll do is following this, I encourage you, there is a website. I will get the link out to everybody here. Please go take a look at some of the feedback and the videos that you'll see from the presentation.
Just give us a couple more minutes. Again, as soon as I get the cue and the word from Larry, we'll ping the video, I'll come back up. Thank you.
Delaware Life is a relatively new company. We were just founded through a divestiture from Sun Life Financial. As a part of that divestiture, we took over the assets of the U.S. annuity life business. However, we didn't take any of the infrastructure. We needed to seek new systems, new business practices, and we really took the opportunity to simplify. We were seeking to have as little to no footprint as possible from a data center standpoint. We were seeking to be in the cloud wherever possible. We looked at SAP, we looked at Workday, as well as Oracle. At Delaware Life, we actually use Workday HR. As we were seeking an ERP solution, we really wanted to have an independent view and pick the solution that was perfect for our needs. That's really where Oracle ERP Cloud shined through.
One of the other benefits of selecting the Oracle products was that Oracle offers both ERP cloud services and planning and budgeting cloud services. The other vendors that we were looking at really didn't offer those additional products, therefore, we would have had to continually rely on other products that weren't as integrated. Now that we've implemented, we've seen a number of benefits come to fruition. We've seen the real-time reporting. We've seen very fast upload speeds with all of our multiple integrations, and we actually do integrate 26 different systems on a daily basis. We've seen very fast performance of the data itself flowing into the reports, and we're running millions of lines of data every single morning. The real benefits of using Oracle ERP Cloud and Planning and Budgeting Cloud Services is the synergy that we get from the data between the two systems.
In our prior state, we were never really able to get that actuals to budget on a real-time basis. Now that data flows continuously, the feedback that we received is excellent on the usability of the system, as well as the simple fact that now all of our data is in one location.
Ladies and gentlemen, please welcome to the stage Oracle Chairman and Chief Technology Officer, Larry Ellison.
Okay. Whatever you want to talk about.
They want me to speak into the mic. Hi, Larry Cochran with B of A. When you look at the database market, you guys have clearly dominated this for centuries, maybe decades. Centuries is too generous. No question that Oracle is firmly entrenched in the customer base since you've held your share. No question that you've fought all these database wars in the last several decades and defeated all whoever aspired to be a threat. I have to ask this question again because I remember asking this 10, 15 years back. As you look at the current crop of whatever it is out there, as you look at new workloads, existing workloads will keep running on Oracle. If you look at new workloads, new application development projects, how do you ensure that Oracle stands up and continues to dominate the field against whatever it is, AWS, Microsoft SQL?
Everybody envies your position. How do you view that? Thank you.
I think to capture the next generation of workloads, there's really two prongs. One is keep making sure our technology is the most advanced technology, and I'll speak about that in a second. The second, to make sure it's easily available in the cloud. I think you've got to have a delivery vehicle that's very convenient if you're a startup. You got to be able to, rather than buy a computer, buy a server, and put the stuff up, you should be able to just immediately get a development environment and rent it and get going and build your application. That's how you go after the startups. That's where AWS has done very well. The other is our traditional enterprise customers. There, we've got to make sure that our technology is still the most attractive technology in terms of cost, performance.
Cost, a lot of that is productivity. The big costs in IT are not the cost of the server. Electricity in it is now as much of a cost or more of a cost than the cost of servers these days. It's really the labor costs that continue to dominate. If you look at what we're doing with the new versions of Oracle, it's a huge degree of automation in terms of creating a database, backing up a database, making it very easy to create redundant copies or fault-tolerant copies of the database. All of that's more or less automatic now, where that used to require considerable expertise and labor. Of course, there's the new generation of technology, like in-memory database. Being able to handle structured and unstructured data to do all of that. The database arguably is the most complicated program ever written.
We have a huge technology lead over the competition in database. We have a huge install base, lots and lots of people that know how to use it. We just have to make sure it's easily and gracefully accessible in the cloud with a lot of automation associated with it. I think we'll do fine. There are three businesses we're going into in the cloud. One is applications. If you look at applications on-premise, we're the number 2 player in applications on-premise, and we think we have a huge opportunity to be the number 1 player in applications in the cloud because we have by far the largest portfolio of applications in the cloud. We'll sell more SaaS this year than anybody else, including Salesforce. We'll be selling more applications.
If you look at our portfolio, we're the leader in ERP, we're the leader in EPM, we're the leader in marketing. You can say Workday is the leader in HCM. It's very, very close. Certainly outside the U.S., we're the clear leader. We're Salesforce's number 1 competitor in sales automation. It's very close between Salesforce and us in service automation. We're the leader in field service and so on. We just announced manufacturing and supply chain. SAP is nowhere to be seen. Unless you count Concur, Ariba, and SuccessFactors, which I don't. None of those are strategic. They're not strategic applications. They're just non-strategic. Doing expense reporting in the cloud is not the same thing as doing ERP in the cloud. SAP's claim to fame where they were the number 1 ERP company on-premise, and they're not even in the ERP business in the cloud. They're not there.
They have no product. That's a very big deal. Who's going to win that? That would be us. We're number 1 in ERP in the cloud. We were number 2 on-premise. We have a chance to be number 1 SaaS player. We have the largest portfolio. We're going to sell more SaaS than anybody else this year. That's a good thing. SaaS in the cloud is very interesting because SaaS in the cloud includes the underlying database and includes the underlying infrastructure. SaaS in the cloud drags a lot of platform with it. When we sell an on-premise ERP system, we were the number 2 ERP system on-prem. We'd sell our application, then we sell our database. Maybe we even sell an Exadata machine to go ahead and run the application, an Exalogic machine to run the application.
