Ladies and gentlemen, please welcome President and Chief Financial Officer, Oracle, Safra Katz.
Good afternoon, everyone. It's wonderful to see you again this year. It's been an amazing Oracle Open World. Unfortunately, most of it, I've missed because I've been homesick in bed. So I apologize for a couple of things in advance.
First of all, my voice, the nonstop coughing I would do if I stood up here the whole afternoon and the fact that we'll be switching a few things around today because of it. First, let me just thank you. Let me thank you all for being here, for spending the time with us. I hope you've gotten the chance to really spend some time at Oracle Open World. This is without a doubt the most exciting open world we have ever had.
We're going to share with you today really the fundamental of our future and our present, which is what makes it so much more exciting. I always kind of try to figure out where we are in our life cycle. And I can I really do feel confident that I can actually say we are finally at the end of the very beginning? And we've got just all the parts and all the parts engineered to work together. And I hope today we can really share with you our strategy for the future, our goals, our abilities, our products and really our future results that will come from bringing it all together.
Because my voice is just not going to be able to hold out, I'm going to come back and do Q and A after Mark's presentation, but we're going to reorganize a little bit. And so Ken Bond is going to do the section I usually do, which includes our financial results. And he'll be followed by Mark. And then Mark and I will together take questions and answers. So with that, I'm going to pass over to Ken and thank you very much.
Thank you, Safra.
And then also welcome all of you. So obviously, as Safra pointed out, it's been a very busy week here at OpenWorld. And just do a little housekeeping and then we'll go into the financial summary. If you haven't already grabbed the lunch, they're right outside. Bathroom is right here to my left, your right.
The Oracle Wi Fi is up and running. It's It's Oracle FAM, FAM in caps. So it's all there and then you all should have electrical. So we'll do that. So this is my favorite slide that I always get to do.
And I have to read some language here, so please indulge me. As a reminder, today's presentation 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, these statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. Throughout today's discussion, we'll attempt to present some important factors relating to our business, which may potentially affect these forward looking statements. And as a result, we caution you against placing undue reliance on these forward looking statements, which reflect our opinion only as of today.
And as a reminder, we're not obligating ourselves to revise or publicly release the results of any revision of these forward looking statements in light of new information or future events. We encourage you to review our most recent reports on Forms 10 ks and 10 Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. Also, we'd like to make sure everybody understands that the presentation today are for information purposes only. And then lastly is just as a reminder, we will be using non GAAP measures throughout the performance, especially the one I'll be doing shortly here. So I just want to remind everybody that the GAAP to non GAAP reconciliations are available on our website.
So thank you for the indulgence. What you're going to see is a number of the speakers as they're presenting today will show you the safe harbor slide. They'll make a quick reference to it. When they're making that reference, they're referring you back to this portion of today's webcast. Okay, let's take a quick walk through the agenda.
And as you heard from Safa, we've made a couple of little changes here, so welcome. What we'll do then is we're juggling things a little bit. I'll walk you through quickly the financial summary. Mark will talk with you then about the strategy. We'll bring Safra and Mark back up on stage for Q and A.
Then we'll start getting into the technology. We'll have Abhay Parsnus talk about the Oracle Cloud, the platform level. Steve Miranda will talk about Fusion and Software as a Service at the application level. Then we'll talk about our engineered systems. Juan Loeweza will speak to you about the Exadata products.
Hassan Rizvi will speak to you about Exalogix. And then what we'll do is in order to be a little bit more efficient about it, we'll bring Thomas up to address the Q and A for those products. We'll then get into a break and that'll take us to about 3 o'clock just so everybody has an understanding about when that'll be. We expect to be there at 3. Then we'll get into the second half.
And Andy Mendelson will come up and talk about Oracle Database 12c. We'll also continue with Engineered Systems. Balaji Yalemanchilli will speak to you about Exolytics. Thomas will come up in data. We'll do a Q and A on that portion of the day.
And then Larry will be coming in to do a Q and A with you to wrap up. We expect the event will wrap up somewhere around 5 o'clock thereabouts. Okay. All right. Let me take you through some of the financial summary.
Safe Harbor, I just referred to. So I want to kind of hit 4 things today. First of which is a quick update on our financial performance over the last quarter and the last year. I thought it'd be good to touch on the business model a little bit and then we'll get a little bit deeper into some of our historical financial results and of course how we stack up. Most recent quarter reported was fiscal quarter Q1.
We had 11% constant currency growth. These are constant currency numbers. I want to talk about growth rates. 11% constant currency growth that compares to $0.11 in the prior year, double digit net income growth and earnings per share growth on top of the same last year. Very strong cash flow of $5,700,000,000 this most recent quarter.
Last fiscal year, which ended in May, 9% new software license growth and that was on top of FY 2011 had 19%. Revenue was 4%, but that's on top of 30% the prior year in FY 2011. And then we've seen margin expansion. We're back to record levels for last year. We saw margin expansion in Q1, double digit earnings share growth in FY 2012 and that was on top of 30 percent growth in FY 2011.
Free cash flow continues to be very, very strong. So setting a baseline for you for a lot of the slides that come forward, Larry made a comment back in 2,005 talking about our expectation that we could see earnings growth in excess of 20% over the following years. So how have we done against that? Actually quite well. We've seen EPS growth averaging 20% over the last 7 years.
What's driving that? Big surprise to folks. The software business does extremely well. Just kind of putting in perspective here, 87% of our margin dollars is being driven by software business, software new license, software support, very strong part of our business. What makes that so strong?
It's the fundamentals of the business model. When we sell software licenses, new license sales, substantially all of those new sales come with the support contract. The renewal rates on those contracts very high, very steady, very consistent. And that leads to an installed base model on software support that as you can see has just gotten bigger and bigger when we look at our software sales overall, started at 49%, most recently, 55% of our software revenue is from software support and that has been expanding. That business by the way comes with very healthy margins.
Let's take a
look through some of our financials over the last few years. Top line growth very solid 18%. New software license, double digit. And that growth over the last 8 years, 7 years, excuse me, has been very strong and been balanced. If we look across our geographies, all geographies showing double digit growth.
Software support, a big part of that story. It's an installed base that just keeps getting bigger. 17% growth over the last 7 years in excess of $16,000,000,000 in software support. These are big numbers. Now we've been investing.
Safra talked about there's probably never been a better time for Oracle in terms of our product portfolio, never been stronger. Investments that we've been talking with you about over the last few quarters, making those investments in sales resources to start driving value from the wonderful products that we're bringing to market. But the investments haven't been just in sales. We want you to understand, we're always continuing to innovate. Not only do we invest for growth, we invest for innovation.
4,000 people over the last 8 quarters added to the R and D organization. Okay. But how does that stack up with everything else? 94% of our headcount ads over the last 2 years have been sales and that's sales, not sales and marketing, it's sales in R and D. We're investing for growth.
We're investing for innovation. Now given the size and scale of Oracle, we have natural advantages. We're basically taking the development dollars $4,500,000,000 last year, higher than that approaching $5,000,000,000 this year. We're spreading that cost over an enormous base of 390,000 plus customers. That translates to margins that are best in class.
I think we probably have probably the single best margins out there, especially for a company of ours says. You can see here this graph is just showing depicting here, the smaller the company, the lower the margin, Oracle being large, better margin. And you've seen that play out through the financials, Margin expansion over the last 5 Here's 500 basis points higher than they were back in FY 'five. Put broke out, you can see FY 'ten, we broke that out in 2 halves for you. Second half and the middle of Q3, actually the last month of Q3, we acquired Sun Microsystem.
We laid a hardware business on top of a software business and we're still 500 basis points higher. We're still expanding margins. Last year's 46% was back to record levels set in FY 'nine. That starts to flow through as we work our way through the P and L, operating income up 20%. And in turn drives a lot of cash.
Our cash flow last quarter $5,700,000,000 We're putting that cash to work. We reinvest through R and D, the $4,500,000,000 last year, higher this year. We invest through M and A. We also are in a position to generate sufficient cash to push back to shareholders $25,000,000,000 over the last 8 years. Roughly 30% was just in the last fiscal year.
If you look at the numbers, you can kind of see that last year between buybacks and dividends, we were almost the same level as the prior 3 years combined, very healthy cash flow generation. And that flows to the bottom line again 20% earnings growth. Okay. That's us. How do we compare?
Well, we took a look and we said, why don't we kind of compare ourselves against some of our friends? You've got some high flyers in here, fast growing companies and you have more steady mainstream companies that have been here for quite some time. Some having more recent challenges, some not. But the point is you've got some high flyers and you've got some of those others as well. So it's a balanced portfolio.
We took a dozen companies here. We also looked at the Dow. Now to be clear, we took the Dow less the financials. The business model for financials and banks is different than others. You can see the names there, but anything that's financial service related, we took that out.
Everything else, fair game, we threw them in. What did we do with it? Well, we took our revenue and we normalized that revenue in FY05 to 100. We indexed to 100. And then we aggregated all of the revenue for all of our tech peers and we normalized that to 100.
And then we took all those Dow 30s not excluding the financials and we indexed all those back to 100 and then we laid it out. How have those numbers changed over time? We did pretty well in revenue. We did pretty well in operating income. We did pretty well in net income.
We do well in free cash flow. Guess what? We do just fine in earnings per share as well. Very strong, consistently outperforming the group of peers and the Dow 30s. Now a lot of stuff has happened.
We took a look at how has our multiple been. We looked at the Dow 30. Now the world has changed a lot since 2,005. We all remember 2,008, 2009 And there's been compression. We've all seen that.
The Dow multiple has dropped 26 points. The tech peers, the companies we're looking at, they've gone down 33. Oracle, down 40. Now we're not trying to draw any conclusions, but these are the kinds of things that we look at sometimes and we do scratch our head a little bit. With that,
I'm going
to turn it over to Mark. Mark?
Hello? Hi. Safra's uninjured reserves. So she's going to be well enough, so we'll do Q and A together. Hi.
When I saw my schedule for the week, I have to tell you, this was the highlight of it to come see all of you. I bet I've got her laughing. She's had a rough week. I'll tell you three things. First,
I thought I'd tell you a
little bit about strategically what we're trying to do. 2nd, tell you a little bit about our field organization since that seems to be a hot button that everybody has. I'll tell you a little bit about the announcements we made at the show and how relevant they are, I think, to our customers. And then Sefra and I'll do Q and A and I'll try to move through this at a rapid pace. First, strategically, 4 things we're trying to get done.
No change to our best of breed strategy. Everything we do in engineering, we do to win by the various point product. We want to be the best at what we do. We line up from engineering to sales to execute that strategy. It doesn't matter where at the stack, whether we're at storage, servers, OS, database, you look at our progress at Linux, our progress in database, the popularity of our database, popularity of our middleware applications.
And we do have customers that want to buy from us in a heterogeneous environment and we sell to them in a heterogeneous environment. We want to be open, high level of enterprise fit. No change to that strategy. What we do, do then, 2nd, is we integrate these best of breed capabilities together. And one of the reasons as we talk about Engineered Systems that they're so attractive isn't just the integration, it's the fact that each individual piece part is in and of itself the best in class.
And that's why you get this huge exponent of performance and total cost of ownership as you do it. Engineered systems manifest itself in Exadata, Exalogix, Exalytics, Spark Supercluster. They deliver extreme performance. And there are multiple benefits that come out of these engineered systems. 1, they're just simpler.
We provision the stuff, the customer doesn't. 2nd, they perform better. And as we talked Larry talked a lot Sunday night about not just performance, but performance and cost, if you will, TCO is actually one conversation. We've historically talked about it being 100x faster being exadata. But the fact is you can translate that into cost savings.
In addition to TCO, performance, we can support them better. One of the things we announced June 6, we announced the cloud that probably got less publicity than the cloud was Platinum Services, our ability on certain configurations now to give 5 minute SLAs. Frankly, we can do better than that. But 5 minute SLAs when we see an SR, highest levels of support you see in the industry. 3rd for us, and you're going to hear more about that today, is this whole movement to Fusion Cloud Applications.
It's a big transition. We're the only people, we're the only company with a suite of applications available in the cloud, but they're also available private cloud and available on premise. Huge differentiator in the market, brand new code. Salesforce circa 1997, 1998, SAP, nothing in the cloud of consequence, highly differentiated position that we've got. And then 4th for us, we're taking things to market through industries, trying to solve industry problems, banking problems, health care problems, etcetera.
So that's what we're doing strategically. Now last year, we added a lot of people to the field. They are we added them and I have even better news, they're still here. So we've had keeping you entertained over there. So we had lower attrition than historically.
We've hired. We've been able because of various reasons to attract, we think, very talented people. Our pipelines are up accordingly. I'm going to repeat again because every now and then I'll get a note that somebody says the Oracle field is in some transformation, some transition. I want to make sure I'm clear with you.
They're not. They're not. Every salesperson at Oracle knows who their boss is right now. Every salesperson at Oracle has a territory. Every salesperson at Oracle has a comp plan.
And they're being measured on their pipeline and their funnel according their pipeline and their results accordingly. Now what we've done is while we've added more people, we've actually specialized them further. And one more time, there's a big belief let me put it another way, I have a big belief that when you give a salesperson 2 things to sell, they self specialize. We specialize for them. Get them focused.
We want them to be experts at what they sell, better than their competition. Simultaneously, we use a key account director process where there is a lead in the account amongst the group to align the total portfolio of Oracle to our customer. Large number of resource in the field. Now to Ken's point, I want to make sure I clear up one thing. When we say we added in sales and R and D, there's also what did you add in sales because sales is a broad category.
What we added in sales were 2 things, primarily, quota carrying sales reps and presale technical reps that support the quota carrying sales rep. In addition to that, we reduced the number of double pay people in our quota carrying sales organization. So I don't want to get you into too much complexity, but just so you understand the transformation we've gone through, that's over, focusing more people with a singular quota, further specialized in front of the customer who sell, supported by technical resource that's also expert, if you will, deeper technically in the product set aligned with those sales folks. So when you put a label of sales, you can find operations people, alliance people, all types of people. That's not what we hire.
Quota carrying and presale technical people supporting those folks. At the show, some pretty big announcements. You're going to hear about them during the day. We announced the new Exadata. Is one here?
You see, one hates this because I'm going to have to tell you about this thing so that when one talks
to you about it's not going to it's going
to feel like, didn't the other guy tell me about this? It's pretty big stuff. 20 I got to tell I used to be in the analytics business many moons ago when a 3 or 4 terabyte data warehouse was a big deal. 5 terabyte, 10 terabyte. This thing has 26 terabytes of memory, 4 terabytes of DRAM, 22 terabytes of flash, translated to it's like really fast.
So you've got certain jobs that we talk about jobs with the Oracle database that we can run 100 times faster with Exadata. Certain jobs with this -three, we could actually accelerate 20 times as fast as that. Fast. Big announcement for us. Big announcement for us.
And remember, as I just went through that, I gave you that example with pure speed. You could do exactly what I said earlier, translate that into TCO for the customer. 2nd, we announced infrastructure and platform as a service to supplement our SaaS offerings out of the cloud. 3rd, we announced database 12c and the c being cloud. And again, he's going to talk to you about that.
And then lastly, we announced the thing that probably is got about as much buzz as anything I've seen for a while. We announced really the capability of the Oracle Cloud as a private cloud for our customers, meaning that you can now get that very same Oracle Cloud and we'll put it behind your firewall. We'll make it OpEx for you. We'll let you share resources with the Oracle Cloud while you do it, so you get elasticity as you do it and forms the basis of what can be a fantastic consolidation engine, infrastructure service, you get all the benefits of AXA standard configurations, fully secured behind your firewall. We'll make it OpEx.
We'll manage it for you. Four big announcements at the show that supplement what I'd tell you I think is probably the no doubt the strongest portfolio in the industry top to bottom. So that's what we've done. So with that, you want to come up, Safran, we'll just do Q
A? Okay. By the way, those of you who want to ask questions for Larry, save your questions because he's coming late in the afternoon. So and he'll do basically just the Q and A. So I tell you these lights are so bright.
If you're raising your hand, we can't even see it. Maybe we could turn them down. Adam?
Hi. Thank you. It's Adam from Morgan Stanley. Last couple of days, we've talked to a lot of partners and customers who are talking a lot more about fusion and building pipe for fusion, customers live on fusion. At this point in the fusion cycle, how do you size what you think the forward license revenue or opportunity set is?
And how should we expect to see Fusion really start to impact the numbers over the next 4 to 8 quarters?
Well, listen, we've been working on Fusion for 7 years, okay? This is the most modern product line, the broadest product line in the world, okay? We're pretty optimistic. Now I'm not going to give you numbers of where this is going to go, but we're talking about over 100 modules. I pulled myself out of bed to meet with a couple of customers, a few customers, and they were talking about going live on Fusion procurement on all the different Fusion HCM.
And this has been really very, very warmly received. It's gone really well and we're very optimistic. I don't have a number for you to plug into the spreadsheet, but we think this has been a long time coming and we're very excited about it.
I mean, listen, we're putting a lot of energy behind it. I won't give you any numbers either, particularly if she won't. I think we're out aggressively selling. And I think, Adam, you see it in the show of HCM now is great. We've got references.
We've got live customers. We think we have a better solution than our competition measured in just pure functionality. We've got more release coming. We've got sales people that are now educated and trained. The run we're having in Europe and globally is exciting.
So we're pretty motivated about where we sit. Sales automation, as you know, was released after HCM. We're going through that exact same process with sales automation. We've got our organization aligned as of June 1. It's very focused on it.
We've had some good wins. We talked about that at the quarter conference call. So we're pretty motivated by the position we're in. The Safra's point, we also get these competitors we have are point product competitors. And to the point she raised, we're the only one with a suite of capability, which I'm telling you long run as much as many of you want to talk about these little boutique players that are out there, companies not only have to look at these things vertically, they have to look at them horizontally and how they work together and being the 1st mover with cloud SaaS apps on a suite of capability is going to be huge differentiator for us out there.
So I agree with you. The reception, I think we're buoyed by the positive reception. And we're not thinking
for anything.
Hi. It's Brent Thill from UBS. Safran, you achieved your 20% operating margin goal, 20% earnings growth goal. Can you just give us a sense of how you're thinking about that goal going forward? Is that your aspirations going forward?
And for Mark, just on Adam's question on fusion.
We're doing 2 parts now, you get to do 2 it will take forever.
I'll leave it there.
Okay. Listen, we have gone into an area now where we are very, very focused on organic growth. We think we have all the best, most incredible parts. Those of you who may have watched Larry do some Q and A television or in other venues here have to hear from us that we are extremely confident about the different product lines we have and their opportunity to really grow fast. We've invested massively in our distribution channel.
That should tell you right there and then how optimistic we are. We are literally leaning in with the best product line top to bottom that we've ever had and the reception has been incredible. In all the parts of the business that really matter that we really look at very carefully, we believe that this is our chance to move forward. And we've got the parts, they're engineered to work together and no one has what we have. You can't stand up a single other company that's got the platform, the products and the infrastructure that we have and has people look and say, we're new to the cloud, we're old world and now we've come to the new world, Brett.
But that's not true. You see, the truth of the matter is Oracle always actually lives in the new world, okay? Larry has always led us with a vision and maybe it wasn't called cloud 7 years ago when we decided we were going to build the most modern toolkit in the world to build the most modern, SaaS ready applications in the world. And maybe it wasn't called, I don't know, cloud when we decided to make sure our hardware and software can work together and it can work either at our place or at our customer's place. But let me tell you, we've got everything for the cloud and we think this is going to be an incredible next 5 year run.
So yes, for the last 7 years, it's been 20% compounded annual growth. There's nothing standing between us and doing that again with what we have now. Okay.
Thanks, over here. Mark Richter Ellen. I'm just curious on the references for Fusion. Last year at this time, Larry announced Fusion. I think you had difficulties probably selling it before you had good references.
So I guess the first part of the question is, where do you stand now in terms of real referenceable customers for that? And I'm also curious about the Fusion behind the firewall on the private cloud. It seems that a lot of big companies are a little reluctant to put their apps out into the wild. Do you have any customers that are running it now in the Oracle Private Cloud? When will we begin to see that?
And what kind of feedback you're getting from big customers in terms of their desire to have it behind the firewall versus to say work day out in the wild. Okay.
Thanks. Just one quick just point of decorum, right? This thing is called Q and A as opposed Qs and A. But anyway, we'll go I'll try my best to get through the stuff you asked. 1, you're right.
Mean, listen, it's much easier to sell. When you sell, you have to go through a process of provisioning the solution, getting them live and then getting them referenceable. So to your point, when we announced, it's obviously easier as you go through that process. In HCM, we're out there. I mean, we've got people that are live.
We've got references. We've got references of extremely sophisticated logos, if I can use that term. We're just we're out selling. We're in great shape. We're going through that same process now going live in sales automation in right with right now in service, we've got more references than anybody in the planet.
We've got the leading solution in service automation today. So I could go through things piece by piece, but we're in pretty darn good shape from a going live referenceability perspective as we go forward. To your point on the private cloud, I use this term putting their apps into the wild. But I let me say it a different way than you said it. I think what we've done with this announcement is eliminate most every concern that an IT organization or business would have regarding security, regarding anything outside their firewall, whether it be regulatory or just I'm just worried.
