Hello, everyone, and thank you for joining us today as part of our ongoing educational speaker series hosted by Oracle. I am Shauna O'Boyle, Senior Manager, Investor Relations, and today is Thursday, July 18th, 2013. Joining us today is Oracle Executive Senior Vice President, Andy Mendelsohn, and Equity Research Analyst, Kash Rangan of Bank of America Merrill Lynch. Today, Andy Mendelsohn will give an overview of Oracle Database 12c. He will not be discussing any information that is not already publicly available. At the conclusion of Andy Mendelsohn's presentation, we'll turn the webcast over to Kash Rangan, who will moderate the question and answer portion of the webcast. You may submit questions at any time during the presentation by typing your questions in the Q&A box in the lower part of your screen. Please keep in mind that we will not comment on business in the current quarter.
As a reminder, the matters that we will be discussing today may include forward-looking statements, and as such, are subject to the risk and uncertainties that we discuss in detail in our documents filed with the SEC. Specifically, the most recent reports on Form 10-K and Form 10-Q, which identify important risk factors that could cause actual results to differ from those contained in forward-looking statements. You're cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we will not obligating ourselves to revise, update, or publicly release the results of any revisions of these forward-looking statements in light of new information or future events. Unauthorized recording of this conference call is not permitted. I would now like to introduce Andy Mendelsohn.
Good morning, everybody. I wanted to start out by just giving you all a little bit of a historical context about the relational database market. You're hearing a lot today about people who are claiming, "Oh, relational databases are obsolete, SQL is bad," things of that sort. You hear other people who say, "Oh, we have a better relational database than Oracle. We're cool." I guess I just wanted to explain two points here. Number one, the relational database market, as you can see from this data we have from IDC, has had a spectacular performance over the last 20 years. We went from a billion-dollar market to today being about $28 billion, 20 years later. Over that period of time, there's been major changes in the computing environment that we're running in.
We went from client server 20 years ago to the internet 10 years ago, and now we're sort of moving into this era of big data and cloud. Relational databases have been able to survive through all these trends and changes in the environment, which is a very unusual thing for a software technology to be able to do. The reason it's worked is that customers are able to write applications using this language called SQL, and those applications have survived for all these years as the underlying technology underneath relational databases evolved to meet the challenges of client server and internet and now cloud and big data. Those applications stay the same. You don't have to rewrite them. We, the relational database vendors, rewrite the guts of our products to evolve, and our customers happily move on.
That's why relational databases are very powerful and very sticky. That's a key attribute of relational databases. Why has Oracle been able to thrive over all this change over the last 20 years? The reason is that my group really prides itself on our technology leadership. At each era, we make sure our database stays years ahead of the competition. From time to time, some competitor will have a new feature that we don't have. We build something better than that. That's our typical response. If you look at its history here, 20 years ago, Sybase was a big darling of the market because they had these new features for client server. They were called stored procedures and triggers and referential integrity that we didn't have. Okay, we came out with Oracle 7.
We blew away what Sybase had. We innovated and came out with something much better. That's how we sort of navigated that current. In the '90s, there were challengers who said relational databases are not a good idea. The best kind of database is something we call an object database. Object database was a database more catering to the desires of C++ developers. Well, relational databases responded. We added object relational technology, and we navigated that as well. Again, SQL relational databases have survived quite nicely. I guess the key message here is that we certainly plan in my development group to make sure that we evolve the Oracle relational database to meet the needs of the future.
As we move into the cloud and big data era, we certainly are planning to evolve the database and Oracle Database 12c, as we'll talk about a little later, we think is our latest response to this major change in the technology evolution of relational databases. Let's move on to the next slide. What does IDC at least forecast for the future of the relational database market? The interesting thing that we're very excited about is they're forecasting a very vibrant future for relational databases. If you read their report, they're forecasting over the next five years that there's going to be a 10% CAGR average growth rate, which we think is very nice for a business that's 30 years old or so. The other interesting point is, what are the key drivers to growth that IDC is forecasting?
