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I have worked in tech all my life. While practically all the people I have talked with hate Oracle, they are so entrenched on the DB space that they are incredibly difficult and cost prohibitive to replace.
But companies and especially government is making the move. Took a long time to move away from mainframes too but there’s fewer and fewer of them every year.
@@JohnSmith-op7ls Certainly may be the case. IBM's mainframe revenues seem pretty steady based on what we've seen in the past. Covered the topic a while ago but some of the findings are still relevant: www.nanalyze.com/2017/10/ibm-mainframe-computers-today/
As someone once wisely said, "the water buffalo is only as young as the grass that it eats." Now that could refer to the type of tail a man is landing, but it most likely refers to diet. Mr. Ellison is said to adhere to a strict diet and regular exercise regime. Let us all strive to be more like this man.
In India there's a Listed Stock Of Oracle Financial Services Software, The Revenue of that company used to be flat but has seen a increase of 10% with Better Operating Margins . I got that Stock 2 years ago. Good Returns in line with Parent Company
You know that's really interesting! Did not know such a thing existed. Here's the wiki for anyone interested to learn more: en.wikipedia.org/wiki/Oracle_Financial_Services_Software
Actually on-prem databases are often cheaper if their IT department is competent, theres stories of companies going back to on-prem from the cloud. Where cloud databases excel is in accessibility from the hybrid workforce
Thank you for the comment. With the emergence of an "autonomous database" then that ought to hold even more true. Oracle could certainly be overinflating the "on premise to cloud" uplift. Seems credible on paper ;)
@Saxafruge I’ve seen (Pay To Read) articles headlines about this, too. I wonder if there’s a way to find the rate of Return to On-Site databases from Cloud DB 🤔
Cloud only makes sense if you have a fluctuating load, because it allows to spin up servers on demand. If you have a stable demand load, then on prem is cheaper. Cloud companies will claim they can run servers cheaper than you can, but it doesn't turn out to be true.
@@thekingofallblogs but then there is security. No company outside of the cloud giants can match the security expertise. On prem with guys that don't get hired by Oracle is getting hacked way too much.
There are other advantages to managed services beyond being able to scale faster but most businesses don’t need them. And these cloud providers do charge and overcharge, for everything. And all that staff you supposedly were saving money on because you didn’t need them for on-prem management, you just spend on higher hosting costs and paying people to figure out how to set up, maintain, and optimize your cloud setup.
I can tell you that with around 150 developers in our office not one will choose Oracle over snowflake for anything analytics related. They love it. The Oracle people are seen as dinosaurs with outdated software and archaic working practices.
@@Nanalyze I wish I didn't have to say it - but the 20 somethings cannot fathom what the Oracle people do… I was in a meeting a few weeks ago where a dev asked one of the Oracle ERP people why there is no image ready to pull so they can spin up ERP instances of services on demand. The call basically ended when the Oracle guy said it takes over a week to install and configure. The design team (more youngsters) determined Oracle EBS fails our usability standards and an internal survey ranked EBS lowest for UX in our org. So now, the Oracle UI must go - thats a few hundred grand to improve usability. And no-exec will touch Oracle implementations - our previous CIO was dismissed a week after it went live. The result, any Cloud ERP discussions include ending our relationship with Oracle.
Oracle makes stuff hard to do so that oracle practitioners have job security and then those people push oracle at their companies which creates a symbiotic self serving situation where companies loose and oracle and its practitioner win. 🏆
What? Oracle has some of the easiest products to use. A huge amount of it is automated. And it’s compatible with almost anything customers have. The only reason not to use it is if you don’t have the money but you have time. Lots and lots of time.
@@daveb4446 It's easy for people who already know Oracle from long time. Oracle has symbiotic relationship with Database Administrators, they both keep each other's job. From investment point of view, this gives Oracle a strong MOAT.
Oracle does a lot so we focus on revenue growth. Since they're a mature company, we would use P/E to gauge whether they're overvalued. Cursory look shows Oracle's (ORCL) forward price-to-earnings (P/E) ratio is 30.54. This is a tiny discount compared to the industry average of 31.24. Of course then you need to go see how that forward number is calculated and what assumptions are made.
I think OCI is the fastest growing cloud for the next 5 years at least. If you look at culture of the cloud hyperscalers, AWS spends like crazy to gain any advantage, Azure is strategic and competitive, GCP engineers great but doesn't push so hard to gain market share. OCI is the patient, hyper-strategic late comer. I think they are set up nicely to grow and grow and grow a smaller piece until they have a much much larger market share. AWS does not see them as a threat given their size. I think AWS and OCI are the best 2 in the long run. AWS invented the space, taught everyone how to do it, then Azure and GCP came in to compete. OCI is late but smart and gobbling up market share from a 2% position to a 20% position (my opinion). I am long on OCI. I don't know much about their DBs except that everyone uses it.