In the cloud, you don't do that. That's all SaaS revenue. The SaaS application business is a lot bigger than the on-premise application business. Witness the size of salesforce.com, which is dominantly one product. It's sales automation, and a sales automation mainly in North America. That's a pretty big business for one application. It's much bigger than the sales automation used to be with the on-premise leader, which was Siebel. I believe the SaaS business in the cloud is much bigger in dollars than the on-premise business. I'll give you another reason why it's much bigger. Oracle couldn't sell ERP to medium-sized businesses. SAP couldn't sell medium-sized companies ERP. It was too costly.
They had to get a data center and buy a server and learn how to use the database, and learn how to backup the database, learn how to upgrade their software. You don't have to do that in the cloud. We have a much larger available market. I submit to you that we are on our way to being number one in applications or SaaS in the cloud, and that's a much bigger business than when SAP was the number one applications player. One of the reasons it's a much bigger business, it includes a lot of database that drags along with it. As you're the number one, we sell a lot of database under applications. Most of the database we sell is under custom applications. Again, we think, we are leagues ahead of our competitors in the database business.
SAP came up with a database called HANA within In-Memory Systems, and we run the HANA benchmark. The unmodified HANA benchmark. A benchmark that was specifically created to make HANA look good. We run it twice as fast as that same identical benchmark twice as fast as HANA. We're way ahead of HANA in just the in-memory stuff, even using their benchmark. We have an advantage over HANA that we think is pretty significant. To use the in-memory features of Oracle, what you have to do to make your application use the in-memory features of Oracle, you have to push a button. You don't change your application at all. You don't do anything to your applications. With HANA, it's slightly different. You have to rewrite your application completely to make it use HANA.
It's very difficult to convince someone to move to HANA when you're going to run half as fast after you rewrite your application. Amazon's got several. Redshift, they've got a lot of PaaS offerings. They actually have a lot of database offerings. They are MySQL. If you look at their new, their latest offering, which is a SQL database, it is compatible with MySQL. It's an open source product that's compatible with MySQL. We're the main primary developers of MySQL. We keep making it better and better and better. The Oracle Database really doesn't compete with MySQL. We're pretty confident. Since we develop both products, we're pretty confident we have a huge lead, technology lead over MySQL. Oracle not only runs a lot faster, it's more fault tolerant. All the backups are completely automated. The recoveries are completely automated.
There's no data loss during recovery. All of these other things. The security differences are enormous between MySQL and the Oracle Database. We think we have big technology, a big technology lead, to sustain our number 1 position in database. We have an opportunity to go from number 2 to number 1 in applications. That number 1 position is worth a lot more in the cloud than it was worth on premise. We can sustain our number 1. Well, you'd have to give me the name of the product that's going to beat us in database. We think we're going to sustain, and we're well on our way to sustaining our position as the number 1 player in database/middleware. The database/middleware business is much bigger in the cloud than it was on premise for the same reason I mentioned.
That you buy database in the cloud, it includes a server, it includes a network, it includes storage, it includes the labor to upgrade the software and back up the data and restore the data and have an automatic recovery database. It includes all that stuff. It's just a bigger business than the on-premise business, where people had to buy a lot of separate labor, had to build their data centers, had to acquire the software, the servers, the network, the storage. It's not we're just going to hold on to what we've got. The number 1 position is a much bigger and more valuable asset to own in the cloud than it ever was on premise in terms of middleware or PaaS.
We have a chance to move from number 2 to number 1 in applications, to sustain number 1 and the number 1 position being more valuable in PaaS. Finally, there's a 3rd opportunity, which is the 3rd tier of the cloud, Infrastructure as a Service. With Infrastructure as a Service, we really never were a significant player in Infrastructure as a Service. I mean, I can name the significant players. I'm sure you've heard of them. IBM, Hewlett-Packard, EMC, Dell, companies like that. They sold NetApp, they sold storage, they sold servers. Cisco, the networking gear. Those were all the infrastructure players. We were a relatively small player in infrastructure as a result of our purchase of Sun. Though our strategy with infrastructure has always been rather different.
Our strategy even for on-premise infrastructure, our strategy has always been to combine our software with a suite of converged infrastructure, and we call this thing engineered systems. That was the attempt basically to make on-premise systems work as gracefully and as easily as cloud systems. Because when you buy an Exadata, what is it? Well, it's storage and a network and compute and the database, then you plug into it the Zero Data Loss Recovery Appliance, and you've got all the recovery. We have an online service called Platinum Support where we constantly upgrade the software. Well, we can do all that on-premise. It's very much a private cloud, the same strategy to take all of that stuff and let us be the integrator like we are in the cloud. We could even be the integrator on-premise using our engineered systems.
If you look at our total revenue for infrastructure compared to an IBM in their heyday or a Hewlett-Packard or an EMC or a Dell or someone like that, we're tiny. We don't think we're going to be tiny in the cloud. We think we have an opportunity to be one of the major players. I don't know if we'll be the number one player. I mean, there's a chance, but it's not a fundamental goal of ours to be the number one player in infrastructure. We want to be a major player in infrastructure. We want to be number one in applications. Again, we'll sell more SaaS this year. $1.5 billion of SaaS we will sell this year. Second will be salesforce.com at $1 billion. We'll sell $1.5 billion plus in SaaS bookings. Just going to happen, at least 50% more.
We think we're very optimistic about our ability to sustain our number one position in platform. We think we can go from a non-player or a minor player in infrastructure to one of the major players in infrastructure, and we think the major players in infrastructure are going to be Amazon, obviously, who pioneered a lot of this stuff. Microsoft, who's done a good job over the last couple of years. I think we'll be there. I'd like to contrast our approach to infrastructure with, let's say, an IBM's approach to infrastructure with their purchase of SoftLayer, where what they do is very, very labor-intensive. They take custom applications, and we would call that hosting. We wouldn't really call that Infrastructure as a Service. Infrastructure as a Service to us looks like exactly what Amazon does.