I have a few quotes here. They talk about Sort of the obvious stuff, cloud, big data, in-memory database technology. What are they saying about cloud? Well, one of the interesting things they say here is that if you look at the enterprise IT shops, what are they most excited about right now? Everybody's excited about software as a service on the public cloud, but the enterprise IT guys have a major interest in private cloud, and that is building, especially in the database space, they want to build their own private cloud on-premise for their databases and other technologies as well. We think one of the key changes here is make sure your database has the best technology for dealing with both private and public clouds. Okay? Number two thing they talk about is, of course, big data is a big driver.
We all know all about big data. He talks about how Hadoop is a complement to relational database technology. He talks about how a lot of people are looking at ingesting data using the Hadoop HDFS file system to ingest big data, sort it, and filter it, and then when you find interesting data, move that into your relational database, your data warehouse, and do the analytics on that. That's another driver of relational database. All this big data is coming in, and the interesting analytics ultimately are going to get done in your massively parallel relational database data warehouse. Finally, he talks about in-memory database technology. He mentions the word table stakes. What does he mean by that? What he's saying is that, okay, this is a new feature, in-memory column store technology. We've had in-memory database technology for many years.
Oracle has the leading in-memory database in TimesTen. What's new here is something called in-memory column store. In-memory column stores are a nice feature, what Carl is basically saying in the report is that if you want to be a player in relational databases, you're going to be building your in-memory column stores, and it's going to be table stakes, which means everybody's going to have to have it. We generally agree quite. We're very well-aligned with what this report is saying, and we generally agree with these comments. Let's go to the next slide. We're moving into this era of cloud and what are the key things that you have to do to be successful in cloud? We think Oracle Database 12c is going to be delivering what people want.
We spend a lot of time talking to our customers, understanding what their requirements are. As we started designing 12c a number of years ago, we think we really understood what they're looking for. They want all the features they have today, as we move into the cloud, one of the key things they want are better analytics, better consolidation, better data warehousing, better availability, et cetera. One of the key things we think they want is something we call multi-tenancy. Let's move to the next slide. For Database 12c, we have 500 new features. We talk about in the table here sort of some of the marquee features. These are things that we think are areas where we have innovated, we're years ahead of the competition.
At Oracle, when we innovate and have something no one else has, we tend to monetize those technologies in these things called database options, and we list some of those options below. The key marquee new innovation in 12c is something we call the Multitenant option, which is this capability we think is critical for clouds, which is the ability to support multiple organizations sharing the same database in a secure and isolated fashion. We are going to monetize that technology in a new option that we call the Multitenant option, I'll talk about that in the future slides. The key other things we mention here, I'm not going to go into, but Oracle has a number of other very popular database options. We've added what we think are very innovative new technologies to each of these options listed below, compression, Data Guard, security options, et cetera.
We think in 12c, we have some new market-leading technologies that are going to be exciting for all those. The last thing I mentioned is big data analytics. This is an application developer API. It's a new SQL feature for pattern matching. When we do that kind of thing, we don't tend to monetize it. We want developers to use these new features, we put them in all the product editions. In 12c, Oracle has a very exciting new technology for pattern matching that satisfies a lot of the use cases that people are talking about around big data for analyzing, looking for fraud, looking for patterns in stock prices, et cetera. It's another very exciting new 12c feature. Let's now move into a little more detail on Oracle Multitenant.
When we talked to our customers and did the design of 12c, the key thing that our customers were looking at is they wanted to understand how they could consolidate their databases in order to lower the capital cost, lower the operational cost of those databases. They weren't using the word cloud then or private cloud. They were using the word consolidation, but it's all the same sort of thing. We invented this new technology that we call Oracle Multitenant. The easiest way to understand it is sort of by analogy. Today, everybody understands what virtualization is for a hardware server. You can divide one physical hardware server into a number of virtual machines, and you can basically consolidate applications running on separate physical servers into one or more virtual machines on this one physical server. One physical piece of hardware.