We take that away when we deliver this in the private cloud. Now there's 2 I want to separate 2 different things. Somebody running Fusion in their private cloud is different from what we announced Sunday, which is our delivery now of infrastructure as a service that has the same infrastructure that which we run the Oracle Cloud. So and we have customers now deploying Fusion. Again, remember Fusion has got a couple of big differentiators here.
Fusion shows up by module. You can buy Fusion. You can buy a performance management app in HCM and you can use that in concert with your PeopleSoft application. You The ability you don't have to rip and replace this stuff. It's modular.
It can run-in the Oracle cloud. It can run-in a private cloud. It can run on premise. And you can change your mind. Really, we've a limit what these product announcements as Safra described, we've just said, we've made it actually more complicated for the customer because we've taken every objection away.
And I mean that sort of tongue in cheek. But now it's to the fact that you actually have to think through what's best for you, because we're going to do it for you whatever way you want us to do it.
Joe DiFucci, I see you.
Thanks. It's John DiFucci from JPMorgan.
Sorry. For the sake of now you're Joe.
I could go with Joe if I were. That's okay. Sorry, John.
That's okay. Thanks, Tom.
I'm a hilarious Tom. No problem.
Mark, you mentioned that the sales team is measured on pipeline and performance. And performance, I take to mean actual sales. I'd expect that more recently anyway, it's more about pipeline because given the high hiring you've been doing recently, so there's a lot of relatively newer people out in the sales force. When do you expect that to become more proportioned or balanced to historical norms where you're really looking at actual sales versus pipeline? When do you expect I mean, you've talked about this in the past, but I'd like to hear it as this progresses, when do you expect to start to see that in actual sales?
You're obviously always looking at pipeline, but you're bringing in new people, your sales you're selling the enterprise, it's 6 to 9 months or so.
I really appreciate the way you continue to repackage the question as you go. But listen, I think you're asking when basically these folks productive. Exactly. And at the end of the day, we have people who have feathered into our model at different points and they're at different points of maturity. So we have people now that have been if you did a starting date of June 1 last year, so you rolled back 15, 15.5 months.
Those people today are measured on sales. It's been enough training, assimilation time, it's sales. We have other people that have been here less than 5 or 6 months. They're being measured now in pipeline. So it depends on tenure as it relates to what we described.
But listen, John, we're focused on selling. We look at pipelines. We measure pipelines. But at the end of the day, it's about deals. It's about transactions.
It's about growing. And so that is in the end the core metric. All you get with pipelines is frankly early indicators of interest. Frankly pipelines growth in the absence of a conversion to a sale and understanding the different elements of conversion. As you know, those are different by product line.
They're different by geography. And so in isolation, it's not a perfect science. You have to get into a very atomic level of detail to understand how this is going. That said, as I said on the last conference call, our pipeline is up. Our pipeline is up materially as a result of what Safra described a few minutes ago.
I guess just quick follow-up there. The bulk of hiring was done, I don't know, 6 months ago, something like that. Is that something so would we should we expect that pipeline to transfer into
Let me go one more time. We expect to have a good year. And I'm not going to give you I know it'd be great to have a call and we can take you through each guy and tell you how they're doing etcetera, etcetera and how their pipeline is growing. And I'm I'd be glad to do it. She's told me I can't do that because I really told her, so it would be great.
I could just take you through region by region, person by person how their pipeline is going. So don't. So listen, we feel good about who we've hired. We think we know we've hired a lot of people. We think we've hired good people.
We've had them in front of a customer. Our pipelines are growing. They feather in over multiple quarters. So we did see some hiring of Q1 of last year and Q2 of last year and Q3 of last year. We've done hiring in Q1 of this year.
We've made a major move in our business analytics business. That's a business actually we don't talk about much. We feel great about our position in Business Analytics. Unfortunately, we feel so good about our other positions, we don't talk about it as much. So I just did a keynote, I don't know, 3, 4 hours ago.
I don't know if Balaji is in here, you're in the back. Balaji and I did a keynote on just the subject of business analytics and we're hiring business analytics right now. And will those people come online? Some maybe a little bit pipeline in Q2, hopefully business in Q3. But really if you look at our industry businesses and our regions, we expect a good year.
Anybody? Hey. Brad Reback from Stifel. I'll make it very quick. Good.
Safra, as we think about the move to the cloud and the CapEx requirements for the business, do they increase meaningfully?
Interestingly enough, they're not nearly what you would think they are. And for us, when looking both at CapEx and at margins generally, it's all very manageable within our And luckily, we both make the software, make the hardware, so I get a reasonably good price from myself. And then additionally, because we do it in scale, because we also write the software, we reduce the one thing that usually actually costs a lot more than the CapEx and even more than the energy and that is the labor. And that's really what must be bogging down many of the other smaller cloud vendors between the labor to manage these systems and their sales and marketing expenses, which they just don't have the kind of scale we do. We don't see CapEx as an issue or even energy costs or labor or sales and marketing.
We actually think we're going to be able to run the cloud at the kind of margins that I think will make all of you reevaluate what all the little guys are doing or even the midsize guys. We think it can be run very, very well. So I know I've answered more than just your question, but we're not it's all within our margin envelope at this point.
We also bought this company called XSIG. Every time I say it, I'm told I say it wrong. Seego, first of all, tell me it's wrong.
Seego. But what we do
in that product is we actually provision more efficiently network connections. So add that to everything Safra said and we lower our network provisioning costs dramatically.
So as a
result, what I'll just say one last time, what a huge advantage when that major supplier, almost the only supplier of everything we do to run our cloud operations is ourselves. Joel, you had I thought Joel, you had your hand up.
Thanks. Mark, Joel Fishbein from Lazard Capital Markets. Just to follow-up on the new Exadata as a Service and Database 12c. Can you just give us when will they be GA and where are they in that cycle? That would be helpful to just get clarity on that.
Exadata, the Dash 3. Yes. They're out, man. I'm making them right now. Orders, they're shipping, they're going.
I'm out of X2s. All I got is X3s. We are That is actually one of the technical guys can tell me exactly when Andy, the cloud infrastructure as a service is 12c. 12c, we're not telling you yet because it ain't ready. We will tell you the minute it's out.
The minute it's out. But we're it's coming out soon.
Infrastructure as a Service this calendar year.
Yes.
Okay.
Hi. This is Justin Bandy from Artisan Partners over here. Safra, I'd like to hear your thoughts on capital allocation going forward. In your comments, you said you're happy with the pieces that you have and your focus is on organic growth. So does this mean we'll see a different pace of M and A going forward?
And then your thoughts on dividend and buyback, what should we think about that? Thanks. Sure.
Well, it's like the past is prelude. And what we're going to always do is, first of all, our first rule is we're not a bank, okay? It's your money. And unless we've got somewhere great to use it, we're spending it home. And historically, that's what we've done.
As you see, our buybacks have been really large lately. In regarding the dividend, our Board constantly is looking at that. Obviously, there are potentially tax law changes coming up. And so we will all of us are looking for guidance. We're going to have to see what plays out in the next few months as to how that goes.
And but we're constantly looking at it. And the We're I'm a personal shopper for our CEO. And We're I'm a personal shopper for our CEO. And when we find something that's really compelling, that we think we can make a lot of money for all of you with, we're going to buy it. We don't feel pressed to buy anything.
We've got all the most incredible parts right now. You can just hear it in sort of every part of Oracle Open World. But every once in a while, there are things that come up that are a perfect fit. And to be a perfect fit, they've got to match what we're doing. They've got to pull through other products and they've got to fit within our strategy.
And so we will look at things. We still continue to do acquisitions. And I'm not telegraphing 1 or the other. In my comment earlier about we've got the greatest parts, we do. But if something else comes up that we see that's compelling, we're going to look at it.
And but for us, it's all about the return. It's all about growth. And it's ultimately about sending the capital back to the people who own it, which is you guys.
Hi.
I'm short. No, it's You guys can't even realize that we can't even show you.
Laura Letterman with William Blair. Thank you. As you acquire products like right now that where those vendors had them only running at their site that shifted from running things on premise. When you acquire companies, will you allow them the customers to run it on premise? Will you buy pure cloud companies, the same type of choice you give them for the products you create yourself?
Is that going to be a policy for everything you acquire even if it's pure cloud that you will allow them to run it on their own premise?
It's going to depend if that's the business model that makes sense, depending on what the service is and whether it makes sense and whether it's technically feasible and manageable. And so I think we'll have to take it on a case by case basis. But as a general matter, we do believe in customer choice. We want to give them the opportunity and we want to make sure though that to the extent that we give the opportunity, we're only going to do it if we think there's a market for it.
Yes. Listen, I mean that's our what you described is our strategy, but you're going to have to take each of those products. Products have been architected for the cloud. We have typically to your point bought SaaS products, point products to fill in some parts of our portfolio and those products work in the cloud. We'll always evaluate whether it makes sense to ship them just as we would make decisions on how we integrate products across our product line when we bring them into the company.
So but those generally are SaaS products. They nothing would stop us from running those as a private cloud solution from a technical perspective. Just a time check. Yes.
We don't
know. How can okay. Thanks.
Hi, Mark. Michael Turits from Raymond James. Hi. Sales specialization, can you talk about what segments in what segments you're specializing cloud sales from non cloud sales? And how do you incent people to sell cloud when conceivably those could be smaller upfront deals?
Yes. So we actually don't think of it the way you described. So we don't have a cloud sales force and a non cloud sales force. We organize our sales force really by function, by process, by buyer. So we actually have an HCM sales force.
And in the HCM kit, you have on premise, you have private cloud capability, you have SaaS capabilities. Our sales force is very incented to sell SaaS cloud. They're incented against what's determined ARR, annual recurring revenue. And then they get a factor against that ARR. And it's a very attractive compensation.
I think you'll find our compensation plan for you may want to apply for a job. It's a very, very, very lucrative assignment. That's provided you sell. You provided you sell. But yes, it's a very, very that's great.
Send it to me, e mail would
be great. And then but
we do incent them by ARR and they are highly incented to sell in the cloud.
Yes, I see here.
Yes. TBR Moorthy, Puzina. Infrastructure as a Service, how are you thinking about as a business? I mean, why is that strategic for you? I mean, you can see that why SaaS is very important for you, why platform as a service is also important for you.
I mean, what are your aspirations from Infrastructure as a Service?
Boy, I want to make sure you get this one. So you get context for what our customers are dealing with. Our customers have incredible data growth. If you talk to our customers and I hope some of you did here at the show, our big customers are averaging 35%, 40%, 45% data growth, okay? We have customers, if you go to banks, any of the big banks in this country, you're going to find they have 800 petabytes of storage.
They're paying $8,000 to $10,000 a terabyte to buy storage. Let me just connect the dots on that math for you. If I had 100 petabytes and I grow by 40%, I'm going to buy 40 petabytes. If I have to spend $10,000 a terabyte, can somebody do that math, Safra can? 100 of 1,000,000 of dollars.
Huge. This is a non sustainable model. When we apply infrastructure search, by the way, many of those customers, the most popular database they have in their business is Oracle. A very large percentage of that data sits in Oracle. That data, that opportunity for us to move that to the infrastructure we're of Juan's material, he's always loves when I present for him.
We've got compression capability. We now can compress that data in some cases 10x or a 10th. Meaning, let's just say hypothetically, I had 50% of my data in Oracle. You could insert 60, 70, 80, whatever number you want from your algorithm. I mean, I have 50 petabytes in Oracle.
I could compress it 10 to 1, the 50 turns into 5. Now my remaining 50 plus my 5 turned into 55 from 100, now I grow 40% from that. I just saved 100 of 1,000,000 of dollars. I just gave you one example of a consolidation thing that's very real around customers that have Oracle. It is a huge opportunity for us.
Huge. And we've now taken away all of the concerns related to doing that via the cloud by being able to do that as a private cloud infrastructure as a service.
Okay. I think that's it for us. Thank you. Thank you very much.
Ladies and gentlemen, please welcome Senior Vice President, Product Development, Oracle, Avjei Porrasnitz.
Yes, you were great. Yes.
So I'm going to spend the next 20 minutes or so talking about Oracle Cloud. So my goal is to give you a sense of the overall strategy as well as what we believe are some of the unique and core differentiators to our cloud strategy all the way from infrastructure as a service, platform as a service and software as a service. And I'm going to do this jointly with Steve Miranda, who's going to come right after me and he's going to focus on the application parts of our SaaS strategy for the cloud. Okay. So I'm just going to refer back to Ken covered these two slides at the beginning, safe harbor as well as the product roadmap direction.
So at a high level, what is our cloud strategy and vision? It really revolves around 3 core pillars. And actually, you're going to find a lot of what I cover is already covered by Mark. He thought he was covering Juan's material, but he's actually covering a lot of my slides as well. Really, we have 3 core pillars and they're very simple, but we believe they are uniquely differentiated in the marketplace.
First, part of our cloud strategy starts with having the industry's most complete and comprehensive SaaS suite. So take our portfolio of applications and really deliver the entire suite of applications that we deliver today on premises, deliver that in the cloud. And so the 2 core elements of our SaaS strategy are take the best of breed functional workloads and deliver them in the cloud, but deliver them in a fashion where they are completely integrated. And so the integrated SaaS suite, we believe is the first element of our core strategy that's uniquely differentiated. Now building on top of that, the second part of our strategy is to take the SaaS suite and deliver adjunct with that a platform as a service suite that is completely integrated with our SaaS suite that allows both enterprise customers, but also ISVs and partners to take our SaaS suite and extend that with custom applications or other packaged applications around it.
So the combination of SaaS and the PaaS suite together, we believe going hand in hand when delivered as a complete breadth of platform is a very uniquely differentiated capability. So just to step back, if you look at the market today, there are vendors in the cloud that deliver either infrastructure as a service or maybe platform as a service, but don't have as much of a SaaS application suite. Then there are vendors who deliver application capabilities, but either don't have an open platform or don't have any sort of infrastructure as a service capability at all. And so the notion of having this fully integrated suite is one of our core tenets for the cloud going forward. Last but not the least is some of the announcements we made earlier in this week at OpenWorld is we are going to deliver the full PaaS and SaaS suite on an enterprise grade infrastructure in conjunction with our engineered systems in a fashion that allows customers the deployment choice.
So not only do they get the best of breed applications and the best of breed platform, but they get to choose whether they want to deploy those capabilities either in Oracle's public cloud, the one that we run and manage, a private cloud that's behind their firewall that is still owned and operated by Oracle, but it is running in their environment or they can take the exact same capabilities of our platforms and applications and buy them as licensed software to run on their own hardware in a traditional model. So as we look ahead, so I'm going to walk you through now the core capabilities, the roadmap, but more importantly, what we believe are the unique capabilities of each of our tiers of the cloud. So to begin with, there are 4 layers. There is a common infrastructure layer or infrastructure as a service layer that really enables us to give this deployment flexibility of going from public private cloud and hybrid clouds, where the workloads actually span both the environments. On top of that, we have a fully integrated suite of applications that are delivered in conjunction with our platform technologies, the most popular database on the planet and the most popular and widely deployed middleware on the planet.
So delivering those application and platform services. And then last but not the least, is set up new capabilities we have added recently to Oracle Cloud in the enterprise social space. So these are capabilities that extend further our SaaS suite into mobility, social and big data. So I'm going to walk you through now quickly to each of these layers. The common infrastructure services layer is really a layer that we have been working on for a long time.
It's at the foundation of our own cloud. This is what we are running our own cloud on in the Oracle public cloud. This is also the secret sauce, if you will, that allows us to take our solutions that we are building and deliver them both as public cloud, but also private cloud when combined with our engineered systems. And so this is the layer that some one of the questions earlier was, how do we think about new applications that get delivered either in the public cloud, but over time need to move down. And so it's this layer of abstraction that gives us the choice for customers to take engineered systems, Exadata, Exalogix, Exalytics and these services on top of which then you can run all of your capabilities on top, whether it be PaaS or SaaS.
So to begin with, we have the core storage and virtualized compute infrastructure. We have a enterprise grade secure identity infrastructure and this is very critical. The identity infrastructure is one of those most critical elements to span the public private cloud topologies. And then on top of that, we have set up capabilities for developers, things like messaging, queuing, notification gateways, network topology that Mark talked about earlier, caching. And so our goal with this layer is to have industry's best from a performance as well as cost performance standpoint, infrastructure layer to run our global cloud, but also give the same capability to private cloud customers.
On top of that is our platform as a service layer. And so this is really a layer of capabilities that mirrors our strength and assets as a company in the traditional technology part of our business, which is database and industry's first kind of best deployed middleware layer. So at this capability, we have 3 core differentiators we believe as we take our path into the marketplace. First of all, taking the most widely deployed and used database and Java middleware product, we are delivering our cloud in a fashion where all of the existing apps, all of the existing apps, which are hundreds of thousands of applications written by customers or ISVs can be deployed without a single, single core change. They don't have to rewrite their applications.
They don't have to reconfigure their applications. They can take those existing applications and move them to our public cloud. We believe that is a huge differentiation and significantly lowers the barrier for these customers to adopt our platform cloud. 2nd, we are continuing to invest and deliver a portfolio of platform capabilities that mirrors our platform portfolio on premises. So capabilities like collaboration services, capabilities like BI and analytics, capabilities like big data as a service.
And we will continue to offer those so that the same partner ecosystem, same customers who use these today on premises have a seamless path to take some of these workloads into public cloud without rewriting their applications. 2nd part of our PaaS strategy that is unique is the entire PaaS platform is built on open standards. 1 of the biggest issues marketplace today has with PaaS platforms from some of the SaaS vendors, Players like Salesforce is their platform is a proprietary platform. So if you as an ISV or if you as a customer write your application to their contrast that, our platform as a service is written entirely with standards like Java, Web Services, HTML, SQL. And so not only can you take your application and today decide to run it on our public cloud, 6 months later, you may decide you want to move it to your private cloud or if you decide you want to just take it to some completely different vendor in the marketplace, you can do that.
We don't believe a lot of the customers will do it, but there is no lock in. Architecturally, the platform is architecturally to be open. So I want to give you a sense a little bit switching from products and capabilities into what are we seeing in the marketplace today. What are some of the customers who are using our platform as a service cloud? What are the kinds of applications and adoption scenarios we are seeing?
So broadly speaking, we see 4 broad categories of early adoption momentum, if you will. At the bottom of the slide, you will see that 2 workloads, which is the first category we see is large number of our existing enterprise customers have applications that they have written in Java on top of our D2B that they simply want to drive a consolidation of the workloads much the same way they have driven consolidation on virtualization into now the cloud. So the first thing we see with a lot of our customers like Windstream is they're taking their existing web logic based Java applications or existing database applications written in Apex, SQL and simply moving them as a consolidation exercise to our cloud. Similarly, we see a lot of our customers and more importantly partners. So this is another unique differentiation for us in our cloud, which is partners like Siemens and Accenture, they are seeing Oracle PaaS Cloud as a very attractive model for doing things like using the cloud to do testing, development during projects.
And then when the customers want to go live in production, move those workloads from public cloud to a private cloud for that customer behind the firewall. And so this notion of scoped workloads where they start in one place on public cloud and as they go through the lifecycle, they move it to private cloud or custom deployments. So if the bottom two scenarios are mostly around existing application, the top part of the slide shows what we are seeing as new application development. And so our PaaS cloud is appealing for both the scenarios. First is SaaS apps.
There are large number of new vendors and new ISVs that are looking to deliver new kinds of SaaS applications that want a robust enterprise gate platform. And so the examples there is somebody like Emerson who wants to get into now business of delivering a new SaaS service for doing data center energy management. And they looked at how they could deliver that service globally and they realized that the cost structure, both OpEx and CapEx of offering it on top of Oracle PaaS is far more economical for them than trying to build that entire infrastructure themselves. Similarly, the last piece, which is customers who are taking our extensions on SaaS applications. So partners like CRM IT, they are taking our Fusion CRM SaaS applications and they are extending those with extensions that they are going to market with.
So this is a partner opportunity that is building on top of that virtuous cycle that I talked about, that SaaS extending to PaaS and more applications on PaaS means our SaaS applications get more stickier and more useful. So speaking of SaaS, at the core of our cloud strategy is really having the industry's most comprehensive SaaS suite. And the goal for us is very simple, to literally cover every single mission critical business process within the enterprise via an integrated SaaS workload that is both best of breed in its functionality in-depth, but it's pre integrated with all the other business processes that the enterprises have to deliver on. Steve is going to talk a lot more about this part of the presentation. So I'm going to skip through and have him cover this in few minutes.
Beyond PaaS and SaaS, the other key part of our cloud strategy, the one that we have made significant strategic investments over the last 6 to 9 months and have made substantial progress on is a new layer of capabilities called social relationship management. And this is a layer of software services that we deliver that really integrates seamlessly with our SaaS suite, but brings newer experiences around social, mobility, data and insights into your social applications as well as your core line of business processes. The key approach we are taking with social unlike some of the competitive landscape today is today a lot of the competition treats social as in either afterthought or a point solution. So most of the social applications, whether it be marketing, whether it be insights are disjoint from the core LOB application processes. And so the thing we are focusing on is to deliver industries first and what we believe to be the only integrated social relationship platform, where social is no longer a point solution, but rather it's blended completely and seamlessly with all of our SaaS applications.