@@Nanalyze yep, that's their normal game plan, they decide on a market sector they want and buy the dominate providers in that sector flipping those customers into theirs. They will also customise that software to link into the Oracle ecosystem making it then tempting those new customers to always choose the Oracle option and with each step get more entangled. Before the process is complete they are onto another market segment, and another, and another. I worked for a company that got acquired so went through the process of assimilation and afterwards watched others, it's brutally efficient and quick.
What I wouldn’t do to have gone back to the mid 80’s and bought 10,000 each in Oracle, Microsoft, Apple & Adobe stock when they IPO’d……I’d be Larry Ellison rich.
ok. I'm a noob and I don't know the difference between database and cloud. My guess is that the database is data stored on hardware owned by the company producing those data itself, while cloud is basically storing your data on datacenters owned by other companies like aws (basically paying them rent).
The adventurer in me always gets excited when people ask these questions ;) That's the White Salmon river in Washington which is very popular with kayakers and rafters. Joe P.
Cloud is more spendy for the clients than on-premise? Interesting. Well if that's the case it's hardly an easy sell. You know this isn't the only firm we've looked at proposing this ARR uplift value proposition so there's probably some "there there." But as you said, not always the case.
With the advent of Terraform and their open sourced counterparts. The whole argument for cloud being more robust in disaster recovery went out the window. We have an AWS account and enough terraform scripts to build our entire infrastructure in the cloud in the event of a disaster. We kept our 2 datacenters on prem and are saving a ton of money.
What do you think of AI’s impact on oracles growth potential. There is talk of AI replacing SaaS, which to me sounds overblown. I think Oracle in both the database and enterprise apps space have incredible history , domain knowledge of respective requirements and that with the right AI sitting atop, they could crush the enterprise B2B Ai race. Thoughts?
What do you mean by Oracle cloud application $3.5b, are you referring to Oracle on premises applications stack like EBS etc.? because Fusion is Oracle cloud which is $0.9b? Also, the 10.9 billion cloud services and license support, how much is license support? infrastructure cloud and fusion cloud? Moreover, how did you come to a conclusion that gross profit of Oracle cloud is better than the support revenue? isn't support still a 90% GP business for Oracle?
Lots of rapid fire questions here. We used their SEC filings and/or the investor deck to produce this video. If you believe some number is incorrect, state the number we presented and the number you think it ought to be, and we'll have someone go make sure we didn't state something incorrectly. Let's start there.
i still prefer Amazon's strategy if I was a sys admin. Open standards can be more compatible with more tools than proprietary ones. Oracle has been keeping up and sometimes going faster than Apache tools, but might not always be the case.
Per Wikipedia: "Oracle Fusion, consists of two parts: Oracle Fusion Applications and Oracle Fusion Middleware, both of which run on the open architecture ecosystem Oracle Fusion Architecture." So this would largely represent the apps noted at 9:07 ?
I can’t say from experience how Oracle and Snowflake compare, but I can say that a huge chunk of Oracle’s bread and butter, their very roots, government agencies, are increasingly moving away from Oracle and to Azure DB offerings. Just like they’ve been moving away from IBM mainframes, slowly, but surely.
@@derrickpigatt5195Welcome to the channel. It's in the video at 0:51. The point is, 1,385% sounds impressive but not when the Nasdaq returned 1,247%. So you would have taken on a lot of company-specific risk to beat the benchmark by that amount.
While security breaches are rather scandalous, it seems like most companies get over them with minimal reputational damage. Any exceptions to that rule?
Cloud is stuck with a crossover point where on-prem becomes cheaper above a certain size, so old-school vendors like Oracle are still the best-of-breed for F100 etc. Smaller vendors like Snowflake don't have much incentive to complicate their products by adding the scaling features that the incumbents have, so the market is split into smaller accounts where cloud is attractive and larger ones with economy of scale. That means that Snowflake isn't much of a lure to Oracle's big on-prem accounts, but Oracle cloud isn't either. I wouldn't bet on many $10M on-prem Oracle accounts switching to $50M cloud; that's Larry smoking crack.
If you want to see why they are so successful, go compare the complexity of adopting various systems. Oracle is effortless to adopt, but the competitors are nightmarish. If you want to switch to Oracle it is designed to be extremely ergonomic. But if you want to switch away to a competitor, the competitors have no reasonable way to do so. It’s like pulling teeth… out your dickhole. It doesn’t take a genius to understand why administrators adopt Oracle and avoid switching away from them.