That sort of technology is designed to lower operational costs, I mean, capital costs, excuse me. That kind of technology has been very heavily used in the middle tier. As you get into the database tier, a lot of people have not been very excited about virtualization because it doesn't address the operational cost of databases. You can do this kind of consolidation from physical servers to virtual machines, and you can run your databases and move them from physical servers to virtual machines. At the end of the day, you still have the same number of databases as you had at the start, which means the cost of operating those databases, managing and administering those databases, has not gone down.
The key thing we were trying to do with Oracle Multitenant was to build a database virtualization technology that lets you do both hardware consolidation, like virtual machines let you do, and reduce the total number of databases you need as well, which attacks the operational cost problem. With Oracle Multitenant, we have the attributes of virtual machines, like simplified consolidation, more dense consolidation, reduce the number of physical servers you need to run your databases. We also have this ability to reduce the total number of databases you need to manage via this feature we call Manage Many as One. That's the key new trick we have in Oracle 12c Multitenant. We can consolidate and reduce the number of actual databases to manage. We have, with Multitenant, all the key attributes people expect in an agile cloud environment.
You can do rapid provisioning of databases. You can move databases around using this unplug and plug capabilities. We're very excited about this technology. Also, when you start doing consolidation and you move a lot of what were once separate databases, possibly run by separate organizations, into one physical database, you need to make sure that those databases share the resources fairly, and they are secure and isolated from each other. With Oracle Multitenant, we spend a lot of time making sure all these different, what we call virtual or pluggable databases, are isolated from each other from a security standpoint and also from a resource management standpoint. We don't want to let one of these tenants in our multitenant model take all the CPU or I/O resource from all the other tenants. They have to get only their fair share.
Finally, as we rearchitect the database to support this multitenant capability, we preserved all the existing features that customers know and love, like Real Application Clusters and Automatic Storage Management and partitioning, et cetera. All those features move forward into 12c, all work underneath the Oracle Multitenant option. Our customers can take advantage of all those kind of technologies that they use very heavily today. Finally, we're once again doing what I mentioned earlier. As we evolve our database, we want to make sure all the applications that were built over the years to run on the Oracle Database continue to run as we move to this multitenant cloud era, and we've done that. Customers who've written applications over the years can now easily move them and run them in these plugable databases, these virtual databases under our multitenant option, without rewriting their code.
If you talk to our ISVs, that's one of the things they're really excited about because this will enable them to move their applications to a cloud environment or cloud model without huge amounts of rewrites. With that, let's move on to the next slide. What you guys are mostly interested in is not so much, this is a cool feature, but what is the business impact of that feature? Like I said, Oracle has over the years monetized our innovations through these database options. What we see with Oracle Multitenant, which is our latest new database option, we think it has the potential to be the largest database option ever by far, much larger than the largest options today, which are RAC and partitioning.
The reason is that if you look at the market for something like RAC is mostly used by our high-end customers who need the most scalability, the most availability, the most mission-critical requirements. Oracle Multitenant is an application or a capability that we think is very mainstream. It's needed by the high-end customers for the most mission-critical databases, and it's needed by all the customers for even their less critical databases, because they want to do consolidation to lower the cost of ownership of running their databases. We're very excited about its potential as a major new business for the Oracle Database business. Number two, the key thing I wanted to talk about there is also our engineered systems business. You've heard all about Exadata and how successful we've been on the earnings call a few weeks ago.
Exadata's main use case has been running very mission-critical systems, the most mission-critical transaction processing systems, the biggest data warehouses. People are running those things on Exadata. Then Exadata is just starting to crack the market for clouds, for consolidation, private clouds in the enterprise space or on the public cloud in the SaaS space. The key thing that's been missing is that we didn't have something like multitenancy support built into the database. Now that we have that with 12c, the combination of Exadata and the Oracle Database Appliance, which is our other engineered system for database, and the Oracle Multitenant option, is going to make our engineered systems great platforms for clouds. We think it's going to greatly accelerate what's already a really good business around our engineered systems.