You take a credit card, you can go online, you buy compute, you buy storage, you buy network, and you're up and running. There's not a lot of labor associated with it. We believe in a highly automated Infrastructure as a Service business where we see our primary competitors as Amazon and Microsoft. I said in an earlier presentation, it's a very long answer to one question, I understand that. Probably discourage anyone else from asking a second question. I said we really don't see IBM because IBM's whole approach to the cloud is so fundamentally different than ours. They're really not doing Platform as a Service. They're not doing SaaS. They're really not even doing Infrastructure as a Service as we think of it as Infrastructure as a Service, which to us says, well, that's what Amazon does. That's what Microsoft is doing with Azure.
That's highly automated, not much labor on either side. Walk up with a credit card. Of course, you can send us a PO and make a big deal and move all of dev test to our infrastructure and our platform. I got it. In general, it's a highly automated system. What IBM does with SoftLayer is something quite different. It's what we call hosting. To take what you have, they run whatever servers you want. You can run power. You decide the servers, you decide the networking, you decide the switches. You decide all these configurations. Everyone's configuration is different. It's a lot like lifting up the data center and kind of moving it over. It's a very different business. Maybe that's a great business for IBM. Sure, God bless them. I hope they do very well because we don't compete with that. That's just not our business.
It's not how we look at that business. In summary, if you look at our portfolio of applications compared to anybody else, we have by far the largest portfolio of SaaS applications. These applications are strategic applications. It's not just edge applications. It's core HCM. We are Workday's number 1 competitor. We are Salesforce's number 1 competitor. We are the only guy in mid-market, I should say. Workday has something like they claim to have 100-plus ERP customers. I don't think so. I think they count payroll as ERP. I think they have very few ERP customers. Let's say they have 100, 150. We'll have 2,500 by December, by the end of the year. It's not close, and a lot of them are big names. We are on our way to being the leader in SaaS. We have the largest portfolio.
We're selling more SaaS than anybody right now. Right now. The applications we're selling in SaaS aren't like Concur or SuccessFactors or Ariba. They aren't these little edge applications that you plug on. We didn't get them as a result of acquisition. ERP was built over the last eight, nine, 10 years, entirely in Fusion, entirely in Java, entirely designed for the cloud. Our core HCM built entirely in Fusion, entirely ground up. We built all of that stuff. There was nothing to buy. There was nothing to buy. Our sales automation, 100% Fusion, built from the ground up. These are strategic applications. They're very sticky. They're very important. It's put us, I think, in a very good position to replace SAP as the number 1 applications player in this new generation of the cloud, this new delivery vehicle called the cloud.
I think that answered your question and seven or eight questions you didn't ask.
Larry, it's John DiFucci from Jefferies. You've spoken through the years on the concept of cloud and even invested personally in some companies totally focused in that area. While Oracle has had some cloud offerings in the past, it really seems like we're seeing a much more focused Oracle on this topic here and more recently. The entire company seems to be moving this way with urgency. That's what it feels like to me anyway. It's something that didn't feel that way, let's say, a year ago. I just curious, what in the market is causing that? If it's as simple as demand, why do you think that's changed so dramatically, so quickly? With all due respect to Mark, please don't talk about the gig economy.
I don't think it's as simple as demand. The reason we're so aggressive is we finally finished our products. I think it's very, very simple. It took a long time to build these products for the cloud. It's hard for us to aggressively market things we don't have. It can be very frustrating. We can do it, what if someone actually wants to buy it? "Oh, you want to buy it?" The other said, "Yeah, that was one hell of a pitch. You convinced me I want one of those." Yeah, that's the problem. It's not quite done. We started this. I know it's been said, and I don't mean to sound offensive, I kind of missed the cloud. I never liked the name cloud. Doesn't matter. It turns out it's a very charismatic name. It's a great name. Who cares? Cloud is fine.
I believed in this, running things on the Internet, renting services for a very long time. In fact, I think the first cloud company was called NetSuite. I still own a majority of NetSuite, creating NetSuite was kind of my idea. It was my idea to build ERP for small business in the cloud. The next company that came out was salesforce.com. They came out about 9 months after NetSuite, I was a large investor in salesforce.com and very supportive of that. In fact, salesforce.com, if you will, was a copy of NetSuite in the sense NetSuite said, "Okay, we're going to put ERP in the cloud," that was Evan Goldberg. Marc Benioff said, "Hey, that's a cool idea. I'm going to put CRM in the cloud." It wasn't called the cloud, it was called SaaS. They happened about 9 months apart.
If I was so deeply involved with that, how come Oracle didn't get to the cloud just as fast as they did? Well, the reason we didn't get to the cloud as fast as they did is we started converting as many applications as we have. We didn't have to just enhance or rewrite our applications. We had to rewrite portions of our database to make it multi-tenant. We had to rewrite almost all of our middleware. We had this enormous bottom-up re-engineering project. Once we realized, okay, that's what's going to happen, we're going to have to re-engineer the company. In the meantime, we got to keep selling what we've got while we're doing this re-engineering project, and that's what we've been doing. Again, this has been going on now for more than 10 years.
Oracle Fusion Applications, Oracle Fusion Cloud ERP has been going on for a very, very long time. Now that we got it, we want to sell it because we think we have a big lead over everybody else now. We're the first there with ERP for large companies and the mid-market. Workday's product isn't on the field. We'd like to take a lead. We'd like to build the ecosystems, get thousands of customers, thousands of references, lots and lots of industries covered by our ERP product, where we have basically an insurmountable lead in ERP before we get serious competition from somebody else. We don't think that competition is going to come from SAP. They canceled their cloud project. This is by design. They just canceled it. They don't have anything. We can talk about, you want to talk about SAP S/4HANA? We can. It's a 30-year-old code.