So for example, our social marketing capabilities are blended and integrated with our Fusion CRM sales and marketing. Our social engagement and monitoring products and services are seamlessly integrated with our customer service offerings from right now into Oracle Cloud. Social network, employee collaboration services are similarly integrated and blended with sales and marketing, talent management, HR, all of the business processes that customers are using today now just light up with social capabilities inside them rather than a separate island. So in the interest of time, I'm going to go through this quickly. But since this is a new area, I did want to touch upon, we are seeing already significant adoption and momentum in the marketplace with some of the largest brands and largest customers already embracing social in a big way along with using SaaS applications from Oracle, starting with marketing.
So this is an example where somebody like Intel is essentially using Oracle's marketing offerings for social in a blended fashion to do multichannel marketing, where they're taking their traditional CRM marketing and extending now social as one new channel. Similarly for monitoring engagement, this is a case where companies like McDonald's or Pepsi are using social marketing and social community management from Oracle to really manage their brand presence on variety of social channels, Facebook, YouTube, Google Plus etcetera. So this is a case where we are seeing now a very interesting virtuous cycle build up where customers who are using our SaaS applications are getting more value by simply turning on the social capabilities. As we go forward, you will continue to see us blend social more and more throughout our application portfolio rather than treating it as a point solution. Now of course, all of these capabilities are built and Mark talked about quite a bit of this at the beginning, so I'm not going to touch a lot of the same things again.
But it's important to note that not only do we have the most comprehensive stack all the way from infrastructure, platform and SaaS. But the way we have architected the entire Oracle Cloud footprint is exactly how some of our largest enterprise customers would architect it if they were building a private cloud. What that means is both at the data and the middle tier, we have created the proper isolation and sign boxing that no tenant or customers data is co mingled with another tenant. Now the beauty of this model is this is one of those key things that allows us to go and offer now a infrastructure as a service and a private cloud offering, where a customer can start in public cloud and that's exactly how we have architected our public cloud. But at some point, if they decide they want to move that workload from public cloud to behind the firewall private cloud, Turns out architecturally, both those things are built exactly the same way, using our engineered systems, using our middleware products and they are managed using the exact same set of enterprise manager capabilities that they would use if they were managing on their own.
So this notion of using is completely symmetric hardware and software stack is extremely powerful for our Oracle Cloud going forward. And then on top of that, we have a very simple, easy to use subscription model that makes the entire consumption experience of Oracle Cloud extremely simple, self-service and a pricing model that is highly tailored to doing both per user pricing for applications and a consumption oriented pricing model for PaaS and infrastructure services. So as I wrap up, one of the things we are excited about both at this open world as well as as we look kind of the last 12 months, we are now starting to see a very strong and broad adoption cycle across some of the best name well known customers across the globe. And not only are they adopting portions of our cloud, but what's more interesting is they are starting to see the value and realize the value of adopting all tiers of our cloud, PaaS, SaaS and IaaS. So
in summary,
here are the 3 things I would like to leave you with as we think about kind of the Oracle Cloud all up. First, Oracle is aggressively, aggressively moving and delivering on a complete portfolio that we think is unmatched, unmatched both in the full stack infrastructure platform apps and unmatched in the deployment choice of public, private and hybrid cloud. 2nd, Mark talked about we are not delivering only a complete cloud, but each of our components are best of breed. So the depth of the functionality in Oracle Cloud and the breadth via the integration is uniquely positioned both for our customers, but more importantly for the partner ecosystem that is also rapidly now converging around our cloud and starting to take it to the market. So with that, I'm going to invite Steve Miranda on stage and he's going to walk you through the SaaS portion of our cloud strategy in more detail.
Okay. There's Safe Harbor again. Thank you, Abe. So let me first go through the SaaS strategy. And as Mark talked about earlier, the he talked I think a little about removing the objections for the customers.
I think of it slightly differently. Customers have particular problems and those problems are bounded by a couple of variables And those variables have time elements to it. They have sometimes technical elements to it. They have kind of functional choice elements to it. And so what we try to do is deliver, 1st of all, the most complete set of applications possible.
This gives our customers not only a solution today in some cases, but in a solution going forward. Because while in some cases they want to solve a particular niche problem today, they want to know they have a roadmap going forward. In cases where we compete against the best of breed, we develop the richest deepest integrated together, build out integrations not only with the organically built applications that we have, but also with the acquired applications that we've purchased. And then we exploit the platform as a service capabilities and especially social being a component into several different applications. And in fact, I'll give you three examples where I think social is a fundamental aspect to applications these days where you can't do without it.
It has to be incorporated into apps and I believe that's going to be incorporated completely into applications, but fully essential in 3 different examples at least today going forward. And so what I'll try to illustrate is how we do this, give you some background on the SaaS applications, what we've built organically, how we've supplemented that through acquisitions and then illustrate a number of customer examples. There were questions earlier about references. And I picked the particular customer examples to showcase a particular customer problem and therefore how they've exercised a choice and why either depth of functionality, integration or breadth of suite has been critical to them to solve their business problem. So first off, what were the driving tenants and these have always been the driving tenants from day 1 of the applications that we presented in infusion applications that we started to build day 1.
First off, we always wanted to build a complete suite of applications. Secondly, we felt that it's critically important to build across the board on industry best and industry standard technology for ease of integration, for ease of extensibility, particularly in the cloud, for ease of inter operability going forward. And so that our customers as they extend the application and will have to live in an ecosystem of other applications, they have the best in class and lowest cost, lowest risk platform going forward as opposed to proprietary platforms, which tend to age, which means cost and risk. We wanted to have extend that to the most modern user interface, including HTML5, which has given us the nimbleness to though we started Fusion applications long before tablets, at least in the form that exist today were available, long before the phones of today were available. We've now quickly made all the Fusion applications available and they all run on the tablet devices, both Android devices as well as iPad devices, because we went with a native approach pardon me, with a standard based approach as opposed to a kind of a native or proprietary approach on a particular platform.
We always built in from the beginning business intelligence. We thought that was going to be the key. And now as big data takes hold, that's even more of a key. And we designed at the start what we initially called collaboration built in, which means particular event points within the application. Now collaboration has evolved to be social, which meant that we didn't have to re architect the applications now as social is much more pervasive, but we had the collaboration event points in the application built in from day 1.
So now we can easily plug into Twitter and Facebook and Google Plus and LinkedIn and other social platforms as they evolve. And then we built always for SaaS, but always with data isolation, as Abe alluded to before. Okay. So when we talk about the product families and the product modules, what do we really talk about? And I'm going to go through these in a fair amount of detail as we go forward.
But we talked about HCM, talent management. So HCM, obviously core records, benefits, payroll, talent management, things like performance reviews, compensation management, succession planning, sales and marketing, things like entering leads, cast, quota management, territory management, customer services and support. So this is basically ticket logging, response, knowledge management to be able to respond to customers and then e commerce to be able to take it from a ticket into an upsell. Financials, which is things like general ledger, accounts payable, accounts receivable, expense reporting. Procurement and sourcing and inventory, which is a supply chain components to be able to buy, manage suppliers, procure and have the kind of online sourcing.
Project and portfolio management to track projects, to build contractors, to be able to charge back for professional services type of fees and then governance risk and compliance for things like segregation of duties, Sarbanes Oxley compliance and a host of other similar regulatory requirements around the world. All built on the common infrastructure of Exadata, Exalogix, Exalytics, all built on a common set of platform services that we not only use, but are available now as a standalone service to our customers. So the database as a service, the job as a service and all take into account the social components that we've added to the suite. So what it looks underneath, while there's a lot of attention paid with Oracle moving to the SaaS through the acquisitions, really what we have is a vast array of organically built fusion applications from HCM, sales and marketing, financials, procurement, project and portfolio management and GRC, which is when they talk about the 7 years of building the applications, that's that breadth of investment across those different product families and product modules that were all organically built. So make it the journey to the cloud, we're not new to the game.
We've been working on these applications for quite some time. Then we supplemented those applications with Taleo for talent management, specifically around recruiting and learning. And then we further supplement it with service and e commerce with the acquisitions of RightNow, ATG, Endeca and Enquirer. So basically those components fit very nicely with extremely little overlap into the existing built application to give us a comprehensive complete suite of applications. And again, the social acquisitions of Collective Intellect, Vitru and SelectMind, I said earlier, it's more than it's a social platform, but it's platform that gets embedded into the applications.
So it's not a separate standalone social app. And let me give you the three examples that I said earlier that I would argue are basically table stakes for the apps today. 1st, with select minds for recruiting. So recruiting is basically if you have a job site either on your internal website or you want to post to job boards, you want to do recruiting. And what social recruiting means is that if someone within your organization wants to take that job post and share it either on Twitter or Facebook or Google Plus and you want to have that further be passed along in the social network.
So basically use your own employees to do recruiting in their social sphere and then track that back. SelectMine provides capability integrated with the best in class, the world's leading recruiting solution Taleo, that we now have the capability to take a job post, have employees posted to their social networks, have a track back so that employee gets referral credit and you get business intelligence. A fundamental table stakes part of recruiting today. If you're doing recruiting, you're not using social networks, you're probably missing it. 2nd example is in the RightNow case for service.
Service is what's typically what was called call centers, where people would have a question about your product and phone in, call centers start to have multi channels with this chat and email because people weren't doing phone calls. And today what's happening is more and more is people aren't going to the brand for service. I mean, if you have an issue, you don't necessarily call or email the service provider, you sometimes post the question or even worse post a comment usually negative the service onto a social network of Twitter, Facebook, Google Plus, etcetera for either help responses or frankly just event that this is an issue. Modern call centers or modern service agencies are using products like Collective Intellect, again combined with the world's leading SaaS service provider right now, so that they monitor the social networks to be able to respond to questions, inquiries, complaints that don't actually come into your call center directly, but instead go to the social networks and they'll be able to respond in the context that it's 2nd example, what I would argue is a table stakes where social is now part of a table stakes application component. And the third example is, of course, marketing.
And in Thomas Kurian's keynote on Tuesday, we demonstrated using social for marketing, which is traditional marketing campaigns used to be send out flyers and you have programs or events that migrated to email. But now it's table stakes to have social as a component to a marketing event where not only do you send your emails off, but you post advertisements on Facebook or Twitter or Google plus or the social component. It gives you better lead management because you have better data as far as who's coming in and integrate that to sales. So social is key, not a standalone application into itself, though there's certainly uses there, but three examples where it's very rapidly become table stakes into the applications. Okay.
So a little bit more into what's in each product family and then I'll get into some examples. So to be clear on HR, global HR, which is basically records management, compensation stability to give raises, promotions, bonuses, incentives, benefits processing and this is global benefits processing. So not only benefits through the U. S. But also the global with different regulations, payrolls, that is a global payroll as well as U.
S. Payroll, management, network at work, which is another example of social integrated in. So this is basically the ability for your own employees to have a Facebook like page on your internal directory, worker portrait and then time and labor. Now for some customer examples. So the first one is Elizabeth Arden.
And the reason why I call Elizabeth Arden, this is an existing Oracle customer in HCM PeopleSoft, but they were basically a North America PeopleSoft customer with a set of disparate systems, meaning spreadsheets, niche systems, no real central HR system globally. So here's where the depth and the migration was important to them. They wanted a quick solution. They are live today in core HR as well as talent management SaaS in Europe. They're going to go live in Asia Pacific later on this year or early next calendar year.
And then finally upgrade their North America HCM system from PeopleSoft to Fusion HCM going forward. So kind of an example of what we call a coexist running side by side to PeopleSoft, but important to them to have a migration path going forward. The second example I'll call out is UBS. UBS is in the process of implementing the HCM system. I call it UBS for a couple of different reasons.
They've selected us in SaaS for core HCM and talent management. UBS because they are highly regulated company and because they have very strict standards as far as IT chose SaaS, but before they selected us, they probably put us through the most scrutiny in terms of everything from the way we do data encryption, both across the wire and internally, the way we do data backup, the way the application is secured internally, our business processes for securing the application, our data recovery type of systems or disaster recovery type of systems, leveraging things like data audit vault and the Oracle database, a whole litany of security requirements. In addition to that, the fact they're a European bank and the fact that this is HR data with personal identical information, they did not want the data housed in the United States. So we've housed them in our European data center, another example of our breadth globally, satisfied not only all their security requirements technically, but also with physical location legal things. And so that was that example.
The third example I'll call is Brocade. So this is a separate case of coexistence. So Brocade is a big e business suite customer. They run on premise today and they are continuing to run on premise. However, they needed a rapidly deployed talent management solution.
They deployed Fusion Talent Management in the cloud, both compensation and goals. So basically they set their goals earlier this calendar year. They assess their employees against those goals and based on hitting those goals, they read their compensation round. That data was fed from the E Business Suite system with integration that we prebuilt on premise. So in other words, the employees were fed into Fusion Cloud.
The comp was issued and then it's fed back into E Business Suite on premise for payroll. And as they move forward, they're looking to move more and more applications quick need fulfilled, but have a complete roadmap because of the breadth of the quick need fulfilled, but have a complete roadmap because of the breadth of suite we offer in the SaaS environment. Moving on to sales and marketing. So a little bit more about first what's included. First is install base.
So what is the customers own Territory management, assigning the territories and this kind of carving up the customer base to the different sales rep from a management perspective, so you can better optimize coverage of your sales. Multi channel marketing, meaning be able to market, as I alluded to earlier, not only in email or call down or traditional marketing campaigns, but also social. Partner relationship management, so this is for companies that go through resellers or sell through partners, be able to manage them and give them access to the sales, tools and utilities. Something we call sales predictor, which is where we leverage our BI technology. So sales predictor basically mines the install base and based on your results of actual install sales predicts where you might have best opportunity to sell to new customers next, which gives the sales reps more qualified leads because you're predicting sales based on quota management.
In customer service, so this is from right now, we have web self-service. So basically the ability for the customer to come online with the knowledge management capabilities that we provided at Oracle in addition to right now have the ability for the customer to more rapidly find the issue that they have to better answer their questions on their own. Meaning if you go to a company website to search for an issue on the product, how quickly can you find someone who had the same problem, the same resolution. This includes mobile of all types that you would expect, including tablet and phone, chat and browse capabilities, so the ability to go on to the vendor website and chat via the browser. Of course, email, knowledge management I covered to traditional contact center and then support communities, which is another flavor of social built in to be able to go and have kind of message boards or forms, if you will, so that the users can interact with one another.
A couple of examples here in sales and marketing. First of all, Key Energy. So this was an example of a pure best of breed sales situation against sales for sales and marketing. Key Energy chose Fusion CRM for sales and marketing. A couple of key components, one was of sales prediction.
The second was what we call a personal sales campaign, which is the ability for a sales rep to be able to start a marketing campaign specifically to their targeted customers. So not have to have a global marketing campaign. And the 3rd and probably most important was outlook integration. So the big problem that we found with our customers and generally with Salesforce Automation System is getting the sales reps to actually use the system and put data into the system. So with Fusion CRM, we have outlook integration, which means a customer or a sales rep can update their customers, their contacts, their appointments in Outlook and it gets synced automatically with the CRM system.
So that the sales rep is actually updating the CRM system really without having to enter into the CRM system, which helps a lot of that uptake and usage and gives the organization better data. Graco, Graco is the same type of thing, a standalone best of breed sales force automation system. They chose Fusion CRM for many of the same reasons. I call it Graco because this is a classic example of a rapid go live from purchase to deployment, which in this case is just a SaaS pod to go live was about 12 weeks for Brake to deploy their sales automation globally. In ERP, the products are included here, financials planning and budgeting, financials accounting, governance risk and compliance, a set of reports mainly around the close and financial reporting for SEC and other regulatory reportings, procurement and sourcing, costing, inventory and finally project and portfolio management.
Here's a situation again where our breadth really matters. So in the Red Robin case, Red Robin restaurant, they were existing Oracle customer. They were on JD Edwards, but JD Edwards world. So this was the AS400 solution before enterprise and Enterprise 1. So in a sense, they had to go through a major transformation, particularly around inventory, particularly around inventory optimization within their restaurants.
And so what was appealing to them was breadth of solution. They wanted to run it in the cloud. And in a sense, Red Robin is an example of a customer need where they skipped the generation of application. They went directly from the AS400. They did not go to a e business suite or any other kind of client server or Internet deployed mode went directly to SaaS.
The second key that was important here was standards for them because they have integration to the inventory systems to 3rd party barcode systems that they use within the restaurants to track inventory and track and report inventory. And they use our open web services, the standard based web services to inventory financials to do that rollout. And they roll now globally, not only ERP, but supply chain as well as HCM in the cloud for Red Robin. These are live today. So I called out each to try to give you a sample.
I showed you some coexist customers like Brocade that actually coexist and integrate, coexist customer like Elizabeth Arden that kind of runs it more side by side, some standalone deals within CRM like Graco and Key Energy and then a more complete ERP representation like Red Robin. But I call them out as a sample. These are the logos for the ERP and HCM customers that we've talked about at length of the show. Here are the logos for the sales and marketing as well as service and support. So both the right now and the Fusion CRM customers and you'll notice from my presentation last year, the slides are getting more crowded and the logos are getting smaller.
And that's kind of the sign of the progress that we talked about. Okay. So why do we win? So it's reasonably simple to say depth and breadth, but I think one of the things that gets somewhat overlooked or maybe forgotten about is that in the different acquisitions that we've done over time and the teams that we've used to build fusion applications, we have a tremendous depth of functional knowledge of people who've built these applications before. So the team that built the Fusion Financials were the best in class developers from E Business Suite, from PeopleSoft as well as from Hyperion.
And not only did the technology and things like social and BI allow to do things differently, we also had a chance to take a brand new look at what we built. So just some examples going forward. In ERP, we think we have the best in class GL from the start with PeopleSoft and E Business Suite as well as Hyperion, but Fusion Financials really combines those 2 like never before. So when you post the ledger, you now simultaneously post to the Hyperion consolidation queue. So we took basically what was 2 best in class solutions, but had an issue because they were built by 2 different organizations and use that functional domain expertise, which takes time to build within our teams from the experience of building these and really fixed a lot of the business process issues we have with previous generations going forward.
Just another reference for the Fusion ERP, Oracle ourselves, so $30,000,000,000 plus corporation global. We closed our financials on Fusion Financials for Q1. So we use it all three quarters in our live and that's what we use to close our books in Q1. Examples like HCM in Global, if you recall back when we first built HCM, even PeopleSoft HCM and a business suite HCM, those applications were not built as true global solutions. By that, I mean the following.
If you had a global company and you had people workforce that move between countries, there were still definite issues within those systems on how you moved from one company in one country to another company in the other. Because though you're moving between countries and maybe between legal entities, you want to keep things like salary, tenure, your vacation plan stays the same, all those things are measured. And so when you build the solutions at
the first, didn't wasn't
really accounted for because that wasn't We really focused on having increased adoption and it really comes down to 2 areas. 1 is having it easier for the rep to get data into the system where we have outlook integration as well as tablet integration on the iPad. And second is you had to make it more valuable for the sales rep to basically be able to sell more. And so when we had management tools and sales targeting tools like sales predictor and territory management, we would get better adoption. So give you a depth of functionality.
Next thing is the breadth of functionality. I listed out the products and in each product family, we think we have the biggest breadth of solution so that wherever your problem lies, whether it was in talent management, core HR, payroll, distributed order orchestration, territory management, we think we have the right solution today and ability to expand. In addition, I said integration. So we have those pieces integrated so that the customers that we have today not only use our products, but have addition or adding on sales and marketing to right now. Are probably our most popular addition is a combination of Fusion HCM with Taleo.
And sometimes it's starting with HCM and adding Taleo recruiting, sometimes into existing customers that are using Taleo recruiting the cloud that now want to move to an integrated core HCM system. The architecture allows the customer not only have best in class integration, but because it's the same platform that you use in our platform as a service that are they talked about, if you want to extend the applications, you extend them in the same way that we've built the applications going forward. It gives you very tight integration, gives you very good security, a nice user flow and similar in the same look and feel. And all combined with social and frankly, some of the areas I think would argue that are just mandatory the way you do business for social today, no longer optional to add on or the separate application. Okay.
So to summarize, what do we do? We want to deliver the world's leading technology and business applications to our customers anywhere. And we have an extremely diverse existing customer base with therefore extremely diverse problem sets. The way they approach those problem sets either it's a point solution now where we compete best of breed, but we give those customers a path. Or in the case of Red Robin, we're doing a more wholesale replace of systems.
We have that solution as well, whether it be in the cloud or in the private cloud as we talked about before. Integrated from the start and integrated with social included, open standards for no lock in for ease of integration with 3rd party systems and with a brand new built from the ground up modern design and the common thread through all of our customer base regardless of the heterogeneous problems I talked about is speed and lowest costs. And that's what we think we provide with the Fusion SaaS applications. Okay. So now I think I'm going to hand over to Juan Louiza, who will talk about Exadata.
Okay. I guess we're going to continue our whirlwind tour through technology. So I'm going to give you a quick Exadata update in about the next 15 minutes. We have I'm going to go through some of the what it is very quickly and then talk about our new generation technology that we just introduced, compare it to some of the other technologies that are in the market, talk about a lot of a couple of customers. And I'm quite certain that you'll hear more about Exadata later on from Larry.