Then finally, from a differentiation standpoint, we think our Oracle Multitenant capability is a very unique, differentiated capability out there, and it's going to help our customers justify why they want to keep using Oracle. Oracle has great technology. It's going to help them lower their cost of ownership as they move into the era of deploying private and public clouds. This technology is, I think, really critical for us to make sure our installed base is happy with the cost, that we are helping them drive down the cost of ownership around running all their Oracle databases. Just to drill down a little bit more into the market opportunities around Multitenant on this slide. One of the things people always ask about, okay, you've got this new database 12c release. When are customers going to move to that release?
When are you going to really capitalize on the market opportunities around this new feature, this new Oracle Multitenant option? In this slide, I go through sort of the top five use cases or market opportunities around multitenancy and when each one of them we think is going to start becoming significant to our business and sort of a relative size of the market opportunity for each of these different use cases. The first thing customers are telling us that they want to do with 12c, and some of them are saying they want to do it the second we ship, is development and test. A lot of customers have, for each mission-critical database, they might have five, 10 test dev versions or even more, 50 versions of copies of that database.
It turns out that Oracle's Multitenant feature is a great technology for supporting dev and test environments. We support high-performance cloning of dev test databases. We think that market opportunity is going to be available right away, and we think that's a really huge opportunity. There's huge numbers of test dev databases out there. The next thing we think customers are going to do is they're going to do consolidation of their less critical departmental kind of databases. We think that's going to start kicking in after we come out with what we call the first patch set update of the database, 12c, that we'll be planning to do soon. We think that opportunity is going to continue growing as our first patch set comes out, which has some bug fixes. A lot of customers hang out until then.
We think that's going to be the next big opportunity. This, again, is a huge opportunity because if you look at what customers are doing in their shop, they have far more departmental databases than they have the most mission-critical databases. As we move forward, again, I mentioned earlier, and Carl mentioned in the IDC report, that customers really want to build these database as a service or private clouds in their environment. Customers are going to do that once we roll out our first patch set. That's the general behavior of customers. They'll move these more mission-critical databases into private clouds, maybe a year or so, start doing that a year or so from now. That's another big opportunity.
In the same time frame, we'll see, I think, customers starting to use 12c as a platform for software as a service in the public cloud. Finally, the last thing that always happens is the most critical databases are the last ones to get upgraded to a new release. We think in a couple of years, we'll be seeing a large number of those customers, again, trying to consolidate their most mission-critical databases onto private clouds using 12c. That sort of concludes my whirlwind tour of 12c. I just wanted to have one little more comment before we sort of close, and I want to talk about big data. Again, this is another very hyped area. There's a lot of talking about Hadoop and how Hadoop is going to take over the world.
What I wanted to explain to you guys is sort of what is the reference model that people have really been gravitating towards in this whole big data space? I go back to that report from IDC about what they say is happening in the big data space. What is happening is people are looking at taking all these new kinds of data from sensors and social media, et cetera, and some of them are looking at using Hadoop as basically a file system on steroids for storing, ingesting all that information. They do some analysis of that data, and they move that information into a massively parallel relational database to do high-performance interactive analytics.
If you look at this picture on the slide, what the next generation of data warehousing is sort of evolving to, it's evolving to being a platform where on the front end, data is getting ingested into Hadoop, HDFS, sometimes, and that data is then moving into a massively parallel relational database. In the Oracle case, it would be Exadata. Oracle has two engineered systems that fit perfectly in this model. We have our Big Data Appliance, which is an optimized system for running Hadoop. We have Exadata, which is our, as you know, very popular system for running all database workloads, but in particular, virtually all the data warehouse customers are moving to Exadata to run their data warehouses.