I can name names of the engineers. We got a lot of engineers from SAP. That's just old code that's been partially. They put a new user interface on it, and they made it work with HANA. That's it. That's 30-year-old code. We don't see them either. Again, why the urgency now versus last year or the year before? Very simply, we've got the products now. We even have manufacturing and supply chain, which is brand new. It's only been the last 18 months, arguably two years, that we've been able to be very aggressive. When you start to sell these things, you have to get the appropriate references. You have to train your partners to do the implementations.
Just getting a bunch of consulting companies trained up so they. The good news is we're selling hundreds and hundreds of ERP systems every quarter. The challenge is, who's going to implement all these things? It can't just be Oracle consulting. It's Oracle consulting and a number of the consulting companies. They have to be trained. This shift is massive. It's not just us. We have to retrain all of our partners. We had to. Engineering had to finish their job. We had to retrain the partners. We had to get the references in place. We had to retrain our sales force. We had to change the way we sell. If we're going to go do mid-market as well as high-end, we have to have a much more cost-effective way of selling. We have to sell on the Internet, not just face-to-face.
That old, very expensive high-touch model of sales doesn't really work with this much larger available market, the mid-market, where the transaction size doesn't justify the cost of having this very high-touch sales model. There was a tremendous amount of re-engineering to do in the company once we got the products working. This is not an easy change. Now we're there with a comprehensive suite, and we want to make sure that we get rapid customer adoption. Before the competition shows up.
Yeah. Hi, Larry. Brian White, Drexel. Just everything you just said about being number one in SaaS is your ambition, number one in PaaS with your database and middleware position, and being a top Infrastructure as a Service player in the future. When will Oracle surpass AWS in total cloud revenue? I think that's ultimately your goal. That seems to be where the company is heading. Is that something we can see in five years, 10 years?
AWS is not our number one focus. AWS is an infrastructure company. We have to be, again, the number I keep quoting is we'll sell $1.5 billion worth of SaaS this year. In sales, we'll surpass the number one SaaS company. Salesforce.com and AWS are about the same size. They're close. AWS is growing faster. Believe it or not, even though AWS is more profitable, or their contribution margin is higher than Salesforce's actual margin, we think the SaaS market is inherently more profitable than the infrastructure market, which is really a commodity play. Infrastructure is a commodity play. Storage is storage. Compute is compute. Networking is networking. A really good ERP application, if you have a better ERP application, people would be willing to pay a premium for that ERP application versus a not as good ERP application. We're working at this top-down.
Our focus is, again, to become the clear number one player in SaaS and the clear number one player in PaaS. We're looking at stage 1 is we're not going to overtake Salesforce in SaaS until we sell more than them every year. Otherwise, if they're selling more than us, they're pulling away. That's why this year is so important, where we will sell more than them, and we will close the gap, and we will pass Salesforce.com. We're much more focused. Again, even that's not enough. Again, Salesforce.com has done a great job in sales automation. We're already bigger and more important than them in marketing. Again, it's kind of a draw in service. We need to be a lot bigger than Salesforce.com. We need to be the clear number one, again, in applications, the clear number one in PaaS.
I would be happy. It's very hard for me to forecast. Do we want to be bigger than Dell? If you asked me a while ago, Oracle bought Sun, is your goal to be bigger than Dell? Dell is an infrastructure company. With Sun, we bought an infrastructure company. Now, in infrastructure, it's not being the largest infrastructure company. It's offering this complete suite of services where we are the number one SaaS company, number one PaaS company, we are very competitive, very competitive in infrastructure as a service. We're as good as they are or better than they are, our customers can then come to us and put all their workloads in our cloud.
They'll primarily come to us because they're buying our applications, they're buying our platform, as long as the data's in our data center, it's easier to get at if they do their compute and storage in our data center. We're going to offer this complete suite. That's the way we want to compete against Amazon.com. We look a lot more like Microsoft Azure in terms of having apps and PaaS and infrastructure than we do like Amazon, which is much closer to a pure-play infrastructure company. I can't give you an answer when we'll pass Amazon.com because I don't know how fast they're going to grow. I don't know how fast EMC is going to shrink. What you're watching, we see it in our own application business.
The way we look at our application business, the way we used to look at our application business, we had two components. We have license, how much have we sold, and subscription renewals, sometimes called support. How many of those people are renewing every year? The combination of those two is our application revenue. That's not what we look at anymore. We still look at license, but we primarily look at SaaS bookings, and we add that to license. You got to sum those two up to see how much application did we sell this quarter. If you want to know how we're doing in applications this quarter, you got to add our application license sales to our SaaS bookings. Is that growing? Is that total growing year-over-year? Not just how are we doing in SaaS. SaaS is growing very fast in terms of bookings.
What's our overall business, our application business doing? We got an on-prem business, which is growing slowly. By the way. Our on-prem applications business and our on-prem platform business is described as growing slowly, very stable, but growing slowly. We're experiencing hyper-growth in our SaaS business. We think we're taking market share right and left, but you got to look at those two together. Similarly, in PaaS, we have to look at our PaaS bookings plus our database and middleware license sales, to see how we did in the quarter. Then we look at our total business, our licenses, our renewals for the on-premise database and middleware, and our SaaS bookings, plus our SaaS revenue. Got to add all four of those numbers together to see is our platform business growing. I think you'll see the same thing.