What do you think, Seth? I think that's a good bet. We're all very excited by Sreeda all the way up and down the stack here at Oracle. So who am I? I'm Juan Loaiza.
I've been working here at Oracle for 24 years on database development, working on mission critical database capabilities. One of the things that my group developed starting about 8 or so years ago is Exadata when we became frustrated with some of the limitations in the conventional hardware technologies. So I have the same safe harbor. I have the same forward looking statements. So let's start with some of the basic, who is the target customer?
Our target customer is the decision makers for mission critical databases. So all the mission critical databases in the world, whether they be OLTP systems or warehouses. And our available market is really that market, the market for mission critical databases. That's what we target. Everything that's mission critical database, we want running on Exadata.
The big drivers are data growth, moving things online, the faster business decisions. So that's kind of the growth part of it. There's also a big transformation happening within companies where they want to simplify and reduce costs. So that's kind of the other part of it. There's the growing parts and there's the shrinking parts.
So we're attacking both sides of it. Okay. Our strategy is pretty simple, which is we want to be the best platform for running any database workload, whether it's OLTP, data warehousing, applications, mixed workloads. We want to have the best performance and the lowest cost, okay. And we also want to be the best platform for clouds.
And what you'll see is over time we're going to become and we are becoming the corporate standard within many large corporations for the database platform. We sell the Exadata database machine, which comes in various different flavors. And our differentiation is we provide the best performance by combining leading edge hardware with very sophisticated proprietary software. And that's really where the magic is in the very sophisticated proprietary software. We also provide a very complete solution.
So everything a customer needs, it's all pre tested, pre configured, it's ready to go. All right. So I'm going to lead you through a little bit of what is Exadata. As I mentioned, we're attacking the entire market. So one of the things that's happening is people are claiming you have to specialize in a specific niche of the market to do well.
We don't think so. We're going after the whole market, the data warehousing market, the OLTP market, the cloud market, the SaaS market, the applications market, the whole thing. And there's big advantages in that because there's synergies among these markets. So for example, the warehousing people want high availability and high security. The OLTP people want very high parallelism and very fast analytics.
So we don't believe these markets are really segmented. We think there's great synergies among these markets. So if we take a quick look at Exadata and say, what is Exadata? What is this thing? I talk about the leading edge technology.
What we have in there is everything you need to run-in Oracle database. So what does that mean? It means database servers, it means storage servers and it means networking in the middle. So we've taken we started with a brand new platform. It was first introduced 4 years ago.
So we've taken the most modern available architecture. So we're doing a scale out database servers. And many of you that have followed the Oracle database for a lot of years, you know that we made a big push towards scale out database starting about 10 years ago with our real application clusters. So that's been a big drive that we've had going on for a lot of years in database and that's what we use inside Exadata. We scale out database servers.
The other big thing in Exadata is we did the same thing on the storage side. So we're using scale out storage servers. So we don't use conventional storage arrays. We use lots of little servers and we scale them out for storage. So we're doing the exact same thing we did on the server side to the storage side.
And we're going beyond that by putting database intelligence in the storage and we're putting very large amounts of PCI Flash in the storage. And then if you follow the networking industry, you know that the big trend in networking is unified networking. So the same network for server to server and server to storage communication. And that's exactly what we do in Exadata. We're in the most modern kind of networking, unified networking, server to server, server to storage, interconnect, and we're using the most advanced networking technology, which is InfiniBand.
So we're kind of a step ahead there too. So that's just kind of a look under the hood and say, what is in this thing? The most modern server architecture, the most modern storage architecture, the most modern networking architecture, all put together. That's what it is. The other big aspect of ESSA data, it is a complete platform.
So that means it comes ready to go to customers, delivered, ready to run. Everything is in there, everything's been pre tuned, pre optimized, debugged. We've tested all the availability modes. There's also other advantages here. So it is a complete level.
So for example, we work with telecom customers that have very high volume data. The expertise that we gain by working with them gets built back into this platform, it's available for everybody. We work with financial customers on very high availability systems. The expertise, they put this thing through the wringer on all kinds of availability tests. Every time they find any kind of little issue, we work it back into the platform, everybody benefits.
So that's something we didn't have before when we just sold software because when the financial guys found some kind of availability problem, they would fix it in their system, nobody else the military guys find issues with security, it all comes back into our platform. It all goes back into the military guys find issues with security, it all comes back into our platform, it all goes on in the market. So there's a lot of synergies in having a unified platform. And it's important to point out that although I talk a lot about technology and a lot of cool new technology that's in Exadata, It runs the existing Oracle database workloads. So we run everything that runs on an Oracle database and it has run on the Oracle database for the last 30 years.
So that includes SAP, E Business Suite, PeopleSoft, Siebel, these are the most sophisticated applications in the world. Okay. So those are kind of at kind of a low level what's going on. We've also added a lot of special software technology, a lot of special sauce in Exadata. And I'm going to talk about 3 things here.
One, I briefly mentioned is scale up storage. We scale out the storage. We also put database intelligence in the storage. So traditional system, there's a big computer over here where the database runs. There's a big storage array over here that contains the storage.
And every time we over here in the database want to access some data, we pull all that data out of the storage array, pull it into the computers, process it, throw it away and the very next party has to do the exact same thing. And that became the big bottleneck for database processing is pulling all the data out of the storage arrays on every single operation, moving it over to the compute servers. So the big kind of thing that we started with Extadata with was moving the database intelligence. Instead of moving a mountain of data to this little program over here, we move the program to the data. So we put database intelligence, we put a lot of processing power and database intelligence directly in our scale out storage.
So that was the first big breakthrough in Exadata. Another thing we've done and I'm going to talk more about the way we do memory and flash in Exadata is we put a lot of memory technology. So that's the latest kind of generation of technologies and database. And we're using what's called PCI Flash. So flash technology has started to enter into the enterprise world.
The way it's mostly entering now is what's called flash disk drives. And what that is, is you take flash chips and you make them look like a disk drive, so they can just slot into an existing system, which is a great way to start. But the trouble is using making it look like a disk drive loses most of the performance benefits. So the next generation of flash technology is PCI Flash. That's flash that fits directly into the motherboard of the servers, right next to the CPU with very fast access between the CPU and the flash.
And that's exactly what we use in Exadata. So in a single rack of Exadata, we have 56 of these flash PCI cards that give us extremely high performance. So it's database intelligence into the flash. And then the specialized form of compression that we use in Exadata that we're able to do because we have a specialized form of compression that we use in Exadata that we're able to do because we have a lot of processing power in storage. And that's what we call hybrid columnar compression.
And the benefit of that is for data warehouse workloads, we can achieve 10 times compression and Mark talked about that's a huge financial difference for archiving workloads, we usually achieve 15 times compression. So that is a gigantic amount of costing. If you can squeeze the storage down by a factor of 10 or a factor of 15, a customer gets a huge financial benefit. And all these technologies work together. So the fact that we're able to squeeze the storage means we also are able to fit a lot
more data in Flash.
And then we're able to profit it in the storage with our processors in the storage. So all these kind of work together and they form a virtuous cycle. Okay. So that's kind of what Exadata is kind of at the technology level. Now let me talk about what we just introduced.
So Larry introduced this on Sunday, which is our next generation database machine, our 4th in the line and it's called Exadata X3. So we started in 2,008 primarily focusing on warehousing. In 2,009, we expanded that with OLTP and affordable BLDB. We added a scale up version of Exadata in 2010. And now we have our new X3.
And there's a lot of changes in X3, but the big headline change is it's really an in memory machine. So we've expanded the memory capabilities both in the hardware and the software such that for previous generation database machines were really primarily disk based machines with a lot of memory to accelerate. What we really have now is primarily a memory based machine with a lot of disk to expand the capacity of it. So the focus has changed and we've really kind of turned the corner in the industry on disk based versus memory based. So this is really the embodiment of that change.
And part of the reason for that, which I'm going to mention is we've quadrupled the amount of memory in X3. So typically what you hear from year to year is an advancement of like 20%, 30%. That's a very fast advancement. That's Moore's Law. That's what you typically see in our industry.
Between our last year's version of Exadata, the one from 4 days ago and the one from now, we've quadrupled the amount of memory in the machine. So it's 400% extra. So that's a huge change and that's really changing not just kind of qualitative basis, but in a quantitative basis, how users are going to use this, okay? So we have a massive amount of flash and we've written a lot of software to make sure all IOs go to flash. So that's the second part of it, okay?
And then just drilling down into that a little bit more, what we have in Exadata, we're blending this technology, flash technology and DRAM technology. And what we want to achieve is the best of all possible worlds. So we want to achieve the cost of disk, the IOs of flash and the speed of DRAM. And we've written the software to make that this mass memory hierarchy. That's the software that blends all these.
The hardware has all the components. The software blends all these together. And if you combine that with our compression technologies, we can get up to 40 terabytes of data in DRAM and we can get over 200 terabytes of data Still have disk, we'll be able to keep backups on disk, historical data on disk, documents, images, things like multimedia files can go on disk. But all the active business data, it will now really be in memory. And that's the things that's happening in Exadata.
Now to put a little perspective on this, if you go back a few years, I'm going to compare the performance. So today with this machine, we achieve 1,500,000 IOs per second. Perspective, if we go back a few years, that would have required 150 storage array frames to achieve. That's what we achieve in a single exadata rack. Same thing with data scan rates for warehouses.
You would have had to have a gigantic configuration bigger than almost any customer in the world has to achieve the performance that we achieve in a single rack of Exadata, okay. It's a true scale and architecture. So we can achieve performance. A lot of people have flash. A lot of people have memory.
What they don't have is the architecture to take advantage of it. And this is just one little diagram that shows it. What that number is because you don't live these numbers like I do. But a very large storage array, an enterprise storage array can achieve typically somewhere around 4, 5, 6, 8, maybe 10 gigabytes per second. And those cost 1,000,000 of dollars.
The very biggest storage arrays you can find, the latest and greatest, the ones that came out this year, they claim they can achieve 50 gigabytes per second with the maximum possible configuration of a storage array from the leading vendors at the top end of their product, a single rack of Exadata achieves 100. So there's Flash and there's architected flash and it's 2 different things. We're very highly optimized, very highly ready for flash technology. And then just to complete the technology thing, I talked a lot about memory. There's a lot of other changes in there.
So we've increased the amount of CPU, we've increased the amount of connectivity, we've decreased the power and we've left the price the same. So the X3 that we released last Sunday is the exact same price as the X2 that we had before. We've not increased the list price at all, even though we've quadrupled the memory, increased the CPU, increased the connectivity, decreased the power usage, exactly the same list price. Okay. And then the other thing that we announced last week, this Sunday, it seems like last week already is we've increased the breadth of the product line.
So Exadata has come in a quarter half full and multi rack configuration. We introduced a new low end of the product line, which is the 8th rack, which is roughly half the cost of the quarter rack. So that means we have a new lower cost entry point and this will primarily be used for smaller customers, smaller workloads, but also dev test and Doctor. So we've had a lot of interest in that here at OpenWorld. It's actually going to be one of the most popular configurations.
It extends the reach of the product. Now let me go a couple of technology comparisons. I'll talk a lot a couple customers and then I'll be done. So this is a slide that we put together for Larry. He used this on Sunday.
This is a competitor that we run into a lot, which is IBM. So what this slide does is it compares the list price of comparable hardware. So you take the main metrics, which are the number of CPUs, the amount of memory, the amount of disk and the amount of flash. Those are the main metrics that you apply to a computer and you okay, let's see what we have in a half rack of ours and let's configure something that has exact same metrics, the same number of CPUs, the same memory, the same disk, the same flash as what's in a half rack of Exadata with IBM technologies. And you see there's a dramatic difference in just the hardware list price.
So if you just take the same bits and pieces and you put them together in an IBM config, you see there's a dramatic difference in list price. And then what this does and then what it says on the upper right is and that doesn't consider the extra technology that we have in Exadata. So that's just kind of looking at the piece parts, not the architecture. If you look at the piece parts, we're over 8 times lower cost, lower list price than IBM and we have a lot of extra technology. We have huge amounts of CPU and storage.
We have the ability to do the 10 times compression. We have InfiniBand. We have flash PCI cards, not flash disks. So we have a lot of extra technology, which gives us a lot better performance and a lot lower cost, but it all starts at a much lower list price also. So it's a very dramatic comparison, but this is the actual list price comparison of 1 of the vendors that we meet the most in the market, which is IBM Power Series, their leading product with their leading end storage array.
A couple of slides One thing I want to point out, we sell to a lot of different industries and a lot of different applications. And one of the big ones is application. So our application, so E Business Suite, PeopleSoft, Siebel. So here's a quick example of a customer who's a very large organic grocer that probably a lot of people here shop at. And there's a typical example of what a customer like this.
They take a package application like PeopleSoft, they add lots of other stuff like their ordering, their timekeeping, lots of other applications, they put it all in one exadata. So in this case, it's like a half rack with another half rack for Doctor and a second one for dev test. So it doesn't take a lot of hardware to run a very large and very well known corporation running their business critical apps all the way across the board. And they get the single vendor support, much better performance, much better availability. So these are the benefits that we see.
And it's consolidating. It's combining all these different things into one platform, simplifying their IT, making it much lower cost. And then one other example, we are becoming the corporate standard at a lot of companies now. So Exadata was introduced 4 years ago. We've gone through a process of establishing a presence in the market.
So what does that mean? 1st, people want to touch it, then they want to try it. So they try 1, right? And they say, okay, we're going to deploy 1, we're going to see how it works, we're going to benchmark it, we're going to prove it. And that's kind of the first stage of adoption in the market.
Now we're moving to the next stage, which is, all right, I have 1, I have 2, I really like this, I'm going to adopt this broadly within my corporation. And so I have a few examples here. For example, Procter and Gamble, we started with the trading there. We've now added shipment data. We've now added planning data, trade fund management.
So the footprint, the breadth of the applications within P and G is increasing all the time. Customs and Border is another great example. We started there in 2010. Now we run practically all the mission critical applications. So for example, when you come into the United States and you hand somebody your passport, that's now processed through Exadata.
All the cargo that comes in the United States, everything comes from China and everywhere else has to be processed by customs and borders. There's millions and millions of these every day. It's extremely mission critical. It's all processed through Exadata. So again, the breadth, it started in one place, it's spreading throughout.
And these are that's an example of mostly an OLTP system. They have some warehouses also, very mission critical. If it stops working, shutdown, the airport shutdown, the port shutdown. It has to work. It's extremely mission critical.
Another example here is Turkcell, they're spreading within their warehousing and analytics. So and actually I wanted to show that one. One of the interesting things there is a petabyte of data. So a petabyte is the next number you start hearing about now. So a petabyte is 1,000 terabytes.
It's that next higher value. So a petabyte of data in less than 3 racks of exobata. So that's the power of that compression technology that Mark talked about. It's a petabyte for somebody who's been in this for over 20 years like I have, it's an amazing number. It's like fitting a 1,000 people in a Volkswagen Beetle.
We're squishing a lot of stuff in there. So it's a petabyte of user data in less than 3 racks. It's just an amazing thing and it's live. The use cases keep expanding. We started things with call detail records.
Now we have subscriber data. So it's just another example of you start with 1 and then the footprint grows within the company. And I'm going to wrap it up there. What I wanted to conclude by saying is our goal, we started with this 4 years ago. And remember I said the goal was the best platform for Oracle Database, best for OTP, best for warehousing, best for clouds, best for consolidation, best for apps.
And I think we've now achieved that goal. So we are the best for all those things. So we've achieved that goal and we're just going to continue to innovate. So there's a lot of stuff that we have cooking in the labs that's going to make it even better. But I think I can confidently say and I've talked
to a lot of customers in the last week, they will
tell me we are the number one platform for OLTP warehouse consolidation cloud and apps right now. So I think Hassan is next. Thank you.
Thanks, Juan. So I'm here to talk about Exalogic. I manage the Fusion Middleware development. In the Java Development Organization. What I was going to do is really focus on, so I guess the standard disclaimers first.
I was going to focus on Exalogix. So I didn't want to repeat everything that Juan said, but Exadata is engineered system for database workloads. Exalogic is an engineered systems for applications, Java, middleware, other applications. The same principles around engineered to include hardware, soft hardware, the storage, the network, the compute, all the value in terms of engineered at Oracle, standard configurations, customers who use it as we learn from it, we bake it all in, you get much faster time to value. All of those principles apply across all of our Exa line.
So I'll focus on what Excel is built to run Java, Oracle applications, other applications, non Java applications, compute platform across all your workloads. We offer physical and virtualized environments. We launched Exalodge, I'll talk about that. We started with physical. We offer now physical and virtual workloads.
We provide a complete management framework to manage the entire infrastructure. So on the middle tier side, if you talk to customers, there's a big problem in terms of manageability across all these different particularly that problem actually gets compounded. In all the benefits of virtualization we understand, but one of the drawbacks is you have a lot of management complexity. So we've built all of that to that complete solution. And as I said, the architecture is the same across our Exa platform.
So InfiniBand, Net Metals building block from a networking perspective and we integrate with Exadata because as you can imagine most of the applications obviously have a database behind them. So one of our very common configurations is Exa Logic and Exadata running together. The target customers like I mentioned, Oracle application customers based applications, another 120,000. Bespoke ISV applications, Java and mainframe applications, we have over 340 ISVs, which are certified on this platform. The key drivers, again, increasing demand, the retail utilities, these are still very, very performance sensitive.
All the metrics you see around for each extra millisecond, how many people do you lose from your website, how many people put stuff in the cart and don't check out, etcetera. These are very intensive performance At the middle tier level as well, people want simplification in their environment, again, Xalogic provides a great platform to do that. And then of course, all IT organizations, including everybody I talked to this week at OpenWorld wants to see how it will save them cost within the 1st year. In terms of adoption trigger issues, that's still you'd be surprised even though you have middle tier scale out, a lot of applications still have performance implications. New projects, application upgrades, application lifecycle includes hardware upgrades and then hardware of a certain point at which they do refresh it.
Those are kinds of areas where we're seeing triggers for Xalogic adoption. As I mentioned, we've been 2 years in the market now, very strong customer adoption across the globe, across all industries. You can see some of the name brand customers here. These customers in a little bit of detail. Ingersoll Rand, they are looking for improved customer experience.
So in their case, this is another one of those Oracle application, E Business Suite Release 12, Fusion Middleware underneath that. This is Exalogic and Exadata together, 6 system, the IT spend and a much faster response time and just in terms of customer experience management, deliveries, quality of products. So they again cost benefit, but as importantly much better on a one time basis and then ongoing reduction of 40%. Another example is Hyundai Kia Motor Company. Again, you're familiar with the company.
In this case, they were looking at better scalability. This was an IBM. This is middleware workload, so content management, Oracle content management. In their case, again, higher throughput. They were automating document related workflows.
So in this example, something that took them 4.5 hours to do was mostly driven by increased productivity, but also cost savings at the same time. America Movil, this is the 4th largest telecommunication company, mostly focused on Mexico, Latin America. This is half a logic of half a rack of Exologic, really that performance requirements in this case 35 times the throughput. And this was also interesting because they got it up and running within a month and they saw ROI within 3 months. And then again, that's a key point where you get the entire system, just our customers when you talk to, you'd be surprised at how many really sophisticated IT organizations actually value that aspect a lot, which is even though I have the people and I can put the system together myself and I've optimized it, etcetera, but I would rather not have to spend money on that.
So if you've done the engineering to put it all together, that helped me get much faster ROI. Last response time, a big focus. This is actually a lot of Oracle products running on this system, WebLogic Server, E Business Suite, SOA Suite, some custom Java applications. This was a quarter or a quarter rack of Exalogix and a half rack of Exadata, again, cost and performance. But again, improvement in terms of the resources, the human resources it took them to operate the system and operational benefits.
Now as you've heard, adding to existing hardware, the secret sauce is in how we engineer the products together. So what are the couple of things I want to highlight in terms of the engineering benefits that we have. So one thing is exabas, I want to spend a minute on potentially the InfiniBand networking that we have, while it's a faster network, higher throughput, lower latency, But it's the question of how we reengineer our products to take advantage of that. So in this case, for example, if you have regular networking, you have a lot of time better job of transferring these messages both in terms of the speed at which they go back and forth and also the reliability. So we can take Java workload and actually have it run much faster.
And the beauty here is that while this directly to everything that's running on top of this, you don't have to change anything from an application perspective. This is standard Java application. So all the smarts that we build in really get leveraged then by existing programs, existing applications. So that's really the value here of not having to change your applications, run your existing applications and you see the benefits, but it's things like these that we've done that help you achieve that. Another capability I want to highlight is the Oracle Traffic Director, which is really an application delivery controller being able to manage the workload in terms of incoming workload service levels, has taken the software and integrated it much more closely with the hardware platform.
In this case, processor level, hardware encryption, SSL security type configurations and really not only provided this capability out of the box, big problem present layers to be able to get that application performance. So this gives the control to the application developers, but more importantly, really provides an additional capability built into the box directly. Now we also announced the next generation of the hardware platform for X3 and Mark isn't here yet, but I'd be happy to have him talk about it as opposed to Juan who doesn't like him talking about X3. XLogic X3 is the next generation of the XLogic platform again, much more processing capacity, much more memory flash, even better performance. And again, the same principle, it's the same price.