As you see here, what's happened is that people see Hadoop as a great platform for ingesting large amounts of data, they can do some batch processing to filter through that data. When it comes to interactive analytics, Hadoop really doesn't fill the requirements. What customers in the big data space are all doing is they're taking that data that's interesting, they're moving into their data warehouse to enrich the data warehouse information about their customers or whatever the object of analysis is, they're doing massively parallel SQL queries on that data. Again, we think in this space, Oracle is very well positioned with our engineered systems technologies and our software technologies to capitalize on this trend for big data. Okay. Let's just summarize sort of what I said today.
Number one, we talked about how Oracle over the last 20 years has sort of grown market share by meeting the technology needs of our customers and building technology leadership in transaction processing, data warehousing, and big data management. We talked about the forecast for the next five years, a very healthy 10% CAGR. Very good growth. We talked about how Oracle 12c's new technologies, including our Multitenant option for the cloud, our pattern matching for big data, et cetera, we think are going to continue Oracle's technology leadership in various areas of database technology. We talked about how Oracle Database 12c Multitenant option in particular, and our engineered systems, when combined together, are going to be a very powerful platform for running database cloud.
Finally, we talked about big data and how our Oracle Big Data Appliance and Exadata are, again, another very powerful platform for the next generation of big data and data warehousing. With that, I'd like to close, and I guess we'll take some questions.
Thanks, Andy. Before I turn the call over to Kash for question and answers portion of the call, let me remind our listeners that you can submit a question at any time during the presentation by typing your question in the Q&A box in the lower part of your screen. Kash, I'll now turn it over to you.
Thank you very much, Shauna and Ken, and thank you, Andy, for doing this webcast. First observation and question. Congrats on getting 12c out. 1.2 million hours of testing. That's a lot in 2,500 person years. That's probably the most amount of development that has gone into an Oracle Database release. With respect to which key features of the 12c Database, would you characterize as being the most anticipated from a customer viewpoint, and which ones are the features that Oracle's more evangelizing?
I talked today a lot about the Multitenant option, and I have to say, the customers and our partners, our ISVs, are incredibly excited about that feature. No matter who we talk to, they are dying for that feature. I think that's number 1 on the list. As I mentioned, there's a lot of other stuff that we're doing that they're very excited about. Customers really want to lower their cost of storage, so they're very excited about our enhancements to our advanced compression option that lets you basically automate the process of lowering the cost of data over its life cycle. They're very excited about our security enhancements, like Data Redaction. We're seeing a lot of excitement there, and it goes on and on.
This release is full of a bunch of really exciting technologies that we think are going to be, again, cementing our leadership for the technology under databases.
Got it. Thanks so much. Another question. How should we think about the upgrade cycle with 12c ahead and the potential to drive new Database demand within the Oracle customer base?
I talked about that a bit when I talked about the Multitenant option, how the different use cases will come into play there. There is this traditional adoption rate where customers will go to 12c or a certain percentage of our customers can go to 12c R1, and then everybody goes to 12c R2 when that comes out. We think with the Multitenant feature especially, we're going to get a lot more adoption of 12c R1 just because there's so much excitement and interest in that technology. We're hoping that we will get a lot of early adoption of 12c, and there's a lot there for everyone. We're very excited about the release.
Fantastic. Andy, can you also please talk about how 12c can help Oracle competitively versus IBM, Microsoft, and SAP Sybase? Also more qualitatively, could this help you increase your already high market share and create new opportunities in the RDBMS market? Thank you.
Yeah. As you said, or as you noted from the market share data that I put out there, Microsoft and IBM have been for a number of years our top two competitors. We feel that the key to maintaining market share is to continue to have the best technology in the market, and we think with 12c, we are continuing to have that. We can't predict the future, but we certainly think we're going to have a really good technology story to tell our customers, and hopefully, that'll result in us continuing to do well in the market versus our top competitors.