We've got a slow-growing platform business on premise and a rapidly growing platform business in the cloud. That's actually not so bad. In infrastructure, it's our newest business in the cloud. We're not a top infrastructure player on premise. We're a reasonable player. Engineered systems done very well. In fact, on premise, I think we'll pass IBM this year and be the number one provider of large-scale servers. Large-scale servers is the dollar Above 25K. Above 25K. Okay. If you draw a line, servers over 25K being sold, we're number one in North America, and we'll pass IBM around the rest of the world. In this engineered system niche that we're after in infrastructure, we've done very well. It's a relatively small business when you compare it to Dell's infrastructure business or HP's infrastructure business or, for that matter, IBM's infrastructure business.
Again, I think if you look at how we're doing in hardware and you add that up, how we're doing with infrastructure as a service, you sum those two, then you get a picture of how our overall infrastructure as a service business is going. Again, that's not how we're going to win. We're going to win by being number one in applications and number one in platform, and thereby, I think being a really solid top three infrastructure player. Yes, sir.
Thanks, Larry. Michael Turits from Raymond James. You have product in the lower end of the database market with MySQL and in the NoSQL market, and also partnerships in a business in Hadoop. You have product there, we know. How important do you think those markets are, and how aggressive will you be there?
Well, we think it's important that we play in all of those markets and be a technology leader in all those markets. There's not this bright dividing line between unstructured/semi-structured data that you want to process with Hadoop and use machine learning to add structure, to basically statistically profile the data and then add structure to it, and the data that's structured in an Oracle Database. Companies who have this data, unstructured and structured data, often want to combine it. In fact, they usually want to combine it. Typically, one of the first things we did with Hadoop is put the SQL programming language on top of Hadoop and on top of the Oracle Database and let you issue one query that goes after your unstructured data in Hadoop and combines it with your structured data in the Oracle Database.
You can look at your data any way you want to. We think companies are going to be hybrids. They're looking more and more. We've now got technology that allows us to find value in unstructured data, and that's great. The technology is everything from Hadoop, Spark, machine learning. We can go into all of these things, and we use and deliver all of those technologies on premise with our Oracle Big Data Appliance and in the cloud with our Oracle Big Data Cloud Service. We provide not only big data, unstructured data, but we provide that big data side by side with Oracle structured data and let you combine it as you see fit. As you're navigating through your data and trying to uncover certain insights, you need to look at both structured and unstructured big data most of the time.
That's the reason we think it's so important we're in both of those businesses, that we manage structured and unstructured together. That's why we do have a Hadoop offering and a NoSQL offering to go along with the Oracle offering, to go along with the MySQL offering. We think we have to be the player in data management. The way we're the player in data management is we've got to be able to manage all of your data, all of the customer's data, and let the customer, and give them the easiest and the most rapid and the most cost-effective access to all of that data. We think we're doing a pretty good job with that. Yes.
Ruchir from Roffa. Your database is definitely superior than the competition and the market share, and even if you do independent check with the CIOs, they tell us that. Because SAP is the leader in applications, however inferior their database is, if they were to force their customers to buy their database for their applications going forward, that's-
I'm sorry, I'm having a terribly hard time. I think it's because of the amplification. I'm having a hard time understanding your question.
If SAP were to ask their application customers to forcibly buy their own database, however inferior it is, if that is the case, if that's how they sell it, and because customers in applications, they usually tend to be sticky, how do you see that kind of impacting your business?
What happens if SAP says, "You have to use HANA?
Yes.
We're not going to support Oracle anymore." I hope they do that. I want to be there when that happens. I think there are an awful lot of companies that would not be happy about that. Moving from Oracle to HANA is a non-trivial exercise. Let me start with, first question I've asked SAP. You want me to use HANA, not Oracle, with SAP. I said, "Okay. I'll tell you what I will when you do. How come you use Oracle under Concur, SAP? Why don't you use HANA? How come you use Oracle under SuccessFactors? Why don't you use HANA? How come you use Oracle under Ariba? How come you don't use HANA for anything? Nothing.
You want me, the customer, to move to HANA, and you, SAP, refuse to use it yourself?" I want to be in the room for that to see what SAP says. HANA is certainly not ready. When did SAP buy SuccessFactors and Ariba? How many years ago did they announce HANA, and they still have not moved? I know. I say this a lot. SAP always responds, "Oh, no, we have plans. We have firm plans to move all this to HANA." Okay. You haven't done it. Why? Because you like us so much? We send them bills. We send them bills for using this stuff. In fact, just recently, they paid for Concur.
We get into these big fights with SAP, say, "Why are you using our stuff and not paying for it?" It's not just we got into a big fight over TomorrowNow. We said, "Hey, how come you're using Oracle under Ariba? What are you guys doing? You got to pay us for that." Mark calls someone over at SAP and said, "What are you doing? Give me a check." They send a check. It's like, "Hey, I can't believe I just called you last quarter. Why are you using Oracle under SuccessFactors as well as What are you doing?" They said, "Send me money." He says, "Send us money." They're like, "Oh, my God, you're doing it again under Concur. I'll tell you what, you got till Friday to write me a check." Am I making this up?
No.
I love what you're saying. It's a long way to James hearing nothing right.
This whole SAP HANA thing is incredible. They've been touting SAP HANA. They even have a restaurant called Hana House. Are you kidding me? A Hana House restaurant? We don't have an Oracle House restaurant. We should have a Hana House where people can start up and do stuff in Palo Alto. Are you kidding me? How about just making it work? Under one of your cloud applications. Just one. Something. SAP S/4HANA in the cloud. By the way, someone take it. You can go to the Oracle Cloud. Okay, you want to test Oracle Cloud versus the SAP Cloud. All right. I'll tell you what. You go to the Oracle Cloud tonight. I'll send you the money back. Take your credit card. You can go buy compute services and storage services on your credit card. You can do that tonight. Go log on. It's very easy.