This is 50%, 100% more compute capacity now available as of X2 to X3 and it's at the same price. Now in terms of performance, when we launched Exologic, we talked about 2x to 5x better than the commodity hardware that's out there. And for an OLTP application for a middle Java application, that was a pretty big deal. As you saw in the slides earlier, we actually have seen much better performance in customer installations, actually even beyond that. But these are some of the benchmarks that we look at and with the improvements in the software and the hardware this year in terms of the engineered systems, we can actually now do another 3x to 5x jump over what we had last year.
So that's now cumulative, you can multiply that out. And these are kind of the Java benchmarks that you see. A lot of our customers are using these for our applications. And we've done benchmarking again in our labs as well as talking to customers and looking at customer benefits. This is again Exelogix and Exadata combined.
Like I said, most of these applications, all of these applications have a lot of application logic, but a lot of obviously database processing as well. So these are benchmarks that we've run across E Business Suite, JD Edwards, PeopleSoft, Siebel, running Exologic and Exadata in terms of both response time and scalability. So across both dimensions, much better performance. And again, we are seeing this in the customer base as well. Now this also applies to our vertical applications.
Now these are some of the ones that I mentioned, which are very performance sensitive. So web commerce with ATG, retail, utilities, communications. Here there is beyond just the cost and the management benefit, these are really top line business benefit type applications. And so having that extra performance actually is very, very important. So again, we are seeing fairly significant adoption in these segments, the retail, web commerce with ADG across these.
And again, we have the benchmarks to show the improvements again across scalability response time, the typical metrics that customers look at. So what are the competitive differentiators? Just to kind of walk you through that very quickly. Performance, like I said, breakthrough performance, Java, Middleware, Oracle applications. We introduced virtualization.
I just want to make a point about virtualization. Obviously, technology has been around for some time. They've been vendors who've been doing it for a while. Most of the virtualization adoption in the IT space has been around development test type systems. Mission critical systems like Oracle E Business Suite, like Siebel CRM typically have not been virtualized because those that technology is really not ready for those kinds of business critical applications.
What we've done where we are differentiating ourselves is bringing that virtualization benefits to mission critical applications because we have reengineered our virtual machine, all the low level components that let us provide that level of service for these mission critical applications. So with virtualization, we have fundamentally addressed a space that has really not been addressed effectively before. And of course, we have a lot of these applications, so we can not only do a better job, but we're obviously using it internally with our cloud, but also with our customers. I mentioned about exabus and integrated traffic management. These are some of the key features in terms of how we deliver that extra performance.
And then I think the manageability part is also important because we can actually we have a complete end to end manageability, specifically when it gets into virtualization because one of the challenges like I mentioned, you take hundreds of servers and you boil them down because you have virtualization, but now you have thousands of virtual machines and managing that across your entire enterprise is a big problem. So we have again the tools to help you lower the bar in terms of manageability for these systems. Just in summary, with the engineered system strategy, we have machines for database. We have Exologic for the applications, Java, Oracle applications, ISV applications, mainframe applications. 2 key value propositions, performance, very, very high performance, lower cost of ownership.
The secret sauce is again in the way we bring the software and hardware together and the innovations we do in the software. And again, we are seeing very, very good adoption both Exalogix as well Exadata and Exalytics as an engineered systems approach within our customers including replacing existing hardware and also using it within our applications installed base. Thank you very much.
Okay. I am Thomas Kurian. I'm Executive Vice President of Product Development for Oracle. I run the software development group. We wanted to break up the process of having you guys see 16 slide presentations back to back.
I'll take a few questions for about 10 minutes on the topics we've covered, cloud, exadata, exalogic, then you'll have a break and then we have more to come on Oracle Database 12, Exalytics, Big Data and then obviously Mr. Ellison will be here at the end of day. So please go ahead. Ken, do you want are there mics being handed around or? Okay.
I think there's a question in the back.
I got a mic over here though. Hey, Thomas.
Okay. All right. Okay. If you could stand up because it's a little hard for me to see from your peers. Yes, great.
A very simple question, maybe I missed it.
But will customers be
able to buy Fusion applications pre configured, assembled on Exo machines?
Yes. So we have customers who use Fusion applications, the database and the middle tiers come pre configured using a virtual machine template. You can unzip the virtual machine and get up and running very, very quickly and there are customers who have done that and they come on Exadata and Exologic. Okay. Next question.
Go ahead.
Yes. Tripp Chaudhry with Global Equities Research. I had a question on platform industry landscape, almost every company is struggling with it, salesforce.com withforce.com and Roku are com with force.com and Roku are struggling, VMware with Cloud Foundry even though it's open source and PolyClaudable for almost a year now and it's failing to get launched. Same with Red Hat, OpenShift is dead on departure. And if you look at OpenStack, it is all noise, low traction.
What gives you confidence that your product will gain traction?
Why do we think that Oracle's platform as a service will gain traction? It's very simple. The companies who have attempted to get into the platform as a service business were never people who actually had a platform. If you look at Red Hat, it doesn't have a platform. If you look at VMware, it's an infrastructure provider.
We offer 1 of the world's leading important message we gave across to our customers and which our beta trial customers who have been using the platform as service love about the Oracle platform as service is that it is the exact same database and it is the exact same WebLogic server that you run on premise. It is 100% the same. Same APIs, same access to SQL, PLSQL, Java EE, even the same console that allows you to manage it. So they can move their applications very quickly into the cloud if they want to use this or they can start in the cloud and move back on premise. And one of the customers, Siemens, there was a video about him and he was so excited.
He said, it felt like the Oracle database was sitting right next to me except it was in the cloud. And it's that excitement I think that gets the large number of our customers very excited about it because they adopted Oracle database or WebLogic as a standard. They don't want to pick another platform when they go to the cloud. The cloud is a delivery model and I think that's what's very different about what we're doing. Next question.
Yes. Hi, Tom. This is John DiFucci from JPMorgan. What you're doing with DEXA data is impressive for high end, high performance systems, even the previous version, but now we're doing with the latest.
And it's interesting to see
you come out with an 8th rack, which I assume is customer driven. I didn't hear anything mentioned about the Oracle Database Appliance, which I've heard customers talk about sort of some of their, I guess, lower end or work database workloads. If you could talk to us a little bit about that and what your plans are there?
Okay. So I'll talk briefly. The 8th rack was introduced because customers if you're running an ERP system for example or a mission critical system typically people system and disaster recovery and then they have a preproduction and those are typically identically sized. But then they have a development test, a soft instance and those they don't want to have identical size as production. So they wanted us to give them a solution that says, hey, if I and so prior to this, their model was they would try and use a development test system that was on non Exadata hardware on something else because they wanted a more price smaller configuration.
And we introduced the 8th rack exactly as you said basically that I want the audience to understand is with Exadata, we don't just sell 1 Exadata machine. There are many opportunities for us to broaden into these customers. There's a way for us to sell an 8th rack for test dev, so we consolidate more instances and then we have the storage expansion racks if you want to buy more. Now the Oracle database appliance was introduced in a very different it's a very different market segment we're going after. What we're going after is within enterprise customers as well as within small and medium businesses, there are customers who use the Oracle database, but are you and they wanted a highly available Oracle database set up very quickly and easily.
And we have a lot of customers now using it. There's about 700 customers using it as of the end of May when we last counted. That business is growing nicely for us. Giorgio Armani, for example, is one of the customers, the fashion house. They have a lot of small databases, 35 of them.
They got the Oracle database up and running on a 2 node rack cluster in 6 days, which and so these things are on the order of a month to 2 months, 6 days to get your application up and running. So we see these two products as very complementary. And one of the things we are starting to see for example with customers like Thomson Reuters and others is they buy many systems from us now. They buy a bunch of expansion racks. They're buying database appliance in certain departments.
And then we'll talk a little bit about big data appliance as well. And they can standardize more and more of their data management infrastructure on the appropriate technology from Oracle.
Okay. Yes next question. Raimo Lenschow from Barclays. Can you talk a little bit about your view on in memory in the database and using DRAM like one of your competitors are saying is kind of the only source versus actually what you're doing, which is a nice hybrid of having the hot data and the cold data and the active data in one place. Especially customers are thinking about the cost of things because if you think about data growth and trying to put everything into DRAM is going to be very, very expensive.
So just kind of maybe contrast your approach here compared to what some of your competitors have learned? Thank you.
Okay. We have as Juan said, our general view is best. Customers always have a way of finding more requirements than what fits within the scale of that capacity, right? So years years ago when people went to 48 gig of memory on a processor, people were why that's so much data. And today that feels like a fraction of what people really want.
And our view is has always been that there are lots of data access, IO rates and costs. And from our point of view, Xun should not have to change in order to decide where data is put, whether it's in DRAM or Flash or on disk. The R database manages it for you and we move data transparently between these layers. We also give you the performance of DRAM, the IOs of flash and the cost of a blend of DRAM, flash and disk. And we don't think anybody, no matter what they may say publicly, because we have the breadth of customers and understand the requirements, no one is going to be able to match the performance and costs that we offer, period.
Next question.
Bakkar, cash flow and Merrill Lynch. Thank you, Thomas. Just trying to shift the discussion to the Fusion application side. Yes. Clearly, you launched it last year and nice references coming through.
Where are we in the process of getting a few references for customers that have all modules of Fusion running the entire business financials CRM and HCMR, some of the edge chosen to focus. I'm curious when are we going to get to the point where it's the entire suite is completely referenceable to production? Thank you.
Okay. It's a very good question. I want to just make sure we introduced the first version of Fusion application general availability April 28. We are very happy with the progress. I mean to get to 400 customers in a year is really good progress.
If you look at competitors for example, many of them say that everybody is comparing different time periods. They say, oh, you guys were working on fusion since 1992. Sure. And so but if you look at the effective rate, we're at 400. Workday's recent thing was there at 3.20.
They've been in the market 3 years. We're in the market a year. So we feel comfortable on how fast we're growing. Now with regard to your question on when do we get customers who are moving the entire to the equivalent of a global single instance of Fusion, I think that's what your question was Kash. Most of what we're seeing today is the buying for Fusion is happening department by department.
And that is a central thing that we see in SaaS is the buying decision maker is not necessarily the sea of mental decision maker. And so the HR executive says, I want HR SaaS. The financial person may say, hey, I still want to keep financials on my premise on a different product set. And so part of what we're seeing is not that people find that Fusion is lacking maturity to run a global single instance, but the decision making that's happening within customers. Now our view is there are some customers who are buying more of the suite.
And when I say more of the suite, ERP, they finished the ERP go live. They're happy with it. Now they're picking up HCM. There's a number who have finished the HCM go live with talent and are coming back for ERP. There's a couple of major financial institutions.
There's a couple of major, let's call it hospitality and retail businesses. And towards the end of this year, we'll start having more of them go live with their 2nd phase in November, December, early January.
Yes.
Hey, Thomas. It's Adam from Morgan Stanley. Maybe just a follow-up to what you just said. What are you seeing in terms of Fusion customers in adoption? Are they buying 1 module, 2 modules?
What's a standard footprint or a standard value? And does that change at all
if people are going with
a cloud based version or an on premise version? Is one commitment typically larger than the other? Okay.
It's a good question. The primary purchasing decision is happening at the level of what we call a product pillar. A product pillar, there are 4 of them, ERP, which is financials, procurement, project management and sourcing, that's one product pillar. HCM is typically a second, which is global HR, comp, benefits, payroll and then talent management, that's product pillar number 2 CRM, which is installed base sales, marketing, incentive comp, quota management, territory management, that's number 3. And then number 4 is supply chain and supply chain is typically product information master, costing, inventory, distributed order orchestration.
Those are typically the buying pattern. There's not a lot of differences in whether people are buying on premise versus SaaS. The decision to move to Fusion is typically designed around a collection of business processes that a specific line of business wants. And so they're making that decision at the level of the granularity of that business process. SaaS is more a deployment option, whether you run on premise versus SaaS is more a question of who's operating it for you.
We're not seeing a lot of differences based on if they were on premise, they buy a bigger footprint versus in SaaS, they buy a smaller footprint. Okay.
Thank you. Karl Keirstead BMO Capital Markets. Thomas, I just wanted to ask you a question. I know Oracle has been on this journey to the cloud for a while, but it feels to us like the pace is accelerating of late. You've obviously acquired more aggressively.
This open world is very much about the cloud. So I'd just like to get your perspective on what you're hearing from your clients that's motivating Oracle to step it up in the last year? What's the change in tone that has caused you to get more aggressive? Is it big data like Mark Hurd mentioned earlier? Are you sensing a tipping point on the enterprise adoption of the cloud?
Maybe a little perspective on the why now.
It's an interesting question. I'll give you two answers. First of all, none of the software we wrote for the cloud happened in the last year. None projects that we showed at this event that was organically developed happened since last meeting started after last open world. So these projects happen to be under development for many, many years.
Most of them started at least since that sometimes the projects get done at the same time and that's the way software development goes. You finish a bunch of projects, you get a bunch of customers and then at OpenWorld, we feel comfortable that software is mature enough to open the doors up for a lot of people. So I wouldn't interpret Oracle Beach would like you guys to move to the cloud. We rushed off and built something and 12 months later, voila, here it is. So that's one reality.
And I will tell you all of the plan during long time, but platform as a service started more than 2.5 years ago. Okay. So that was one. The second thing is we do believe that the line of business decision maker is increasingly influential in the purchase of applications. Number 2, to us is a very fundamental change that organizations are going through.
And similar to if you put yourself back in e commerce, when Internet first happened in 1998, most organizations said there's this e commerce thing. And very your call center and your call center guys doesn't know what's going on with e commerce. They want to return something and your order manager has never heard of them. So your order management system needs to change. You need to deliver something to them on a schedule, so you need a view of inventory.
And so e commerce, if you look back 10 years ago, people realized very quickly that e commerce really needed a transformation of core systems. To us, social is the exact same thing. It's going to transform all the core systems in companies. And so the reason we stepped in was we felt there was a maturation of technology that we could acquire to then integrate into our core systems. So I would in response to your question, I would say one factor is that we have seen this cloud, the movement to software delivered over the Internet browser for a long time and we've been working for it for a long time.
And so the fact that all the technology happens to come together is just a reflection of the fact that we finished a bunch of software projects. On the acquisition side, we have felt that our engineers have done a fantastic job building a bunch of technology and there's a few areas where we did not have organic development underway and we felt we need to make an acquisition to fill out the suite. It's as simple as that. Okay? Ken, how what's the you'd like to take a break for how long would you like them to take a break?
15 minutes?
Ladies and gentlemen, we'll take a 15 minute break. Refreshments are being served in the foyer. We'll see you back at 2:50. Ladies and gentlemen, please take your seats. Our program is about to begin.
I still believe in
Ladies and gentlemen, please welcome back to the stage, Ken Bond.
Thank you. Thank you.
We're not saying that necessarily that you will have those superhuman powers if you're using our products, but your customers, who knows. A couple of quick housekeeping items. One is on your desk, you've seen the schedule also on Page 2 on a pink sheet is an evaluation care sheet. Very much would appreciate your feedback on the day. So I apologize, I
should have mentioned that to
you earlier. And then secondly, just as a courtesy of everybody in the room, you'll notice we've got these very big doors. They do swing and they let in a heck of a lot of light. I'd ask if you need to come or go from the room over here on my left, your right, there's a door. If you could please come in and go from there, that'd be very much appreciated.
Now let me turn it over to Andy Mendelson.
Okay. Good afternoon, everybody. Let's talk about database. And after that and that. Okay.
So after 30 years database business is going strong. This is the data from Gartner Group calendar year 2011 survey. They estimate the database market SQL RDBMS market grew about 16% in 2011. And Oracle, they're estimating, grew faster than the market, about 18%. So we took market share, moved up to 48.8%.
The top 2 competitors lost market share according to Gartner. We like that. And so what's going on? Why is the database business still thriving? Obviously, we're in the information age.
Everybody is getting more and more data. So it's sort of a natural growth. But there are 3 big trends driving database. Big data is a very hyped up area right now. And it mostly means big data analytics.
Analytics are traditionally done through databases and data warehouses and our BI tools. And so all this big data commotion is really helping drive the database business. And we'll talk a little bit more about that a little later. Clouds and consolidation are actually big drivers in our IT departments of the big enterprises. They're all the story is pretty much the same.
You've got the flat budgets, but you have to do more to help the business grow. And so they're all looking to lower costs and the key way to do that is around consolidation. And I'll talk a little bit about that. Engineered systems, you've heard Juan earlier talk about Exadata and we also have the database appliance Thomas mentioned. Exadata is the combination of the database and Exadata is really powerful.
Our competitors have nothing like it. IBM, Microsoft, Exadata becomes another differentiation for the database products and really again helps our go to market around database. Okay. So this is sort of our high level strategy statement for the database. The one key thing that we've been focused on for a long time at Oracle is we build our core database product to deal with all the different workloads.
And Juan talked about this in the context of Exadata. We are trying to do transaction processing, data warehousing, consolidation, everything in between on our single Oracle database software platform. And that's how Juan delivers all those things on Exadata is like the core database is designed to run really well for all those different workloads. Exadata, as Juan mentioned, the storage technologies were really limiting the ability of our software to really scale out to the biggest data warehouses. Exadata originally was designed to solve that problem.
And now that we have this scalable platform, our data warehousing business is doing much, much better and as well as all the other businesses. We're going to big data. In big data, there is this new platform people all want to know about called Hadoop. We've embraced that in the database group and we are going to market talking to customers about big data and talking about ARPA data and our big data clients, which runs the Cloudera Hadoop distribution. And so we are going to market in that space as well.
We are building features like high availability, performance, scalability to address the needs of all of our customers, whether they're in the BI space, data warehouse space, OTP space, high availability, data optimization and security, etcetera. And then finally, we have always evolved the database to take advantage of the latest innovations in the hardware space. And we continue to do that. The database still works, of course, across all the different vendor hardware platform. Of course, we also have our own platform Exadata and our database appliance platforms.
And again, we take advantage of every opportunity to leverage those technologies as well as we build out the database. Okay. This is a graphical This is a graphical picture of all the different products we have. Bottom or actually sort of on the side, we show the database machines. Tom has just talked a little bit about the Oracle Database Appliance, which is the one on the lower left.
And of course, Exadata in the upper right. These are very complementary technologies. Oracle Database Appliance forms the low end of our database machine family. It was originally thought to be targeted primarily for the SMB market for customers who wanted high availability, but didn't have the expertise to deploy high availability solutions easily. But we're also finding that our enterprise customers see the database appliance as a nice complement to Exadata.
They're going to use Exadata and they're using data. 1 of the customers the other day at OpenWorld was telling me, database appliance is really cool because I have places out in somewhere in Asia and all they've got is a closet and database appliance is a perfect place to throw a database machine in a closet. I'm not going to maybe run
exited
And we're very excited about both of them. And then of course, we have our traditional our core database family of products. We go to market around we have the additions to the database, enterprise edition, standard edition. And then we have a set of of add on products or the options that we sell as well on core database product. And these slides just talk about some of the key different areas we sell these options.
These options tend to be very highly differentiated technologies. So in performance, for example, partitioning technology are there, maximum availability gate technologies, which are also very highly differentiated market leading products. And in the cloud space, we have the newest technology we just announced for that we're going to deliver with a 12C. I'll talk about it a little later. And data optimization refers to things like our compression technology for lowering storage costs by compressing your data and still giving you really good performance even after it's compressed, which is not what most people expect.
Development tools, we just give those away for free. They're not really a business, but they help drive the business. And then on the right side, of course, we've got things like security What we're going to do in the next few slides is just walk through a few customer success stories. And I think one of the areas where we still I still you need some Hadoop thing or NoSQL thing or something. And Juan pulled up the Turk cell petabyte data warehouse.
So I thought, I'll show you another one. This is SK Telecom, which is the South Korean telco. They are putting all of their billing information and they are loading 10 terabytes a day. That's a lot of information. They have over a petabyte of user information.
This slide is a little out of date. They're actually now up to 3 exadata full racks running this data warehouse and they're technology, they're getting 10:one compression using our HCC compression on Exadata. But the key story here is it's another example of a petabyte data warehouse in Oracle. This whole notion Oracle can't scale has gone away with the Exadata platform. And one of the interesting things if you Refresh that hardware, virtually every one of them is going to Exadata.
It's almost 100%. Okay. And then of course, everybody knows Oracle is great for OLTP. We've been running all the big e commerce sites and huge banks use Oracle and all of your companies probably use the one up anyway. VocaLink is a payment processor in the UK.
They're doing they actually rolled in an Exadata system early 2011. They're doing 20,000,000 transactions per day. And the thing that I thought was most impressive is the customer's quote where he said, this thing has had 100 percent uptime system in production in early 2011. That's pretty good. And that's what you need for running these kind of payment processing systems.
They're using our maximum availability architecture. They're using real application clusters and active data guard to provide an active stand alone. So again, they're using a lot of our highly differentiated technologies for running this Okay. And then the next few systems I thought I'd go into is consolidation. As I said, all the IT organizations are trying to lower costs and trying to do it through consolidation and go through here.