Got it. For the Multitenant option, who do you see being adopted by in terms of percentage and type of database workloads, industry verticals, and what could be the drivers for the faster uptake, as you pointed out, than RAC?
As I was talking about earlier, something like RAC is a technology that we really like. It's one of these highly differentiated technologies that Oracle's had that our competitors have not had. It's very attractive to customers who want to run really scalable data warehouses, or they want to run very high-end, mission-critical, highly available transaction processing systems. However, it hasn't been that heavily used for the less critical systems because it's not considered necessary for that. Maybe, the addressable market opportunity is 10, 20% of the databases out there. The Multitenant feature is, we think, a much broadly required mainstream feature. We think virtually all of our customers who have more than 20, 30 databases are going to be looking at this because they all want to lower the cost of ownership of those databases by doing as much consolidation, building out private clouds.
We think, and we don't know the exact numbers, but versus RAC, we think this is going to be a far more mainstream capability. We think the market opportunity is quite significant. We'll see how it goes, but that's sort of our view. Now, as far as I talked about the use cases again for 12c, and like I said, dev and test is one of the major places that this technology plays really well, and we think customers will move to a new release to do dev and test much before they'll move to the new release to do their most critical stuff. We think that's going to give us some early adoption that maybe we didn't get in the previous releases when they came out.
We're very excited about this release again, and we think it's going to definitely drive the growth of the database, and we think there is going to be some quicker adoption of this release due to the applicability of these capabilities in the release.
Got it. No particular industry verticals. It seems like it's more horizontally going to be applicable across industry verticals.
Yeah, that's exactly right. It is a horizontal technology. It's going to be interesting to every industry out there.
Got it. Another question on my mind, I know you talked about Multitenant, what are the other features of 12c that are new options that can drive incremental revenues for Oracle?
Okay. In 12c, there's one new option. It's the Multitenant option that I've been talking about. 12c also has major new enhancements to all of our most popular options that we have out there today, RAC partitioning, compression, Active Data Guard, our security options, et cetera. We think customers who like all those options, hopefully they'll be driven to go to 12c to get even better versions of those options, and as we talked about a lot already, we think Multitenant is going to be a great new business, great new option for our customers. I guess I'll leave it at that.
That's fair enough. Thank you. How do you, Andy, characterize the impact of 12c on the IT ecosystem? For example, could 12c disrupt other layers of the software stack? I remember talking to you about the 10g, 10 years back, and how that could displace certain aspects of the software stack. How do you think about that question with respect to 12c?
Well, yeah, that's an interesting trend to talk about, Kash. If you look at what we've been doing over the last number of releases from 10g to 11g to 12c, we have been sort of broadening the database capability to take over some portions of the software stack around the database that used to require third-party technology. For example, 10g, we added something called Automatic Storage Management, which was a built-in volume manager technology. Customers used to have to go out and buy volume managers from third parties and integrate it with the Oracle Database. They didn't have to do that anymore, and over the last number of years, virtually all customers have moved to this built-in volume manager capability in the database. Exadata, when it came out, really was a radical change, this is a hardware technology convergence underneath an Oracle Database.
We had all the storage, the networking technology, and the servers you need to run the database. You didn't have to go integrate separate storage products and networking products and server products together anymore. That also sort of had a major impact on the IT ecosystem under Oracle Databases as we went there. With 12c, the big new thing, of course, is multi-tenancy. Like I said, multi-tenancy can be viewed as a way of virtualizing our Oracle Database. As I said earlier, virtualization has not been all that popular underneath Oracle Databases today for various reasons. The biggest one is that it hasn't solved the operational cost problem about running lots of databases.
We think multi-tenancy is going to be very popular for customers building out clouds, and they may still use virtual machines, but I think multi-tenancy may reduce the need for virtual machines in Oracle Database environments. There may be some impact in that space, but at some level, virtualization of the database and virtual machines are complementary technologies, and they'll play together. At the margin, I think the multi-tenant capability will somewhat lessen requirements for virtual machines underneath Oracle Databases.