Go do it at SAP. Try it. Just try it. This SAP HANA thing, excuse me, is a joke. One more thing. One more. I'm not quite done yet. I'm not quite done yet. I mean, I said when they decide, after SAP three structure around. SAP Business ByDesign, their cloud applications. Oh, golly. Bummer. That didn't work. Shut that down. But we're going to get Oracle with SAP NetWeaver. We're going to kill them in middleware. Remember SAP NetWeaver? Anyone old enough here to remember SAP NetWeaver? I got two. Got me, you. We brought a couple of guys. Okay. They're going to kill us in middleware. They're going to kill us in middleware. Net what? Gone. Now, their greatest idea. We're the leader in ERP. I have this fantastic idea. Let's go after Oracle and database. Really? Actually, I've been working out a lot on going after LeBron in basketball.
I asked my son, he said, "Dad, I don't think this is a good idea." Yeah, he's bigger than me, but I don't know what I am. They're going to beat us in database? They're going to beat us in database where we've been a technology leader for years and years and years. I made a comment a while ago about this, and I said, "I got to get the name of that pharmacist because whatever they're smoking or taking over there, that must be fantastic stuff." SAP HANA is just. Go out and find real SAP HANA users anyplace. And they've been pushing this thing for a very long time. SAP HANA is the same as SAP Business ByDesign, and SAP HANA is the same as SAP NetWeaver. SAP HANA is a third consecutive failed project by SAP, and three strikes and you're out in this business. They have nothing.
They're the leader in ERP, and they got nada in the cloud. If someone would like to correct me, please correct me now. What have they got? Do they do financials in the cloud? Can they do general ledger, accounts payable, accounts receivable in the cloud? Can they do that? I think, the SAP HANA thing is not a problem. We spend a lot of time analyzing what Amazon does. We do a lot of time looking at our SaaS competitors, but SAP is just no longer interesting. They're just not a player in this business. Back here.
You guys have done a great job today talking about the future, but there's a transition that you've gone through with SaaS, and there will be a transition with PaaS. During this time, why not pay a more significant dividend? If you doubled the dividend and had something like a 3% yield, it would make people willing to hold during this period.
Well, you're not going to get me to come out against increasing the dividend. I think that's a hell of an idea. Maybe 4% would be good. That's it. I'll take that offline. Maybe we should start a petition. I'll be the first to sign. Again, I'll let Safra answer that, but I think, we use our money for a variety of things. Obviously, we purchase our stock. We have a dividend. We haven't made any large acquisitions in a while. We're saving our nickels and dimes. We might do something interesting one of these days down the road. Not anytime soon, because we are singularly focused, not on acquisitions, but on maturing our cloud business, which took us 10 years to get where we are, to rebuild all this stuff. We are focused on becoming the number 1 SaaS player and the number 1 PaaS player.
We think we can do that pretty quickly if we stay focused. In the meantime, down the road, we think we have a pretty balanced use of cash. The combination of a reasonable dividend, a lot of share buyback, plus putting nickels and dimes in the bank for, I don't know, in a couple of years, maybe we buy something interesting. Yes, sir.
Thanks. Ross MacMillan from RBC. Larry, you said that your number 1 focus wasn't AWS earlier, but Andy Jassy a couple of weeks ago at the AWS re:Invent conference, talked a lot about the database market, and he talked a lot about migration tools, and he talked a lot about how they're really focused on this. Why is that not a concern for Oracle?
We look at their products all the time. Making MySQL available as a platform in the cloud and making it easier to get at is not the same thing as making Oracle available. We've been working on the Oracle Database for a very long time. It's very difficult to replicate that code. SAP has been working on HANA for how long? A very long period of time. We think we have the best database. We think our PaaS around our database, around Hadoop, around NoSQL, and around MySQL, you look at all of our data offerings in the cloud, and we just think we're leagues ahead of anybody else. We think we've got a very strong and defensible position. What AWS came out with recently is a SQL database that is compatible with MySQL. They're going after the MySQL base.
This is not a substitute for the Oracle Database. I certainly understand that they want to go after the database market, and MySQL is a portion of the database market, and they're pursuing that. That is very different from the Oracle Database, which Oracle is a much bigger, more complicated program with a great deal more security, a great deal more performance, a great deal more automation, reliability than MySQL. I think MySQL is a terrific product. It's our product. They're leagues apart, and we're pretty confident that it's difficult to replicate all of that engineering. It's great. The cloud is a delivery mechanism. What gets delivered still has to be engineered and developed. We have this huge lead in database. We just have to, right now, do a very good job of delivering it in our cloud, and we're doing that.
We think that customers will. They're not going to rewrite their application for HANA, and they're not going to rewrite their application for MySQL. It's just too much work. Especially, you end up going slower and you open up security holes. There's just a whole bunch of reasons why they won't do that. We've got to make it really easy and really inexpensive for our customers to move their Oracle applications, which there are lots of them, to our cloud. We're doing that. All the way in the back.
Trip Chowdhry with Global Equities Research. I was wondering, when you look into public cloud, I have two questions. AWS continues to push forward something called CAP Theorem. They say in a public cloud, they are the only ones who can address the limitations of a CAP Theorem. That's the reason they talk about 48 zones and availability zones, 12 regions, and other stuff. Second question I have is regarding the business model. They have three layers. The way you charge for the services, reserved instances, then you have on-demand, and then you have spot instances. On an average, AWS claims that if a customer uses the three layers very effectively, the price points gets down by at least 40%-60%. I was thinking, when will we see similar things from Oracle public cloud?