Garmin, you all know Garmin, they build the navigation systems, they help you navigate in airplanes and boats and cars and things. They did a consolidation exercise and you can see they consolidated things like their packaged apps, the business suites, supply chain, Hyperion from Oracle and some they moved them from 12 servers onto a single Exadata V2 box. Again, they're taking advantage of our DataGuard technology to make it highly available. So they have a primary Exadata half rack and a standby half rack as well. And some of the metrics are times better performance, great uptime, 99.95 percent, and they are in position to grow.
Exadata is a scalable platform. They need more capacity. They can just add it on demand as they need it. This is another nice one company. They're a big IBM mainframe customer, they're SAP customer and an Oracle customer.
And again, they decided to do some consolidation to lower costs. The first thing they did is they consolidated all their SAP apps on the Exadata box. Next thing they did is they consolidated a bunch of mainframe, the variety of the kinds of applications people are consolidating. It's like there's sales and logistics and master data management. It's a combination of things that are closer to OLTP and some are more like BI applications and of course SAP.
So you really need a platform for consolidation that can run all the different work And I guess my last little comment here, well, on the SVP side, one of cool things is we got 50% compression of the data over there, up to 100 times better performance. They're saving 125 ks per year in operational costs. And then about to ask Thomas about SAP and HANA. So this is where I get to say, well, why don't you go ask SAP about when HANA will be mature enough and functional enough and have the technologies and security technologies and everything else you need for doing consolidations like nothing. And obviously, this customer decided it wasn't going to be anytime soon.
Okay. And then finally, database as a service. So right now, it used to be everybody talked about consolidation. Now they're sort of moving to database as a service, which is sort of the next phase of consolidation sort of strategies. Is the big pioneer in this space.
And they've been doing database as a service where basically all the different lines of business in their enterprise go to the central IT group and they say I need new database and they get it provisioned rapidly on top of a centralized infrastructure, provide this on the cloud. A lot of customers want to do this on their private clouds. Commonwealth, as you can see here, evolved. They first they were always using Oracle real application clusters for doing this. They first started on big UNIX servers.
They moved to commodity Linux servers. We can see the cost return on investment 150 percent over 5 years. As I said, this has been a long term operation they've been doing, 50% to 60% reduction in operating expenses. So this is what every enterprise wants to do. This is the model Commonwealth Bank is really blazing the trail on this.
Okay. So that's a good segue to what's going on in 12c and 12c is the 1st major release of the database since 11GR2 that shipped in 2,009. We've been working on this for a long time. Some projects have been going on over 5 years, major, major release, 3,000,000 lines of new code, 15,000,000 hours of testing. And we are going to be we're now in beta 2.
We went into beta early February. The beta 2 release is now out there. Oracle is actually running some production systems Even know that they're using 12 C today. They are their favorite system called ARIA, which is the system everybody uses all the time at Oracle for looking up names and phone numbers of people and shows you the org charts and whatnot. That's production on 12c.
Okay. And to go through all this today, but just for you to see the kind of areas that we focus on in the release from application development to big data, consolidation, data optimization and compression, data warehousing, in memory, technology, I'll do one feature, which is our favorite pluggable database feature. If you saw Larry on Sunday night, he talked a lot about this as the key technology for multi tenant databases on the cloud. And it turns out this feature was actually originally designed for consolidation on their own private clouds or do database as a service. It turns out the exact same infrastructure works fine on either a private cloud or a public cloud.
And the idea is you take instead of having separate databases running on a server and using that as a way of doing consolidation, instead database and now instead of having 10, 20, whatever the number of separate databases you have to manage, now you have one database to manage. So the big thing that customers want for lowering cost of ownership around consolidation of databases, it's lowering the labor cost. And this feature has this attribute that we call manage many as one. So you plug in 100 databases into this one container and now you can do things across them like back them all up with one push of a button instead of backing up a 100 databases, you now have backed up by pushing the button once you back, you want to do a patch, you patch all the container once and that deals with patching all the pluggable databases inside it. So it is really nice manage many as one capabilities.
It's got isolation capabilities so that all these different pluggable databases running different work with things like that. And so you can think of this technology as sort of a way of virtualizing a database. So just like VMs, virtualize servers, this capability virtualizes databases. And if you talk to our customers, you will find every one of them wants to deploy this as soon as they can. Okay.
So let's see. So with that, I'll just close with what's great about the Oracle database. The number one thing to emphasize is we are the only vendor to this day who really capability characteristics for all the different database workloads and that's the foundation for why Exadata is so powerful and can also run all the different workloads. We continue of course to run across all the different OSs and platforms, but we also now are delivering our own engineered systems as well. Cloud consolidation is a key area where Oracle has highly differentiated technologies to make all that possible.
Things like re application clusters and automatic storage management and Exadata's scalable storage servers are really critical for building out clouds. They're highly scalable technologies, management and the new pluggable database feature for consolidation. Business intelligence and analytics, big data is another area we're very strong in. Oracle as a company is the only one that can really deliver a complete platform from the big data clients for running Hadoop to Exadata for running your big data warehouses, to things like Exalytics, the Botbology will talk about next for running all your BI application. So very strong BI offering.
And then finally, our what we call maximum availability architecture is again a highly differentiated set of technologies for making your systems highly available, including things like, again, real application clusters, active data guard, Golden Gate are examples of some of our products in that space. And just to close, the summary is the Oracle database, the RDBMS market and database business continues to grow. It's a major part of obviously of Oracle's business. We're the leader because we're the technology leader. Our development organization is working hard to make sure we maintain our years leadership in that business.
And we have a big loyal set of customers who are all eager to uptake our 12C release as soon as we use things like pluggable databases and a whole lot of other innovations in that release. And with that, I'll close. Thank you.
Good afternoon, everyone. So earlier, we were talking about data and how to kind of make sure that the things like Oracle Exadata, Big Data Appliance, etcetera bring the management and the enterprise grade architecture. Business analytics is all about unlocking the value from it. So if you look at the Oracle's business analytics strategy, it's very comprehensive, yet it is very simple to articulate. First of all, we're talking about analytics across any data and any source.
And what we mean by that is really data could be structured data, it could be unstructured data, it could be semi structured data. You want to analyze this data together, contextualized and correlated, so that you can get the kind of the integrated insight as opposed to a siloed insight. The second thing is any source. It could be an OLTP system. It could be a OLTP system.
It could be a bespoke application. It could be a Hadoop or a big data type source. Again, it should be able to handle any of those sources. So that's a very, very important foundational principle to the Oracle's Business Analytics strategy. The second thing is once you have an ability to analyze this information, the type of the inquiry that could be various different types of tools and techniques, There is no one size fits all.
You want to be able to report on your operational data. You want to be able to do ad hoc analysis and query on both the operational and the historical data. You want to be able to do multidimensional analysis to slice and dice and get better insights. We want to be able to connect it to the unstructured data that's coming from the social and other places, so that you get a more comprehensive view. And for that matter, you also want to be able to then create some kind of predictive models and other kinds of things to be able to predict future outcomes.
It's really the important thing here is when it comes to Oracle Business Analytics, it's about really supporting the full range of analytics as opposed to saying one single tool would fit all the needs. And it's also about performance and the TCO within that context. The other unique thing about Oracle Business Analytics is locations that we provide out of the box and it's very comprehensive. There are 2 categories of applications we provide. One is Oracle Business Intelligence Applications or OBIA.
These are the applications really targeted for specific subject areas, sales analytics, marketing analytics, financial analytics, procurement analytics, supply chain analytics, where we actually know the sources. We have a very good set of repeatable use cases. We can in fact create and deliver a set of applications out of the box and then patch them lifecycle manage them together with the customer. The second set of applications is what we call performance management applications. Alternatively, they're known as Oracle Hyperion.
This is actually targeted for the office of CFO. They're actually focused around the statutory and the strategic business processes that the finance operations actually deal with at any given time. They're around planning, consolidation, cost and profitability management, tax provisioning, a number of different things that actually are very, very critical and very complementary to the business process of the transactional applications that finance operations use in terms of the GL and accounts payable, APAR, etcetera. Oracle's business analytics is very comprehensive. The other thing that's very important that's actually the slide is not talking about is the delivery mechanism associated with it.
It could be on premise. It could be on the cloud. That's from the delivery desktop or a laptop or it could be on the mobile device. In fact, by 2015, Gartner actually predicts that about 50% of the analytic consumption is going to be through a mobile device and not through the traditional device. So that becomes very, very important to us.
The one that actually comprehensively surrounds this tree, very similar to what we do on the data management side, and this is where the Oracle Axlelytics really comes in. Axlelytics is truly an engineered system in the sense that we actually have taken a hardware configuration that is really appropriate right for the kind of the analytic workloads that we have. And at the same time, we wanted to make sure that it is available at the best cost performance. In other words, best performance, but at a cost that actually makes best sense. So let's look under the hood quickly as to what is in the Exalytics.
One of the most distinguishing features in Exalytics is the amount of memory, the terabyte of the DRAM that's actually available in Xolytics. What this means is combine this with a compression of about 5x to 10x that we provide through Oracle timestamp, you can bring large amounts of data into the memory and then you can start analyzing this literally at the speed of thought. It means a lot of different things. It really means you can actually do very, very fast interactive analysis. You can ask the questions and you can get the answers very, very quickly.
That means the quality of your decision making suddenly is based on the kind of the detailed analysis set that normally you would be settling for. In the planning side, the same thing. You could run a lot more models. You can do more sophisticated cubes. You can do a lot of different things that in turn give you an ability to kind of forecast and predict what you want to do as it relates to the business and how you want to run it.
The other thing that a lot of times people ask is, what's actually inside from Oracle Endecca. Is an acquisition that Oracle made about a year little under a year ago. It's because as we said, any data, any source means it could be unstructured semi structured data as well. Endecco is excellent at handling the unstructured data from an analytics perspective. And we wanted to make sure that all of this actually comes together under one single engineered system.
The other thing people also add is a la carte. While it could be possible, one of the key things to understand here is that the power of the exolytics really comes in when you actually bring all these different full range of analytics together. Because when you start asking the questions, when you start operational data, very quickly you start look at my trends based on the historical data using the same context. From there, can I actually move and do some kind of a multidimensional analysis using the same context? From there, can I actually connect to unstructured data using the same context and so on?
And that's one of the reasons why this really foundation where all these things really come together, okay? So, the Exalytics is really about bringing all these things together and doing so at the best cost performance and then doing so obviously in a very, very much a speed of thought analytics basis. The market opportunities for Axlytics is as we've been looking at it, certainly we expected it to be very large. And we've been in the market for about a year and we're certainly seeing that opportunity is bearing fruition quite a bit. The reason is follows.
There are 3, a lot of sense. One is there is a large enterprise data warehouse market where analytics is one of the fundamental application that sits in front of it. And as the data warehouses grow larger, as the type of the the need for something like Axlelytics really becomes much bigger, okay? So that's a big area. The second area is the Oracle has these applications in analytics space that I talked about earlier.
And all these applications can truly leverage the power of customer base that we have, which is approximately 15,000 plus who all in fact can use today the power of the Exalytics to kind of do that kind of the enterprise performance management that they're actually doing from an Office of CFO perspective. So the market opportunity is very big and settling it as well. So very quickly, I want to just I don't want to spend a lot of time in the interest of time here, but I want to talk to each one of these analytical tools very quickly. One is on the reporting and analysis, which is a traditional from someone like SAP HANA? I think it's a very important question.
I think we have fundamentally a different philosophy. SAP says in order for you to do any type of analysis in memory, you have to bring all the data into the memory. But when you know that the data is large, particularly because you want the quality of your analysis to be based on the large sets of the data as opposed to a sample set of the data, you do have a
finite
in terms of your memory. If you ask SAP, what do you do? They just say, have 5 12 gigabytes, add another 5 12 gigabytes. Then you say, well, what if I exceed the terabyte, add another 5 12 gigabytes and so on and so on. Suddenly, it becomes extremely cost prohibitive to kind of bring all that.
We think there is a better approach in the Nexa data. To be able to understand at any given time what's the hot data based on the heuristics that we actually have a pretty good strong IP on. That in turn allows us to really identify where the hot data is and make sure that that data is always available in memory. If the memory capacity is such that the data is actually larger than the memory capacity, then we use this heuristic algorithms to actually manage that process. And thereby, we really do not require somebody to go in and say, just keep adding more memory.
I think it actually works very well. And in fact, many of the customers that are actually using SAP beyond a departmental application and beyond a single application, when they start actually looking at from the standpoint of more of an enterprise wide, they start realizing the same thing and then they actually now very, very important thing to actually understand in terms of the difference between Oracle approach versus SAP and HANA approach. Very briefly on the S space and the planning and the profitability side, the thing that makes me really talk about this performance management applications in planning, budgeting, etcetera. They also have in memory, but they don't actually work together. Is actually has to be rewritten to take advantage of HANA.
Hyperion planning, every Hyperion plan can literally all they have to do is point the instance of the S space they're using to the instance of the S space that's actually running on Exalytics and then they actually can get the full benefits of the Exalytics. SAP has to rewrite VPC and they're not done with it yet. IBM has TM1, IBM has Cognos Planning, they're 2 different systems. So I think it's a very important thing to understand the power of what we're really trying to do here and that is to maintain this compatibility. And then finally on the Endeca, this is where the big data fit really comes in.
One of the benefits of the Endeca is it actually extends the structured analytics and a lot of the unstructured is actually the sources is actually right now from big data, from the social and from the log files and other places. And to be able to really handle both types of this through something like an Endecca and to be able to do that not based strictly on a known set of questions like here is looking at, but to go into more of the discovery and exploration becomes very important. And the reason is in the big data world, you don't actually know what you're looking for. You think you have a lot of good information out in the social world that you're actually bringing it in. But you also know there's a lot of noise there and you want to snuff from the noise.
And in order for you to be able to do that, you start wanting to explore this data, discover this and discover those patterns and make sure that you're really identifying that subset of the data that in fact is the data that's something you want to further analyze. And that's really where the Endicare really comes in. And that's why anything similar to that. And finally, as I said, there are about 80 plus applications today that are certified on this platform pretty much from the time we actually shipped this. And the reason is while we have done a lot of things from an optimization standpoint for in memory that we have done and the IP that we added, what we fundamentally felt was that the applications do not have to be rewritten.
And that's why we kept the APIs fully compatible and thereby actually many of our applications today run on this box pretty much from day 1. The customer uptake has been phenomenal as I said, but even me from my vantage point is the kind of the benchmarking that they
do now. Almost every
customer either they do that in marking that they do now. Almost every customer, either they do that in the context of a proof of concept or they do it in the context of the actual production deployment, they're actually now starting to share with us many of their benchmarks. Initially, we certainly can from an BI standpoint anywhere between 6 to 20x. And as you can see in these examples, 6 to 20x is actually the low, low end of what we were actually looking at. You have customers such as Pirelli 60x faster Verizon 60x to 300x in terms of the calculations for planning.
You have Pernod Ricard, I mean, as it relates to what they're trying to do from a finance operations perspective. Department of Homeland Security, something that I think we can all relate to passenger analytics. In fact, they do passenger analytics and much more they're exactly doing. But you can see the kind of the things they're doing, 20x faster slice and dice with the Exalytics, with the Exadata in the back end with almost 2,400,000,000 rows and doing that with 89 seconds versus the 31 minutes is what on average in Midwest, a midsized company and they are actually using this both for the BI as well as from Hyperion perspective and 100 ablations. You have a large company, world's largest CPE is they try to do a trial close.
And they attempted to do it on a daily basis. And the problem was they were actually taking some of the reconfiltration because of the complexity they have up to 24 hours. Sometimes they can literally do it less than 4 hours. So for them to realize their daily close vision is extremely possible now with the advent of Exalytics that they never had before. We certainly also look at the context of it in memory.
We definitely could not agree with that more. I think the important thing is to ask is it comprehensive? Is it fully understood? Is there real IP behind it? Or is it just throwing more memory at it and then making it cost prohibitive?
This sees query optimizations, you name it. As you look at these requirements, I think you'll start finding that we're certainly breaking away from the pack here. So I think in summary, from an Exelix perspective, we see a very, very large market opportunity for this. So because of what we have here from a value proposition standpoint, it's actually built on a business analytics strategy that's very comprehensive, very broad and deep. It's very complete.
And this is a key point. It's not a range of analysis and it's about doing it in an integrated fashion. And that actually differentiates again us from others. And then suddenly, we believe as a result, it solves problems a lot better than where the competition is. And I think the customers are actually seeing that and then they're suddenly paying it by the pocketbook.
Thank you very much. So Larry should be here around 4. So I'm going to try and get through big data and then take a few questions. Bill, a follow-up broader broadcast on big data. I wanted to just talk briefly about big data to clarify some confusion on what big data is and how we're approaching the market with it, okay?
What is big data? Every company a big data company and then many are trying to be both, right? So big data is to us for people or technical, it's characterized by 4 things: volume, velocity, variety and value. Volume is large volume of information
storage.
Velocity, the data comes at you very fast, so you need to be able to rapidly ingest it and persist it on low cost storage. And then these 2 are important things. Variety, the traditional they have very flexible data shapes like a web log does not have structure to it. It's a giant record of like a binary stream. And even if you it can have a variety of shapes.
And so you need highly flexible storage in order to represent that. And that's very different than a traditional relational storage requirement that has for example, dataset has traditionally got very low density information. Okay, so I'll give you an example. If an order entry system, if you lose an order, people are worried about it. In a web log analysis or a social media feed, suppose you had 100 web servers and you lost an hour's worth of data, you don't worry about it because you're looking at aggregate patterns across it.
Okay. So it's volume, velocity, variety and value. And the reason I mentioned this is later on I'll explain why the variety and value has a certain requirement and infrastructure and why that's different from and there's a lot of confusion and how does that relate to relational databases. So the obvious thing about big data is it's an analytics opportunity and there's analytics in 3 ways. I got a lot more data so I can analyze it.
I can do a lot better analytics if I can access all of the data because then I can look in much more fine grain. And then obviously because it's so much data, my traditional approaches to analytics may not be sufficient to go with it. And so most people talk about the 5 things you need to do with big data. You got to acquire it, you got to store it, you got to process it, you got to organize it and you got to analyze it. Okay, so what how does that work today?
If you look at it, here's what most companies and most users are looking for. I want to acquire it and there's a variety of sources and data types. It could be genetic data, it could be web logs, it could be social media feeds, semi structured and unstructured, okay? Now first step is you need a collection of connectors to basically receive and suck in this data and then store it somewhere. And so when you store it, you can store it as raw files in something like HDFS, Hadoop file system, distributed file system.
If you've got columnar shape to the data, you can store it in something like HBase. And then if it's key value shape, you can use something like NoSQL. And so if you look at it, there's already 3 types of storage right there: files, columnar and then key value. And then once you store it, you want to process it. And this is where the technology called MapReduce comes in.
It's basically a parallel infrastructure to run jobs to process the data. When you process the data, you need to extract metadata to understand what's that data. And so there's something called hcatalog that provides you the metadata about the data in the system. And increasingly people want real time event processing because they don't want all the data to just go in a batch fashion. Okay.
So now you've got the and then you need to organize it because eventually you need to do analytics. And for organization, people may use an ETL tool like Scoop or they may script against it. And sometimes if you're looking at raw like textual streams like the Twitter data or Facebook data for example, you need text analytics in order to be able to parse it. And then on the right side come all the different types of analytic styles of analysis people want. Graph analytics is, say, who's a friend of a friend of friend on Twitter or Facebook, okay?
So traversing a graph. Statistical modeling is to look at sampling and looking at key statistics and standard deviation. Data mining, spatial analytics are also different kinds of analytic types. Decisioning is saying, if I got that data in my HDFS system, how can I run a decisioning algorithm to figure out what to present as the next recommendation for somebody to see a product or service? Quitting analysis is traditional BI and then information discovery and text analytics are obvious things that you guys know about.
So big data and Hadoop, and this is where most of the confusion comes from. What Hadoop does is they parallel compute framework and distributed file system, okay? At the core of it sits a distributed file system called HDFS. On top of that sits a parallel compute infrastructure called MapReduce. Now Hadoop's value is it provides a highly scalable infrastructure for managing data that has got great variety and low information density.
Okay. So but many people confuse this third point. They think and Hadoop is a core element of Oracle's big data strategy. We use Cloudera as our Hadoop distribution and we have a very good partnership with them. But Hadoop alone is not sufficient for big data.
And this is the central point I want to get across. It's massively scalable, but it's batch only. Okay. It does not allow you to do decision support or interactive analysis. And why is that?
It's very simple. To do interactive analysis, when you throw a query at an Oracle database, we have something called an optimizer that says, I'm going to calculate how long this query is going to run. And the way it calculates that is by looking at where is all that data on blocks and disk and roughly how long is it going to take me to retrieve all these blocks and then run the calculation and return the query. In Hadoop, the strength of Hadoop is that it gimable storage because it has to do that given that it's storing highly flexible data types. But in giving you that flexible storage, it cannot compute very efficiently how long it's going to take to run that quick.