Got it. Thank you so much. Oracle had big news with the Salesforce.com partnership. Andy, could you talk a little bit about how 12c and Exadata are part of this relationship?
Yeah. I think, I guess a lot of you probably saw that, the Larry and Marc Benioff webcast a few weeks ago. In the database group, we're very excited about this. Salesforce.com has been a great partner, customer of the Oracle Database since the beginning of that company, and we are very excited that they've reaffirmed their commitment to Oracle for a long term, a large number of years moving forward. They obviously over that time will be adopting Oracle Database 12c. The other big thing they announced is that they're also adopting Exadata. It's another great proof point for the value of Exadata, in this case, in a software as a service environment. We're very excited about that as well. I don't really have anything more I can say about that.
We're looking forward to working really closely with the software, the Salesforce.com developers and IT guys to make sure they get the most out of their Oracle Database technology.
Got it. Thank you. Andy, how do you envision 12c as a foundational technology, with competitive price performance for cloud companies? Not so much Oracle and Salesforce, but for the broader world. Thank you.
Yeah. Excuse me. With 12c, if you are an ISV out there and you've written an Oracle Database application and you have not moved to the cloud yet, 12c is a great, exciting new opportunity for you. Because with 12c, those applications you've written over the last 20 years can all be now moved into a cloud environment without rewriting those applications. If you look like what, for example, a Salesforce had to do 10 years ago when they came to market, they had to build multi-tenancy into their application tier because the database didn't have that capability. When they did that, it actually caused them some issues because now all the existing database tools for querying and reporting can't be used because if you were to use them, you would bypass this middle tier, which enforces the security, the multi-tenancy of your application.
They had to do a lot of work replicating a lot of the tools around databases. With the new multi-tenancy feature in 12c, if I'm an ISV, I get the best of all possible worlds. My application is now cloud-enabled. I don't have to do any work to rewrite my application. Multi-tenancy is now pushed down into the database, so all my existing tools, all the database security mechanisms, everything just works. It's a great boon for the ISVs who want to move to SaaS. Like I said, they're very excited about 12c for that reason.
Awesome. Oracle has had an in-memory database technology called TimesTen, which I think you've mentioned briefly. How would you position the 12c in-memory columnar database that Larry talked about on the earnings conference call relative to the competition?
Yeah. I guess all of you probably heard Larry. Larry talked about in-memory column store technology. In the historical context, in-memory column store technology is a nice new feature, that as the IDC report said, is a table stakes technology. Everybody's going to have to build it. Column stores have been around for 25 years out there. In-memory column stores go back about 10 years. Everybody knows how to build this technology. Everybody's working on it. We will have this technology, as Larry said. I think that's about all we can say at this point in time.
Got it. Some questions from the audience that have been streamed in, and I'm just going to sound like I'm the smart guy asking these questions, but I'm just actually repeating what my smart colleagues are saying. What benefits do you get from using an Oracle Database and Exadata together for big data?
That goes to the last slide I showed. There are two pieces to how you do big data. There is the ingestion of the big data piece, filtering kind of stuff. We think our Oracle Big Data Appliance is a great engineered system that our enterprise customers can use to very easily get into that space. Today, our customers do not have the skills to run Hadoop or to do MapReduce programming, et cetera. Our engineered systems for Hadoop, our Oracle Big Data Appliance, is a nice way for our customers to very rapidly deploy that kind of technology without really having to hire huge numbers of experts to get things up and running. As I said, in the big data space, what people are doing, the best practices around big data, is to ingest that data into an HDFS file system on Hadoop.
That is something all the big data guys are doing. Then they analyze that data using some batch processing on those Hadoop clusters, and they move it into a data warehouse. We think Oracle's data warehousing technology running on Exadata is by far the industry's best platform for that kind of technology as well. We think the combination of our Oracle Big Data Appliance and Exadata give our enterprise customers a very easy entrée into the world of big data. As you heard in the earnings call, we are doing real well with our engineered systems technology. We think the tight coupling of these two technologies together makes it very easy for our customers to install, deploy, and get up to speed there.