I don't want to pre-announce anything, as I said, I said two things. A lot of people wrote about me saying I'm dissing SAP and I'm dissing IBM because we said we don't see them anymore. All I'm saying is we don't see them anymore, especially IBM. No intent to diss IBM. I guess I did intend to diss SAP. We do watch Amazon very closely. We know a great deal about Amazon. We think our new data centers that we're opening up later this year will have big cost and performance advantages over Amazon, and scalability advantages, all of the above. We're really not prepared to talk about that yet, but they will be up and running very, very soon. By the end of this calendar year. We watch them. Again, we pay a lot of attention to what they're doing.
If we're going to be a major player in infrastructure, again, it's a commodity business. There's nothing wrong with being a commodity business, as long as you understand it's a commodity business and you got to be a low-cost provider. Hopefully, you find little ways to differentiate yourself. We're going to try to differentiate ourself in security and reliability, which we think we can do. Doesn't mean we don't want to be low cost. To be low cost, it means we've got to build data centers more cleverly than they do. We think we can leapfrog what they're doing, and we will outline all of that for you sometime either at the end of this year or early next year as customers start moving to the new availability zones that we're putting up.
Again, there aren't a lot of secrets in that part of the business. It's a commodity business. It's not like they're building their own microprocessors. We actually do build our own microprocessors, this is not the time for me to get into all of this stuff. Suffice to say, we think we can deliver infrastructure at a significantly lower price point than Amazon. We've done it for certain kinds of storage, for archival storage. Plan is, if we're in the commodity business, we have to be able to build these things for less money than they can. Let's see if we can. We have to be aggressive on pricing on the infrastructure part of the business. We are putting up our second generation of data centers as we speak.
Again, we think we will be more than competitive with them on price, significantly better. Our stuff is all brand new. Again, we're paying a lot of attention to them, believe me. Yes, sir.
Hey, Larry. Brent Thill with UBS. Dell's embarking upon one of the largest deals in tech. I think everyone's curious to get your thoughts on industry consolidation. You've been a major player and you're sitting on $56 billion in cash. Just when you look at the landscape.
We want to dividend almost all of that out as soon as possible. Actually, I have my truck out front. I have to pick up my share. I think it's brilliant. My friend Jim Davidson and my friend Michael Dell I think have done a spectacular job in engineering that EMC deal. It kind of breaks our heart. I'll tell you, we're not bidding for EMC. I shed more than a couple of tears, said, "God, we could make a lot of money if we bought EMC. We could make a lot of money at that price." We could. We're not going to do it because what I said earlier. We're singularly focused on one thing, and that's making sure we're the number one SaaS provider and the number one PaaS provider.
The next two years are going to be crucial for us achieving those goals, and this would be a big distraction, kind of the wrong message to the marketplace, the wrong message to our people, a distraction to our senior management. Boy, we'd make a lot of money. It's kind of an opportunity that's just bad timing for us. It's an opportunity we're going to miss. Again, Jim Davidson's a brilliant guy. Michael's a brilliant guy. They saw the opportunity for this consolidation to buy a business that out of fashion. The market prices things very interestingly. If you're highly fashionable, you get these wild PEs. If you're kind of an unfashionable company, just because you throw off tons and tons of cash, no one seems to care. Jim Davidson cares, and Michael Dell cares. We'll take that.
They're all going to make $ billions. Michael's going to make $ billions personally. Hats off to them. It's a fabulous deal. It's why it's so great we have a free economy. When the market misprices an asset because it's last generation technology, but it's got a huge install base, it's going to throw up a lot of cash, it's going to be around for a long time, and the people that own it are going to make a lot of money. Good job, Michael and Jim. Is that back here?
Hey Larry, Steve Koenig with Wedbush. It doesn't look as if you're going after the CRM, and in particular, I should say, the sales automation market with the same vigor maybe that you're going after HCM when we look at your price list and we talk to integrators. Is it too late to go after that market, or could Oracle make a real big push there?
Well, we've got an incumbent that's been there for more than 15 years. When you're fighting against a well-established incumbent, it's a slog. We think, surprise, I think our sales automation application, which deals with territory management, we do a lot of things that salesforce.com doesn't do. The bad news is our sales automation product is pretty new. The good news is our sales automation product is pretty new. It's newer, better technology, more features. You've got so many people that know how to use salesforce.com. Again, it's a long-term incumbent. It's tough. We're winning a fair number of deals. I mean, we're doing okay in sales automation. Again, we're their biggest competitor by far. I don't know, I guess Microsoft on the low end also competes for this.
In the mid-market and the high end, we're their biggest competitor. We're very serious about it, very aggressive about it. We're putting in a bunch of vertical features. We're going after them. It's very different because, again, they're so well established. They're so well established in this market that it's tough. It's tough to go after an established player. Versus in HCM, we've got a very small company, Workday, with a relatively new product. We think we can beat them and beat them badly. I will even explain to you why. In the mid-market, there's no such thing as an HCM market. There's an ERP HCM market. A medium-sized company or smallish company doesn't buy HCM from one guy and ERP from another.
We think by beating Workday and ERP, we get all the HCM stuff by default because they don't want to put in two, three different vendors' products. In the high end, in the large-scale HCM market, these are people have their own data centers, have their own programmers. They need to integrate that HCM product with other products. They might want to put extensions, not modifications, but extensions onto the HCM products, but they do integration, and they do extensions. You need a platform. The large customer needs a platform underlying their HCM product in the high end of the market. Workday has no platform. We see Workday as a very hot company that's highly vulnerable. They're highly vulnerable because they don't really have an ERP product yet. Yet, as the mid-market moves to the cloud, they're going to be making a suite decision.