And so it's a fundamental mismatch to say why can't Hadoop do everything a relational database can do and why doesn't a relational database do everything Hadoop does. It's sort of completely apples and oranges. Hadoop is a fantastic technology to store and manage of flexible data types. But in the act of storing that flexible data, it is impossible to perform the same kind of query optimization that a relational database does. Feed rate And it's not an issue of can you do it today.
It is not going to be able to do it because the flexibility of the storage runs completely counter to being able to do a totally optimized credit calculation in a fixed period of time. I hope that's crystal clear. And so what a lot of the leading companies, the social network as you call it, that company what they do is they store the unstructured data in Hadoop and they run preprocessing and they add structure to it. And the more structure they add to it, the more they put into a relational database Because eventually they're running distributed batch calculations on Hadoop, but they want to be able to do interactive analysis in a relational data base. And so the central thing I hope this gets across is 3 points.
1, Hadoop is a good solution to store and value manage flexible data, but by definition, replacement for relational database. Number 2, the more data that goes in Hadoop, typically we see a 10x. If you put in 10 petabytes in Hadoop, you'll put a petabyte into a relational database like Oracle. And so the more data that goes into Hadoop, the bigger market that it owns opens up for Oracle. And the third, people are not taking structured data out of Oracle and putting into Hadoop.
I'm sure if you went out in the web, you could find one strange person who has done it. But typically, they're not doing that because you're using our Oracle database to handle highly dense, high value structured data. And it's the diametrically opposite requirement to load that, they extract the data from it and put it into Hadoop. Is clear? So I hope those three points are crystal clear.
Now what a lot of customers are seeing is therefore Hadoop is a component of a bigger warehousing and analytic strategy and that's where we're going. Oracle is offering the industry's broadest and deepest analytics strategy. And what we'd like to do is to go through this in a lot more detail with you guys. Ellison is here, so I'm going to hand over to him and then Ken Bond and I will schedule a follow-up call where we can do a broader briefing on big data. Larry?
Let's see, is this on? It's on. Okay. So, I'll do my make my first request, which is turn the lights down, please. That's much better.
So whatever you guys want to talk about, I'll do my best to address the issues and answer the questions you have. Okay. Thank you very much. This is Greg. Right here.
Hey, Larry, Rex Rowland. Larry, I wondered
I knew that. Rex kind of asked.
Thanks. Larry, it almost seems again like it doesn't matter what the question. I know what the answer is going to be. It's going to be about the cloud and
It's all about the cloud. Right. It's all about the cloud.
It actually seems very interesting that I think for Oracle, a couple of years ago, it didn't seem like you kind of got the cloud. And All these announcements
Let me stop you right there about I think it's very important. Like I want to really admit even though I founded NetSuite, the first cloud company, I absolutely didn't know it was a cloud company. And the first one, let me be clear. I'm not an investor in NetSuite. I own it.
I started it. It was my idea. Very clear, I called Evan Goldberg and after embed failed I said Evan this time we're going to do what I want to do. Evan started a graphics company first. I wanted to do accounting on the Internet.
So it was my idea. It was 1998. 6 months later, Marc Benioff found out what we were doing and he came up with salesforce.com. He said, well, if you're going to do accounting on the Internet, we're going to do Salesforce automation on the Internet. I don't get the cloud.
But the 1st cloud, modern cloud company was my idea and I didn't sell any of my stock. I still own it all today. When Mark said he wanted to do sales automation, the quote, of course, we didn't the problem was we just didn't know it was the cloud. We thought it was accounting on the Internet and we thought it was Salesforce automation on the Internet and eventually we thought it was SaaS. We thought it was software as a service.
We just didn't know it was the cloud. And what I objected to when I said this suddenly the term cloud became popular because in 2006 Amazon.com rolled out EC2, the Elastic Compute Cloud and the term, the very charismatic term cloud was retroactively applied to NetSuite and salesforce.com and all these other things. And I kind of ridicule everything's cloud, not just Amazon, but Salesforce, NetSuite, everybody's cloud. So I made fun of the term cloud. But as far as not getting the cloud, I'm pretty sure the 1st modern cloud company was entirely my idea and go out and do some fact checks.
Now if anyone I'd love to hear anyone refute that. It's 1998, you can check it, before salesforce.com, come up with a modern cloud company. It began then in the late 90s. Now this idea I didn't get it is interesting. I think I invented it.
So that's got pretty big separation. I don't think Edison got the light bulb like he just didn't get it. So in 2004, I decided we should rewrite all of our applications and they all should be SaaS applications. It was 8 years ago. We had to rewrite everything.
We have a huge inventory of applications. We had to take 100 and 100 of people off what they're doing and putting on writing these fusion applications. It was 8 years ago. Maybe I didn't get it then either. I used to go around talking about this thing called the network computer.
The idea of the network computer was you'd have a simple appliance to access the Internet. You'd have a simple browser on the network computer. That was my idea too. The network computer, remember that? Let's take a simple browser and all the complexity would be hidden from the user on the servers on the Internet.
I just didn't know it was the cloud. I just didn't know it was the word cloud. So I don't accept the notion I didn't get the cloud. You had a second half to your question.
The cloud.
Can you
just talk about your approach to the cloud? Multi tenancy is not something that you historically have embraced with Fusion.
Let me be clear. I didn't embrace multi tenancy built into applications. I didn't think you should at the application layer, the cloud has 3 layers, SaaS, people like Salesforce, NetSuite, Workday, they write applications and then they want to be able to run lots of different customers on a reasonable efficiently on a minimum amount of hardware. So because they're application companies, they build multi tenancy into their applications at the application layer. I think that's a horrendously bad idea, but you had no choice in the late 90s.
You had no choice. There are 2 other places you can implement multi tenancy. The second layer of the cloud is PaaS, the platform, database, programming languages, middleware, business intelligence, those kind of things. And we think the right place to implement multi tenancy, in other words, putting a lot of customers in the right place to implement multi tenancy is not in side of the application. Instead, it is inside of the platform, specifically the database.
The database should be responsible for managing data of different customers and in the same day, it took us almost 5 years to reengineer the Oracle database 12c to make to implement multi tenancy at the database level in the database code rather than the application code. Salesforce does that to the application. We do multi tenancy at the database level. Now 12c wasn't out yet. So when Fusion first came out, I mean today, we implement multi tenancy at the 3rd level, what's called the platform or excuse me, what's called the infrastructure level.
And the infrastructure is the operating system So we implement multi tenancy at the VM level. The VM level, the great thing about implementing multi VM will have lots of customers' data sharing efficiently using hardware and software resources. When you implement at the VM level, there's one great thing that happens. You implement multi tenancy at the platform level, the database level, all database security works properly. You implement multi tenancy in the application, lots and lots of database security doesn't work at all.
Now if you don't think security is important, that's fine. Back in 1998, 1999, that's fine. Implement multi tenancy at the application level, you have no choice. That's pre VMware. That's way pre Oracle 12c.
I think I thought then and I think now multi tenancy at the application level Multi tenancy at the database level is fabulous. You get highly efficient use of hardware and software resources. You can have multiple customers data in the same database, But the database is responsible for separating it into databases in the same container database. So all data data security works properly. You get all of the efficiencies, everything, all the query and reporting tools work properly.
With salesforce.com, not even though they run an Oracle database standard query and report writing tools don't work when you implement multi tenancy at the application layer. Now again, I forgive them. They did it in the late 90s. Workday did it recently, which is really crazy. VMs were around.
Workday knew that VMs were around, but they did anyway. Now it's very important to note that a big difference between us and let's say a sales force or a work We're also a platform company. So if we think multi tenancy is important, we can put it in the right place. So we think VMs are important or networking is important. Technologies are important.
We can implement it at the infrastructure We're the only cloud company that delivers technology at all three layers of the cloud, not just in applications, but the underlying platform. And if you're just an application company, you're going to have a problem. Because when companies buy your application, let's say they buy HCM from Workday and they want to tie it into ERP from SAP. Go check out the Workday platform. Let me tell you about the Oracle platform, the Oracle database number 1 database in the world Fusion Middleware, the number 1 middleware in the world The Java programming language, the most popular pro asked Workday about their platform.
All they can do is do some simple file sharing. So as we pursue the cloud, we're the only one offering intellectual property and innovation at all. Our competitors can't do that and our competitors are too small too much niche players to ever participate at all levels of the cloud. You have more to your question, Rick?
Or do
you give up?
Hi. Can you talk a little bit about Hana and where you see it fitting in the market and why you think they're selling as much as they have? Simple question.
Selling as much as they have. That's a really I love that question. So who are the HANA customers you've talked to? Give The survey of 20 HANA customers in-depth discussions if you'd like it. No, no, no, go ahead.
So I'd love you to talk about the HANA customers. What do they do? Who are they? And don't you tell me who they are? What are they doing with
it? Basically running analytics on it of SAP application.
But a
lot of I'll send you the survey though.
Okay. Let me say that we get a complete list from SAP of all their HANA customers. We have they have a contractual obligation to supply us with a complete list of all their Henna customers. We're still waiting. We can't find anyone in production with Hana.
Now maybe I'm mistaken. They ran a they claim to have 600 customers. Let me start with it's not a database, the Oracle database. It's much closer to Exalytics, business intelligence, what you said business intelligence. It is not a database.
It doesn't do transaction processing. I think again, you surely really shouldn't take my word for it because I think HANA is hijacked. We've been in the database business for a long time. They got a few guys in the lab that built this and it's very quickly. They must be like you may be better figure that at least every one of them is 100 times smarter than our best guy.
So databases, I mean, Exadata X3-eight has 26 terabytes of main memory. And we do database processing and memory. For years, we've had the Time 10 database, which is the leading in memory technology on the planet. So we've been working on this for a very, very long time. The idea but again, I think you didn't just need to all need to go out and talk to these HANA customers and find out what they're doing, because we can't find them.
Not only that, we think what the Verhana would be they take a problem like MRP or the business way to data warehouse and they do some certain kind of they take an application in other words, not to try to build a general purpose database. They take a specific SAP application like the business data warehouse and they reimplement some of the and they make it work on HANA because HANA doesn't support SQL as we know know it. You have to write custom applications for HANA. If you want HANA to work, you have to write a custom application. You want Exadata to work, you have to plug it in.
Every Oracle app existing Oracle application works unchanged on Exadata. Nothing works on HANA unless you write it for HANA. Let's start with that as one difference. Most of the databases on the planet Earth are Oracle. No, that would cost, I don't know, 1,000,000,000,000 of dollars.
So as I know they got their own fund to help support HANA. They announced $150,000,000 needs to be maybe $150,000,000,000 or $1,500,000,000,000 applications specifically for HANA. It's crazy. It's crazy. Maybe they can move 1 or 2 or 3 SAP applications to HANA.
That's all they can do. You think the world's going to stop doing what they're doing and start writing stuff for HANA? Is this HANA? These guys are writing in the proprietary HANA language. All right.
That's 1. 2, the to be a database you have to deal with persistence, error recovery, lose all your data. That's a problem. People get really upset. They get really upset like, remember that data you had?
It's gone. They don't feel it's great. I am so happy they're focused on HANA and not the cloud. This makes me very happy. So they could have been rewriting SAP for the cloud, but instead they built HANA.
So they haven't even begun writing their application rewriting their applications for the cloud. We started in 2,004, took us 8 years. They haven't started yet. In fact, in their last conference, they said they're going to start rewriting their applications for the cloud. They'll be done at the end of the year.
Instead they're really excited with this thing called HANA. HANA to me is much closer to what we call Exalytics except for one difference. If you want your business intelligence applications to run faster and in memory, you plug in the Axolytics box, all the Oracle BI stuff Hyperion times or a 1000 times faster because it's in DRAM. All the existing stuff runs. You don't have to rewrite anything.
So what you're saying is, Larry, Henna is so good. It replaces Oracle and Exadata hardware, the Exalytics software, all the Oracle Business Intelligence and the Exalytics hardware and the InfiniBand network that connects it. If they can do that with 100 guys, they should run us out of business. I'm saying it's a joke. Conversation with you guys.
You told me NetWeaver is going to wipe us out. You did. I mean, I have a room full of you guys saying, Oh, you guys are so screwed. SAP is doing NetWeaver, middleware is awesome. It's awesome.
We talked to this guy. He said it was he had great hair. He said it was awesome. Really awesome stuff. And I said you better talk I mean SAP going into the database business and the hardware business against us, here we are.
Make my day. It's crazy. It's absolutely crazy. But the favorite part is, what are they doing with their applications? I thought they were an application company.
Tell me about R3 or whatever the latest stuff is called in the cloud. They bought SuccessFactors and Ariba and that makes them a cloud company. We bought Taleo and we bought right now. That's not what makes us a cloud company that helps. That helps.
But what makes us a cloud company is we wrote all of Fusion for the cloud. We wrote the 12c database for the cloud. We've got all the SANSI infrastructure for the cloud. We have our own cloud technology. We use OpenStack, blah, blah, blah, blah, blah.
What do they got? This thing called HANA which we can't find it work in any place. But please don't take my word for any of this. All of you, you want to you write a really great article about SAP, get their top 5 HANA customers. Go visit them, find out what they're doing, see if you can find anyone in production, anyone doing anything useful with it.
Yes.
Larry, you don't strike me as somebody that's easily satisfied. What can Oracle be doing better? And what's your vision for the business 5 years out?
I'm a kind of mellow guy. I'm not really worried about that stuff. I think the thing we're doing right now and the hardest thing that we're doing right now is actually now that we've made this huge investment in fusion applications and the 12C database, now that we've built all of this technology with CloudD, that's great. We've got Injune. We 8 years ago with the Fusion application project.
Now we have to turn the field and that's our consulting organization, our sales organization and get them and get them used to much more rapid implementations, selling applications in the cloud, which means not just saying our applications are better, but also explaining the importance of the platform, the importance of the underlying infrastructure. Keep in mind when you buy a SaaS application, what comes with it was as an underlying platform. What comes with it is underlying infrastructure. All of that is important. Not it's not like the old age where you buy an SAP application and you made a separate decision as to what database you're running it on.
That's not the case in the cloud. In the cloud, you buy an application, a database comes with it. An operating system comes with it. Networking comes with it. Storage comes with it.
Recovery system and security comes with it. All that together, you make that one decision of this application and everything else comes with it. It's very different. I mean, yes, there's some things that are easier that we the provider make the capital investment you pay a monthly fee all of that stuff. The implementations should be smoother and faster.
It should be smoother and faster because everyone runs the if you're at salesforce.com, let me tell you what percentage of salesforce.com customers run on the Oracle database do you think? Simple. They don't they do 100%. So they don't you don't have to worry about supporting DB Server and all these things that traditional application companies did. So a lot of the complexity and a lot of the variation is taken out of this.
So you should be able to do an implementation faster. You should be able to do testing more quickly. You should be able to come out really with releases more quickly. So it's kind of up tempo getting the consulting organization ready used to very up tempo rapid implementations faster at a lower cost, less variation, more standard processes implemented. So it's a little bit different way of doing business and we're we've got a lot of people.
So turning the ship, you turn the helm over and it takes a while before the bow starts moving on the horizon. So we've got a lot of people to retrain which and we've been doing a bunch of that. We've had to reorganize the sales force. We think against our secular competitors. So we have an HCM sales force separate from our sales automation sales force, separate from our service automation sales force, separate from our ERP sales force.
So we have a lot of separate sales forces. We made a bunch of changes. So we line up against the competitor. We understand product very well. We understand the competitive landscape very well.
So we've done all of that. And we've done we really did that at the end of last fiscal year throughout our this Q1 we've just finished. So change in the company's orientation from on premise software to stuff delivered in the cloud was more than just a bunch of engineering decisions we made between 8 5 years ago. It's now the entire field organization has to be retrained and retuned and reoriented and we're going through that right now. But we're used to that.
I mean, we started off building databases that ran on dumb terminals, then we went to and we ran on many computers and mainframes and then along came personal computers and client server architecture, along UNIX and Linux, then the Internet. We've gone through these architectural changes, these changes of technology in the past. And we've been able to adapt first our technology and then our organization to these changes. And I think we've done pretty well. We keep growing.
So I think we've been through this before. We've made the changes aren't easy, but we've done it. We're very focused and I think we're going to do it again.
How have the customer conversations changed in terms of moving to the cloud versus where we were a year ago from your perspective?
Well, the biggest thing I think was what caused us to introduce the private cloud. There's a lots of lots of talk about you're a big bank and to take a lot of your data and put it in someone else's data center, you might know very little about. I mean, there might be regulatory problems. I mean, if that data center is located in the United States, for example, there are different privacy laws in the United States than in the Nordic countries. So where the data center is located, where your data is located is important.
What the disaster recovery plans are in case that data center goes down, all of that stuff is important. So our largest and most advanced customers who are used to asking a lot of detailed questions about security and disaster recovery were a bit uncomfortable just saying, hey, here's my data, you do everything. And so we decided to but they love the idea of, if you will, the simplicity of the cloud, the fact that they pick an application and they can be up and running pretty quickly, that they don't have to make a capital investment, that they have them instead they got a simple monthly fee, that they don't it was good that they didn't have to make a lot of decisions about the underlying platform and infrastructure. They kind of like being relieved of making those detailed technical decisions. On the other hand, made them kind of nervous when they started asking questions about, well, Mr.
Cloud Provider, what decisions have you made in terms of what is your disaster recovery plan? What is your security How do you can I have a hot standby database? I mean, how fast can you get me back online, etcetera. So we think in a much more comfortable way to these large clients by saying, okay, we'll just have a piece of our cloud. We'll take the same exact infrastructure that's in our cloud, which is Exadata and Exologic.
We'll take those 2 machines. We'll install them on your floor. We'll own them. You don't be the same application, same database, same everything that we run-in on, same run It'll be the same application, same database, same everything that we run-in our same thing we run-in our public cloud, but it will be on computers dedicated to you behind your firewall on your raised floor. But we manage it, we pay for it and you pay for what you use.
And that has made our customers much more comfortable with the idea of taking advantage of the things they like most about the cloud without dealing with kind of the uncertainties and what kind of disaster recovery and security they provide. So I think that was the biggest thing that we with our major customers this kind of this general notion that my god do I really turn my all my accounting data and all my customer data over to some especially when they co mingle my data with my competitors' data in the same database and there's no security barrier at all other than inside the application. There was the sale the sales, I'm going to rely not on the Oracle database for security. When you're using salesforce.com, I told you security is relying on a salesforce.com's application layer security that salesforce.com built into their Salesforce automation application. That's what you're relying on when you use that stuff.
And a lot of people were uncomfortable with that. So that's why we introduced the private cloud. We think that's a big deal. We think that is providing the private cloud. And having said that, let me now add when they get the private cloud, it's very clear to them that they're making this decision on not just an application, but also the underlying infrastructure, the underlying database, the underlying middleware, the underlying And I think they're much more aware of the fact that there's deep implication when you make one application, you want to hook it up to anything else.
You're going to have to go into what salesforce.com calls force.com. You're going to have to start programming enforce.com to connect that salesforce application up to what else do you want to cut. So you're programming on a proprietary platform called force.com, proprietary. You're completely reliant on whatever security model salesforce.com implemented in their application. You're totally reliant on whatever disaster recovery salesforce .com is.
And we think to our prospective customers for cloud technology by describing what we offer as infrastructure, what we offer as a platform and what we offer as applications. Now I should go no, it's a very quiet section over here. You don't have to ask a question.
I just asked a couple earlier. I have a hard question about your hardware business. Do you really have 2 exodatas in the boat that follows your catamaran?
No. I'm kidding. Or maybe we do and I don't know about it. But we But I kind of doubt it. More seriously, if you look Oh, that was a okay.
I didn't realize the joke. I was wondering. I just thought to myself, is it possible we have 2 signals. We're taking lots and lots of data across the radio network from the sailboat into our telemetry boat. But I don't think we process we process some of it real time, but a lot of it is saved and processed into Exadata.
So but it's unimaginable to me that we have 2 reps of Exadata. More seriously, if you look at
the hardware business, we talked a lot about engineered systems today. They seem to be doing extraordinarily well. If you look at the portfolio of your current hardware products and try and think 2, 3 years out as you always do, what do you see what's your view over the next 2
to 3 years? Where do
you want to invest more? And where do you potentially want to pull back and invest less? Businesses.
We have 1 hardware business where intellectual property where we add lots and lots of value Exadata, Exalogix, Spark Supercluster, our T4 UNIX Computers, we add lots and lots of value. Our InfiniBand switches, these kinds of things, our ZFS storage appliance, our where there's we have a huge amount of intellectual property. We make huge investments in this. That's one of our hardware businesses. We have this other hardware business where we take an Intel microprocessor, Samsung memory, an operating system from Microsoft and we sell that.
Business. And so we have these 2 businesses. We have the IP Rich business and we have the Commodity Hardware business. And the Commodity Hardware business when we took over Sun, it was quite large. We had disks from LSI net value.
We got out of that business. We had discs we bought from Hitachi. We were a reseller. We didn't have any value. We got out of the business.
We are not a distributor. We are not like HP. We are not like Dell. Not even like parts of IBM. We I have no interest in the company.
I mean, it's okay. I mean it's not right. I mean if Dell does a really good job in the commodity business. I mean there's nothing wrong inherently with being in that business as long as your cost structures and your distribution model indirect model and you do all the things right to be an effective business you want to be in and you know how to do it, you know how to control costs and the margins are going to be thin and you can make money. So I have no problem with commodity business as a concept, just not our business.