The verbiage used was "hasn't performed that well" but you are correct. One wouldn't say it has underperformed, especially when you extend the time frame beyond just a few decades. Indeed it has begun the journey from growth to value, though we're now being promised lots more growth. Joe P.
Joe P. here. I should have been more clear about this. They never said Siemens and were careful to avoid saying that. However ;) they said (and I'm paraphrasing here) large German firm producing lots of equipment that begins with "S" and everyone seemed to understand he was talking about Siemens, at least we did. They did not actually say Siemens.
This is the sort of articulate comment people come to the comments section to read. Thank you for taking time out of your busy day yachting in Santorini to send us this critical buy signal ;)
The problem of channels like these is, you are always too late capitalizing on publicity after a rally but bring no value whatsoever. If you came with predictions that are even just 60% correct then it would be interesting.
The other problem with channels like this is that they focus on teaching you something so that you can become a better investor. ;) That said, we do have a fortune teller who accurately predicts the future 60% of the time. Unfortunately, she lost all her chakras at an art installation somewhere in Deep Playa during the greatest tech networking event ever - Burning Man. We expect her to be back to normal just after the coming elections. In the meantime, there are plenty of 25-year-old life coaches out there who will gladly fill the void on predictions.
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I have worked in tech all my life. While practically all the people I have talked with hate Oracle, they are so entrenched on the DB space that they are incredibly difficult and cost prohibitive to replace.
Good to know. Thank you for the comment!
But companies and especially government is making the move. Took a long time to move away from mainframes too but there’s fewer and fewer of them every year.
@@JohnSmith-op7ls Certainly may be the case. IBM's mainframe revenues seem pretty steady based on what we've seen in the past. Covered the topic a while ago but some of the findings are still relevant: www.nanalyze.com/2017/10/ibm-mainframe-computers-today/
Forget about the cloud, Oracle needs to sell whatever the 80 y/o Mr. Ellison is taking. 😮
As someone once wisely said, "the water buffalo is only as young as the grass that it eats." Now that could refer to the type of tail a man is landing, but it most likely refers to diet. Mr. Ellison is said to adhere to a strict diet and regular exercise regime. Let us all strive to be more like this man.
A little adrenochrome helps try microdosing
Sorry that comment was meant for suckerburg
I believe the technical term for it is “naked babes on a tropical island”
@@daveb4446 You're probably right about that
In India there's a Listed Stock Of Oracle Financial Services Software, The Revenue of that company used to be flat but has seen a increase of 10% with Better Operating Margins . I got that Stock 2 years ago. Good Returns in line with Parent Company
You know that's really interesting! Did not know such a thing existed. Here's the wiki for anyone interested to learn more: en.wikipedia.org/wiki/Oracle_Financial_Services_Software
Actually on-prem databases are often cheaper if their IT department is competent, theres stories of companies going back to on-prem from the cloud. Where cloud databases excel is in accessibility from the hybrid workforce
Thank you for the comment. With the emergence of an "autonomous database" then that ought to hold even more true. Oracle could certainly be overinflating the "on premise to cloud" uplift. Seems credible on paper ;)
@Saxafruge
I’ve seen (Pay To Read) articles headlines about this, too. I wonder if there’s a way to find the rate of Return to On-Site databases from Cloud DB 🤔
Cloud only makes sense if you have a fluctuating load, because it allows to spin up servers on demand. If you have a stable demand load, then on prem is cheaper. Cloud companies will claim they can run servers cheaper than you can, but it doesn't turn out to be true.
Good counter argument here
@@thekingofallblogs but then there is security. No company outside of the cloud giants can match the security expertise. On prem with guys that don't get hired by Oracle is getting hacked way too much.
There are other advantages to managed services beyond being able to scale faster but most businesses don’t need them. And these cloud providers do charge and overcharge, for everything.
And all that staff you supposedly were saving money on because you didn’t need them for on-prem management, you just spend on higher hosting costs and paying people to figure out how to set up, maintain, and optimize your cloud setup.
@@JohnSmith-op7ls Good counter argument to the SaaS uplift story, thank you!
I can tell you that with around 150 developers in our office not one will choose Oracle over snowflake for anything analytics related. They love it. The Oracle people are seen as dinosaurs with outdated software and archaic working practices.
Always good to hear from soldiers in the trenches, thank you!