They're going to be buying ERP and enterprise performance management and HCM kind of as a package. They'll buy it all together. Workday can't offer that. The high end of the market, as people get more sophisticated about what you do with these cloud applications, you have to be able to integrate your HCM system with other systems. To do those integrations, to make those extensions, you need a platform, and Workday doesn't have a platform. Workday is a small company. They have no platform. They have no ERP. They're a one-trick pony. They're new, and they're hot. We'd like to make our reputation by beating them. We have a strategy to beat them at the high end, and we're doing it. We have a strategy to beat them at the mid-market, and we're doing it.
We have a strategy to beat them outside North America. They're really focused in North America, we'd like to develop all the markets around the world before they get there, and we're doing that. We're very focused on not letting them become a Salesforce.com-like problem for us. We want to beat them before they become established. We're very focused on them. Yes.
Hi, it's Ed Maguire from CLSA. It's really interesting to hear you focusing on applications and the strategy to go after the SaaS opportunity, but what really struck me in some of the presentations was the work you're doing down at the bottom of the stack, particularly some of the silicon-level security. I'm interested from your perspective, how does the work that you're doing at the bottom of the stack advance your strategy in SaaS over time? How will that play in? How do you look at investing in that part of your technology?
I'll tell you. We're in a competition right now with Workday for a large-scale customer. It's interesting. People have preferences and this and that. An interesting question to ask is, can the engineers at Workday see all your payroll data and all your personnel data? Does Workday encrypt all of its data? Is it all secure? The people who create the databases over at Workday, can they look at your data? Can they? They can't at Oracle. You're talking about silicon and security. These underlying things we build into our database, all the security, and we have this thing called Database Vault that actually enforces separation of duties.
The people who create the database, by the way, this is a differentiation between us and Db2 also, us and MySQL. It turns out that the person who creates the database with MySQL and with Db2 and a lot of these databases, the person who creates the database has privileges on that database. All sorts of privileges on that database. The technology guy or gal can look at the data in the database. That's true of almost every database. Not true of Oracle. You put your data in our cloud, our engineers can't see it. In fact, not only is it all encrypted, and our guys don't have any access privileges. We'll even put the encryption keys on a small server and on your premises if you want us to, where we can't even get to the machine that controls the encryption keys.
We think as people get more and more sophisticated, banks get more sophisticated. Retailers get hacked all the time, right? They lose sometimes tens of millions of credit card numbers in one hacking. Airplane companies, military contractors, lots of people, insurance companies. People don't want to get hacked. It's so interesting that in most of these databases, the engineers who run the cloud can just look at all your data. Would that bother you? We think by engineering the entire stack, engineering security into every layer of the stack, the application, the platform, the infrastructure down to the silicon gives us a tremendous advantage. What looks like just an ordinary competition between us and Workday for an HCM deal, that we offer security and reliability they can never offer.
The interesting thing of all the stuff we're investing in, it's going to help us compete with Amazon. I say the way we're going to differentiate against Amazon in security and reliability, and we're going to work very hard at making sure we can deliver a lower cost than Amazon. It'll be very interesting. Security and reliability is a big deal. Also, if you have your application in our cloud, you might want to put other stuff in our cloud near the application. If you're using our database in our cloud, you might want to buy our infrastructure as well.
By investing at every level in the cloud, and we do something clever down in silicon, or we do something clever down in our database, those clever security features, those clever reliability features, those differentiators percolate up into all the applications that run on top of our database and run on top of our cloud. We end up with a secure cloud where no one can see your data but you. We end up with a reliability. Our data centers are reliable. No one doubts that Amazon has these availability zones and multiple data centers connected by a fiber optic ring and all of this other jazz. We do, too. Workday doesn't.
We think that we get tremendous competitive advantage and differentiation by doing a lot of low-level silicon engineering that will help us compete with Amazon in infrastructure, help us compete with whomever in platform, and even helps us, the silicon stuff and the database even helps us when we're competing with Workday or Salesforce or whoever might show up in SaaS in the future. We'll continue to invest in all levels of the cloud, from the application all the way down to the silicon, from the application all the way down to encrypted storage. Yes, sir.
You're going to be the last one.
All right. Oh, I was hoping to stay here for a couple more hours. Oh, okay. Is that in the same building?
Yes.
Okay. Traffic is a nightmare out there. Yes, sir.
Derrick Wood at Susquehanna. You've got release 2 of 12c coming in a matter of months. Just curious how you're thinking about the options, the in-memory, the multi-tenancy, what the interest is, the uptake, then how do you message going forward to get customers to upgrade their on-premise infrastructure versus getting them to go to PaaS and going to the cloud?
Okay. Two things. In-memory and multi-tenancy have had the highest uptake in the history of any options we've ever introduced. That's really interesting for me because normally people don't go to the .1 release. They say, ".1 is nice. It's got a lot of cool features, but I'll wait for .2, which tends to be a somewhat more stable release." A lot of people hold off. There was so much pent-up demand for on-prem and in-memory, we actually got a big kick in the .1. We think as 12.2 comes out, we're going to get our traditional upgrade cycle, where people who bypassed 12.1 and waited for 12.2 are going to adopt 12.2. We expect another big spike in customer adoption. In fact, multi-tenancy is much better in 12.2.
In 12.1, we could do a couple of hundred by 240 instances per container database instances. Now we're up over 4,000. We've got real cloud scalability and multi-tenancy in 12.2. We've done a bunch more work on our in-memory database. Think in-memory database. That means the database is in a columnar format in memory. Well, what if it doesn't fit? Well, now if it doesn't fit, it goes into this thing called a flash cache. We pretty much, with 12.2, could hold any size database in columnar format in memory. It's a better version of the in-memory feature. It's a better version of the multi-tenancy feature. It's a more stable release, as the .2s are always more stable than .1s, and we expect, again, very rapid adoption of those two options. I'm done. Thank you very much.
Ladies and gentlemen, please welcome back to the stage, Ken Bond.
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