So we have been exiting the commodity portion of this we came up with a T4 microprocessor which is very, very fast. I kind of made the promise with our partner Fujitsu, we're going to be delivering fastest microprocessor in the world in the not too distant future. We think we're moving very much faster because we're moving our projects are to move things out of our software directly into silicon on the chip. Now that's interesting because we're in a good position to do that. We're a software company.
We're a silicon design company. We can do that. We gain a huge Connected business. So we're an IP company. We develop IP and we sell differentiated products based on that intellectual property.
That is our business. So as you look at these 2 hardware businesses, the hardware business that we bought constantly going down, constantly going down. What is the problem? Well, these commodity businesses are shrinking faster than are the businesses we care about are growing. But Exadata, Exalogix, Exalytics has been growing in excess of 100% for a long time.
T4, the T4 Spark T4 Unix machine is the fastest growing Unix machine in the world. ZFS storage appliance, a competitive net apps is growing extremely rapidly. All our IP is our IP rich hardware business is about to cross in size our commodity hardware business. And at that point, we started out with a small IP Rich hardware business and a large commodity business. Small numbers doubling.
Eventually, that small number keeps doubling and it's bigger than your commodity business. That happens this fiscal year. So this fiscal year, our Exadata business will be vastly larger than our X86 business or our X86 and commodity storage business combined. And the IP rich business and the overall hardware business will start growing very pretty rapidly starting this fiscal year. But our strategy is that.
We're an IP company. We're making more silicon, not just Apple. Again, the closest company in the world the company I've admired the longest is it's a the company I've admired the longest is run by my best friend of 25 years, Steve Jobs. And he believed in microprocessors. They design their own displays and they design obviously their own operating systems blah, blah, blah all the way up.
We believe we should be doing the same. And we shouldn't be in the business with our intellectual property. So I love the hardware business if it's differentiated. Now one last thing about Exadata, Exadata, Exelogic, Exalytics, Spark Supercluster. Everyone I think the general and our tone has always been, God, these things run unbelievably fast, 10, 20, 50 times faster than it is the people that need extreme performance.
That's a decent market, but not the most important market for Exadata, Exelogix, Exelytics. The most important market for those products are people that want low cost. Lower cost than a room full of commodity X86s or Xeons, whatever you want to call them. I believe that's true. So we're not just going after the high end market, including the rooms full of X86s.
So we think the easiest part of that market to get are the people the extreme performance part, the people who just need extreme performance. We think those are the early exadata customers. But we think the systems at the high end of the market, the bulk of the business as we grow 2, 3, 4, 5 years out is going to be replacing rooms full of X86s which consume enormous amounts of power are very difficult to manage a very labor intensive, a small number of super servers than huge numbers of small servers as long as the cost performance equation works. And we think it does. We think I'd say it is much cheaper to run than a room full Big.
The server business is $50,000,000,000 and Exadata is half a server and half storage. The storage business is now slightly larger than the server business. They're all around 50. So I think that's the $100,000,000,000 market that Exadata is in. Of the extreme performance portion of that $100,000,000,000 is probably only, I don't know, 15% of it.
Hi, Larry. You've been talking about how you're making this transition from selling the components to selling really complete solutions over the cloud. And you've got a large portfolio of applications that you've been supporting. A lot of them have been acquired and Look forward, I'm interested to hear your thinking about how long will it take before say the majority of your customers who are running applications are ready to make that move to the cloud? And in that process, what do you support?
When do you how long do these long tail either push or pull the demand to try to make that transition?
Okay. One thing is interesting. We love our existing customers and we're not going to try to coerce them or push them to move to fusion applications. But let me make a very important distinction here. I think this is really important.
Suite on a private cloud or on our public cloud on infrastructure. So when you say move to the cloud, this is why people are very you got to be really careful about SaaS applications, cloud SaaS applications equal. So moving to the cloud would mean for Oracle selling a Fusion application. I think that was how you kind of catch your question. And I submit to you that if you take your existing E Business Suite application the infrastructure level.
And you're now running a traditional application. So, like you move to Amazon.com, you move that out. You can run that at Amazon.com. You move it to Lyft right now, move it to Amazon.com. You're running in the cloud.
So you can take all of our all our e business suite, etcetera, can move those applications onto our infrastructure as a service either in the Oracle private cloud or either in the Oracle public cloud or a private cloud on their firewall. So they don't necessarily have to move to Fusion to get them onto the cloud. So we think that we have a lot of opportunity. That's one of the big uses of infrastructure. It's one of the big compete with Amazon.
Well, yes and no. Yes, we're in the Infrastructure as a Service business, but we're using Exadata, Exlogix, Exalytics, which we think is faster and cheaper, but other people can decide. But we think someone who's running say e business and the Oracle Cloud than the Amazon Cloud, the kind of services we provide, the kind of backup recovery, disaster recovery, backup services, etcetera. The fact that it's one vendor, it's us. It makes it easier for them.
So we think we have a kind of built in advantage as we compete with Amazon or Amazon or Rackspace or some of the other infrastructure as a service companies. But if you look at our opportunities in the cloud, it's not just selling fusion applications to Leao right now. It's also selling this infrastructure as a service to our traditional customers and they can take their time. But we can take a lot of the benefits in application change. We get benefits as a provider, as a service supplier.
They get benefits as a consumer. It runs faster. A lot of the degree they have to upgrade their hardware over again, their operating system. We can take over the management of the application for them, upgrade it to all of those. We think our ability to grow our cloud business is going to be measured not just how much Fusion we're selling, but how much infrastructure as a service we're selling to our very, very large installed base.
And that's why we're really optimistic about how fast our cloud business is going to grow. Right in the middle.
Just maybe coming out of the clouds, coming down to the products and talking about the database. It's been I think 5 years since you've had a major new database launch, I think with 9 as a license. I'm just wondering if you could maybe at a high level talk to us about 12C and how you look at that as an opportunity for that core database business versus past few major releases you've had over the last decade or so?
Well, again, we made the decision because we decided to make 12C a container database with pluggable databases, in other words, make it multi tenant. It took a long time to do. It took a lot of re architecting. And I mean, obviously, we had to make security work at and we had to make everything work transparently, right? As you go from Oracle to 11 to Oracle 12, for kind of all the SaaS companies.
We think there are going to be lots and lots of SaaS companies. It's a database when I say database for the cloud, it's not simply rebranding, it was fine. But it doesn't take us 5 years to change an 11 gs to 12c, if it was just branding. That would not take 5 years. We did a lot of re architecting and we think it is the right platform to this whole next generation of SaaS providers and not just us.
But it also has tremendous utility inside of our large customers who want to consolidate lots and lots of separate databases. So they had a room. So the whole idea is everyone's kind of gone to this model of rooms full of X86s, rooms full of Xeon servers running Oracle. There's just lots and lots of these. And it's at the point, I'm much however, where everyone is at this.
The electricity to power Xeon server over 2.5 years cost more than the Xeon server, right? Power cost more. So these were this notion that they're cheap. And then the labor associated with each one backing up each one, managing each one, it's enormously expensive. So this whole idea of manage many as one, that you can take all of the you can take a 1,000 of these Xeon servers and consolidate them into 4 Exodatas or 10 Exodatas, whatever, 10 racks.
And it's not just the power savings and the floor space savings, but the management and you have to back up 10 databases, not a 1,000. You can restore 1 at a time. You can recover 1 at a time. You back them up, you manage them as one as 10 databases rather than 1,000. It has huge implications in terms of labor savings, reliability, floor space savings, electricity savings, etcetera.
So the world kind of it used to use a small number of large machines. Now it uses a large number of small machines. And I think we might now oscillate back to a small number of large machines because it's just going to save you more money, more money on labor, more money in power, etcetera. So that's what we think is going to happen and we think that's going to have be a boon to our database business. Anyway, that was the decision we made.
Those are the 2 driving forces behind 12C, those two business opportunities. Way in the back.
Thank you. Cash London with Merrill Lynch. Larry, you asked us to find a HANA reference. I found it. It's in the island of Maui.
Maui? Yes. Good God. It's only 8 miles away from Alanae. We're exactly on Maui.
And the question is, is it easier to drive on the road to Hana or sail to
I've driven on the road to Hana. Hana means flower by the way. I don't think that's what SAP means. I think for SAP, it's an acronym, but I think the HANA in Maui's flower. I
had a serious question actually, so
it's not a question. I consider that very serious.
Okay. Go for it. Go ahead, Ghosh. All right. The question is late '90s you talked about the common database ERP, CRM supply chain all running on one database.
I thought that was a pretty powerful message. And it looks like I was talking to Thomas and he said that Fusion apps also run on one common database. Your competition, the larger applications companies really install multiple modules on multiple databases. It looks like you have a powerful cost of ownership argument in the next generation of applications. Can you talk more about that?
Thank you.
Yes. Well, I mean, we think, again, this whole notion of having the more of your company's data, let's say, we think it's a good data integration, we'll call data integration is a good thing. So we think if your information about your all of your customers is in one database, you're a big bank or a big insurance company, having all of your data about all your customers in one big database is good. Having it in 50 separate databases fragmenting it is not good. It's just this general notion of you want to do cross selling, you want to sell your insurance customers' banking products.
You want to sell your banking customers' insurance products. If you have totally separate systems for insurance and banking, it's harder to do that. If you have sales automation products and accounting products and you want your sales people to cooperate with your legal people in drafting contracts and they're in separate databases on separate systems, it's hard to build that application. So we so kind of the general notion, the fewer databases you have, the more consolidated your information is, the better off you are. So you'll see all of our systems, even though you could you can just you can take an Oracle HCM system and hook it up to other things.
If you have we're designed if you pick the whole Oracle suite, all of your data is integrated. In other words, it's not fragmented. All of your data is in one place, all your customer data is in one place, all your employee data is in one database, all of your product data is in one database. And therefore, it's very easy to ask a question and get an answer. It's very easy for one group of people in your company to work with another group of people in your company because we all share the same system, we're all in the same database.
It's much lower cost to manage, one database to backup, one database for disaster recovery. Again, it doesn't system fragmentation is a very big deal. That's one of the reasons why we're in the sweet business of applications. I mean a lot of people envision, gee, I'll get this we'll have 30 different applications from 30 different SaaS providers. It can be very tricky to hook up all those pieces.
A lot of your information is going to be fragmented on 30 different databases. It's going to be very hard to find out what's going on inside of your business. Suites, the idea of having a lot of things that are engineered to fit together. And we believe there's kind of horizontal suites like at application layer. CRM should fit with ERP, should fit with HCM.
And there are kind of vertical suites if you will. The application should fit with the middleware, should fit with the database, should fit with the operating system in the VM. So I can patch all of it at the same time. One of the really cool things about the Oracle Cloud or something people call the Red Stack, if we send out a bunch of bug fixes or an upgrade, you don't separately upgrade. I mean think about what goes on when you have 30 different applications on 30 different databases and how you fix bugs in all these different places.
We send out one file. It patches all the applications, database, middleware, Java programming language, the VM, the firmware, the operating system everything in one file. And you know what, we've tested it all together. We've tested it. You don't have to test it.
We've tested it all. Now it's much better if we test it all together than if you test it all together. So this whole idea of fragmentation taking a lot of little pieces that were never designed to fit together and you buy them from 30 different vendors and you're responsible for doing the integration, you're responsible for doing the patching and the bug fixing, you're responsible for fitting all these pieces together. And then when fixes and upgrades are sent out, you have to fit them together again and again and again. That's why being a big company is an advantage in this case, because we can take on the entire problem, a complete suite of applications, a complete stack of technology, no data fragmentation, much lower cost of ownership, All your data is in one place, back up one database, one patch file for everything.
We think it's a huge competitive advantage and something that would be very difficult to do if you're a small company. Over here.
Hi, thanks. Phil Winslow, Credit Suisse. Larry, we've seen a lot of companies start talking about sort of a revival of some old sort of data management systems and also some new ones, object oriented, NoSQL, etcetera. How do you view these as whether they're threats or opportunities for Oracle? For example, do oriented databases actually scale up to high volume transactions?
What's the role of NoSQL? Just how you see this market evolving?
Well, I mean, we have a NoSQL database. So again, a lot of people and we built objects into the Oracle database, object technology into the Oracle database a very long time ago. Oracle handles unstructured textual data and searches it. And with Endeca, we bought a bunch of algorithms that's going to allow us to continue to improve our management of unstructured data. Oracle is not a relational database exactly.
It's a relational database too. It started as a relational database. But we handle structured and unstructured information. We handle objects. We handle images.
We handle all sorts of data. We think it's very important to have all different types of data inside the Oracle database. Now if you have a very specific need like in the old days in in memory database times was highly specialized in that niche extremely important. We think it's great technology and we use it. We have a NoSQL database, which we use in our big data appliance.
So it's not that these other products aren't important, but they're niche products and they're really no threat if you will to the Oracle database. I would say HANA, well, I'd say it's a joke, but it's actually to be fair, it's kind of let's say they do a good job of it. It's a niche product. It's a niche product that's going to be useful for doing data analysis for applications written specifically for HANA. It's a niche product.
It's no threat to Oracle whatsoever. In a lucid moment, I'm sure Haso would admit, they can't they'll never be able to do high performance transaction processing. Never, never. So but I mean it will be in that interesting niche. Maybe they'll do a good job of moving their own MRP on top of HANA and do high speed in memory MRP.
We look at that as a competitor not to the Oracle Exadata machine, but we look at HANA as a competitor to Exalytics and not even a general purpose competitor to Exalytics, a niche an Exalytics niche because Exalytics handles all sorts of general purpose business intelligence. And you have to custom code to. That's not true with Exalytics. Exalytics speeds up all of your existing stuff. But they're somewhat niche products.
Oracle database has gained share every year for I don't know last 25 years, 30 years. I mean, it's for a very, very long time. And it's called the information age. It's not even called the cloud age. And or before that the PC age or the tablet age or the smartphone age, it's not called any of that.
It's called the information age. And we have the number one piece of technology for managing the bulk of the world's high value information. And then in the back.
Thanks. Kirk Materne with Evercore. You mentioned that scale out architectures, you think they're going back towards engineered systems over time. When Facebook, Google were building up, Engineered Systems weren't around. I'm just curious as to what you think sort of inspires them to start thinking harder about Engineered Systems?
And when you guys talk to large public utility public telcos that are going to build out their own clouds,
how do you all
make sure that the next set of public clouds include engineered systems? And is it an either or thing? Can you have the scale out architecture plus the engineered systems because
Well, the engineered systems are purely a scale out architecture. That's all they are, right? I mean, the engineered systems, the reason we use InfiniBand, it's that's what is. It's a bunch of X86 machines loaded up with Flash and DRAM connected with InfiniBand and there's more to it than that. But it is a classic scale out architecture.
It's not a scale up architecture. It's purely all of the extra stuff sparks superclusters. Everything is scale out. That's why there's no single point of failure. I mean and it's why you add capacity, you just plug in more nodes, you plug in more and more nodes into Exadata or Supercluster.
That's all scale out. But the fact that we use a faster networking that we use very, very different software, in some cases, very, very different silicon allows us to run this scale out network faster than anybody else. And we therefore, we should use less hardware. So the argument to a Facebook or a Twitter to move away from commodity boxes to engineered systems is twofold. You'll run faster, you'll spend less.
That's pretty persuasive. If we can and I spend a lot of friends over Facebook, including Mark Zuckerberg, and we're talking about talking we talk about this all the time and again next Monday. So we'll see. But I mean but we want to win 2 parts of that argument. You run faster, so you can offer your customers all sorts of insights from all this enormous database monetize this enormously valuable database.
And if you use our engineered systems, you can provide a level of insight you can't provide with a bunch of commodity boxes. And by the way, you get that insight only if you're willing to spend less. So that's our argument. And that's our argument to Mark Zuckerberg over at Facebook and the guys at Twitter, but also every large organization with lots and lots of databases all over the place. Lady right there.
Hi, thank you. I was just wondering, if we could get your comments. In the years pre Y2K, there was this massive uptake of packaged apps and SAP got a big lead in the market. And with these apps now facing that kind of 10 to 15 year useful life, I'm just wondering if you see a lot of market share up for grabs over the next 3 to 5 years in the app space. And if so, what type of opportunity does this create for Oracle?
Well, there's a famous saying, those with the most have the most to lose. So I'll just ask you, you're the CEO of SAP. You think cloud is important? Maybe? Well, why didn't you move a single application to the cloud?
Isn't that your primary business? Instead, they actually they built this thing called Business by Design, a colossal failure. But it was an idiotic idea because it was designed to sell basically ERP to companies with less than 100 employees. Now does the existing SAP sales force call on companies with less than 100 employees? No.
Does SAP have a lot of brand equity with companies less than 100 employees? No. Can we reuse any of our So we can't use the sales force. We can't use the technology. We can't use our brand.
Why the hell are we going into this business? It's very strange. So business by design a colossal failure. They have not they need to rewrite all of their existing applications for the cloud. They haven't done it.
They've got they bought Ariba and SuccessFactors. And they said they're going to have nothing glacier. So I like I mean, I like our chances. Now they're going to melt away like a glacier. Everyone predicted the end of IBM, the end of mainframes, right?
Well, mainframes are still around. I mean, they're less important every year, less important every year, less important every year. So I don't think there's going to be this evacuation away from SAP, R3 and all this other stuff overnight. But they have nothing to offer their customers until 2020, nothing. It's a long time in the computer business.
So as Fusion applications mature, we think we're going to be able to pick off a lot of their installed base. So we're very, very optimistic that that's going to be one of the companies that really is having a very difficult time. But I'll ask you, I mean, what would you do if you're SAP, what do you do? Have they even said they've started rewriting all of their applications for the cloud? Have they made that statement yet?
What are they going to do, just ignore it? I'm asking you, anyone want to explain to me? You're the CEO of SAP. You haven't started yet. What are you going to do?
I'd love to hear one idea of what you do. Yes. Okay. I think there is now the problem with being with that is predicting exactly when they fall off a cliff. But why would new customer why would a new customer ever ever consider now that they still want to install base, they got a huge install base, they're the number one application company in the world, they got a great brand in the oil and gas industry.
I mean, they're a formidable company. But they talk about I know that you say, I don't get the cloud. I don't get the cloud. Does McDermott get the cloud? Does Snabe get the cloud?
Does Haso get the cloud? If so, what are they doing? What are they doing? Right here.
Larry, I want to switch maybe from a technology and competitive question to something.
I'm so disappointed.
I thought you would be. If I roll the clock back, so a lot of years, maybe around 1990, I remember Oracle was launched a big drive to become more customer friendly. And I remember product quality was a big part of that. And I think there were other parts of that too as I recall. So since that time Oracle has obviously changed a lot.
I'm sure the development processes have become much more rigorous. We don't hear about quality issues. But I'm wondering, do you see a risk as the company grows that it gets harder for customers to do business with Oracle simply because it's got more products, it's got a lot more customers. Is there a risk Oracle becomes more difficult for customers to deal with? And if so, what do you
do about This will be the greatest question of all time. Are we too big? I don't think so. One of the things we try to do is we broke up the sales force into separate sales forces by specific product area. And I think there is a danger.
If you get to be so big and you have so many generalists, so many people I mean you can't have the same salesperson selling InfiniBand switches and budgeting and planning to the CFO and InfiniBand switches to the networking manager at a large company, just doesn't work. And I think the biggest danger is we have so many products We have people selling the products that don't know much about it and don't know much about the competition. And we've decided that lots and lots of separate highly specialized sales forces associated with highly specialized sales consulting and consulting teams is the way to handle it. So you kind of atomize the company. You take this big company and you break it up into areas of interest.
I mean, there's an application group and then the application group itself is divided into CRM, HCM and ERP. And ERP is itself is divided up into supply chain, manufacturing and so on. So you keep specializing, you keep atomizing. And then you constantly measure yourself against your secular Our infrastructure guys measure how well they do against Amazon or Rackspace. So you see very focused on what is the technology?
What is the market? Who's the competition? What who are the potential customers and the existing customers? What is how do we gain competitive advantage, how do we gain share, you measure everything constantly. So in terms of doing business, I think this whole move to cloud actually makes it easier to do business with us because it's done your customers said they didn't want to make a capital investment, don't have to make a capital investment.
You got plenty of capital. Mark Crude was telling me one guy said, I don't want this cloud. I got tons of capital. Well, you don't have to buy the cloud private cloud. You can we'll still sell you an Exadata, but you get a choice.
So we have more modes of doing business, which I think makes us as we give customers more choices, I think just the opposite happens. We become friendlier or more accommodating to doing business the way they want to do business. We'll do we're talking to all the very large customer right now about not only a private cloud, but us running the infrastructure as a service, but also us being the DBA for all the Oracle databases and kind of a little kind of combination private cloud, writ large, a little bit of outsourcing to go with it at least for database services. So we'll do that too. So I think we're learning to be more flexible in terms of delivering the suites of giving the customers more choices and giving the customers suites of products and services the way they want to buy them.
So I hope just the opposite is happening. We're staying specialized. We're lined up against our competition. We understand the technology and we have lots and lots of different ways of delivering the technology to our customers. Thank you very much.
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