We think one of the things we are doing, that we have already started doing, is we are making Oracle SQL available not only running on Exadata to analyze data that is in the Exadata storage, but also we have a SQL connector to HDFS so that we can also run Oracle SQL against data residing in the Hadoop HDFS file system. That is one of the key technology areas that we are investing in.
That actually ties into the next question logically. Maybe it is made a little redundant, but I am going to pose that question just so it gives you a chance to talk more about it. What does Andy think about the idea of Hadoop as a data reservoir with a SQL interface, such that data does not need to come out of Hadoop and into a data warehouse?
Yeah. Well, I guess I'll repeat myself again, but one of the things here is you don't have to believe me. Number one, I think you saw that quote I had from the IDC report. They said, yeah, one of the nice use cases is to use HDFS as a data reservoir and move the data into a relational database. The reason people have sort of soured on the notion that, oh, yeah, I can do all my data warehousing and analytics in Hadoop, is that Hadoop is really a batch processing environment. If I'm a data scientist and I want to analyze data, with Hadoop, I send in my query, and then I run this batch processing environment on it.
It does massively parallel processing, but an hour later, I get my result back, and they say, "Okay, let me ask another question based on the result of this question." At the end of the day, I've asked maybe eight questions. If I'm a data analyst, that's not a very productive environment. With a relational database, you can do interactive querying. You ask a question, you get an answer back in a few seconds or a few minutes if it's a really long-running query, then you ask your next question. At the end of the day, your data scientist has had a very productive day. He's asked hundreds of questions and has made a lot more progress in his analysis. That's why people are really looking at the combination of these two technologies. Hadoop is a big file system on steroids.
It can store lots of data at very low cost, and so lots of people want to store lots of data and never throw it out. This is a very interesting data reservoir for that data. If you want to do interactive analytics, your data scientist-type people really are gravitating towards moving some of that data that they view interesting into a massively parallel relational database and doing their interactive analytics over there. That's really what I think everybody is moving towards as the platform for big data analytics. From our standpoint, it's really just the next generation of data warehousing, where the ETL kind of processing is now being done on Hadoop, and the interactive analytics are being done on massively parallel relational databases.
This, I guess, increases the relevance of the relational database going forward. I think that's an implication, I would suppose.
Exactly. That's why Big Data is a big driver for growth in the relational database market.
Got it. Next audience question. Why is test and dev such a big database opportunity, or isn't Oracle already generally monetizing that? If you're deploying on Oracle, are you also buying more licenses for test and dev?
Yeah. Customers today who have Oracle production databases, of course, will be using Oracle for test dev. I guess what we're saying is that with our multi-tenancy feature, we are going to be able to do two things. We're going to lower the cost of ownership around these test dev environments, which, because there's so many of them, are sort of expensive, and we're going to be making the developers and testers much more productive using our capability because we have this ability to do what we call cloning of these pluggable databases, these virtual databases, very rapidly. We think the customers today are doing fine with Oracle technology, we think with the multi-tenancy, it'll give them lower cost of ownership, it'll give them higher productivity, and for Oracle, it's a new business area. We will get some value out of it as well as a business.
For customers, even though they're paying us something extra for multi-tenancy, we think the return on that investment is going to be huge. We think it's going to be very popular for both parties.
Wonderful. With that, I think we're at the end of the list of questions. Thank you so much, Andy, Ken, and Shauna. I'm going to hand the conference back over to Shauna.
Thanks, Kash. To wrap up, we'd like to thank you for joining us today. We'd like to extend a very special thank you to Kash for monitoring the Q&A portion of today's call and asking the questions most often asked by our investors. If you have any follow-up questions, please contact the investor relations team here at Oracle. This concludes our call.