@@Nanalyze I wish I didn't have to say it - but the 20 somethings cannot fathom what the Oracle people do… I was in a meeting a few weeks ago where a dev asked one of the Oracle ERP people why there is no image ready to pull so they can spin up ERP instances of services on demand. The call basically ended when the Oracle guy said it takes over a week to install and configure. The design team (more youngsters) determined Oracle EBS fails our usability standards and an internal survey ranked EBS lowest for UX in our org. So now, the Oracle UI must go - thats a few hundred grand to improve usability. And no-exec will touch Oracle implementations - our previous CIO was dismissed a week after it went live. The result, any Cloud ERP discussions include ending our relationship with Oracle.
Oracle makes stuff hard to do so that oracle practitioners have job security and then those people push oracle at their companies which creates a symbiotic self serving situation where companies loose and oracle and its practitioner win. 🏆
Interesting theory! At least some Oracle practitioners will be replaced by AI soon it seems.
What? Oracle has some of the easiest products to use. A huge amount of it is automated. And it’s compatible with almost anything customers have. The only reason not to use it is if you don’t have the money but you have time. Lots and lots of time.
@@daveb4446 (Grabs popcorn.)
@@Nanalyzelol
@@daveb4446 It's easy for people who already know Oracle from long time. Oracle has symbiotic relationship with Database Administrators, they both keep each other's job.
From investment point of view, this gives Oracle a strong MOAT.
I can't comprehend how a niche application (nothing else is a enterprise database) in a competitive environment amounts to such insane valuations.
Oracle does a lot so we focus on revenue growth. Since they're a mature company, we would use P/E to gauge whether they're overvalued. Cursory look shows Oracle's (ORCL) forward price-to-earnings (P/E) ratio is 30.54. This is a tiny discount compared to the industry average of 31.24. Of course then you need to go see how that forward number is calculated and what assumptions are made.
I think OCI is the fastest growing cloud for the next 5 years at least. If you look at culture of the cloud hyperscalers, AWS spends like crazy to gain any advantage, Azure is strategic and competitive, GCP engineers great but doesn't push so hard to gain market share. OCI is the patient, hyper-strategic late comer. I think they are set up nicely to grow and grow and grow a smaller piece until they have a much much larger market share. AWS does not see them as a threat given their size. I think AWS and OCI are the best 2 in the long run.
AWS invented the space, taught everyone how to do it, then Azure and GCP came in to compete. OCI is late but smart and gobbling up market share from a 2% position to a 20% position (my opinion). I am long on OCI. I don't know much about their DBs except that everyone uses it.
You may very well be right. Argument seems compelling. Let's see if he hits those big numbers :)
I would explain the cloud industry like this... AWS is your daddy, Azure is your partner, GCP is your cousin, and OCI is your best friend.
So who is the mistress? ;)
@@Nanalyze ha for whatever reason PCF was the first thing to come to mind...
i like your office, i should get space like that myself
The best part is that there aren't any pesky cow-orkers dropping by to chat
No one except the IT team at our company wants to use Oracle. Been that way since we bought it.
Seems to entrench itself and then never gets dislodged
@@Nanalyze yep, that's their normal game plan, they decide on a market sector they want and buy the dominate providers in that sector flipping those customers into theirs. They will also customise that software to link into the Oracle ecosystem making it then tempting those new customers to always choose the Oracle option and with each step get more entangled. Before the process is complete they are onto another market segment, and another, and another. I worked for a company that got acquired so went through the process of assimilation and afterwards watched others, it's brutally efficient and quick.
What I wouldn’t do to have gone back to the mid 80’s and bought 10,000 each in Oracle, Microsoft, Apple & Adobe stock when they IPO’d……I’d be Larry Ellison rich.
Being a winning stock picker is extremely tough. Investing in ETFs is a more sure path to wealth.
ok. I'm a noob and I don't know the difference between database and cloud. My guess is that the database is data stored on hardware owned by the company producing those data itself, while cloud is basically storing your data on datacenters owned by other companies like aws (basically paying them rent).
That's a good explanation! Who owns/operates/maintains the hardware/software is largely what distinguishes cloud vs. on premise.
SAP in similar space..:.What is your thoughts on it
It's not on our radar but have often wondered the same thing.
What is Oracle and does it do really? Go in details please? Other than Oracle?
Thank you so much for sharing your knowledge and wisdom with me.
You're very welcome.
(Joe P. walks in....)
Not gonna lie. This ALMOST has TH-cam spam vibes to it. It's just too genuine.
What place is this , beautiful
The adventurer in me always gets excited when people ask these questions ;) That's the White Salmon river in Washington which is very popular with kayakers and rafters. Joe P.
Am I the only one that thinks that Larry Ellison is actually Richard Boone from Have Gun Will Travel?
Can you believe he's 80 years old and still looks like that?
@@Nanalyze good surgery
I can unequivocally tell you that in the last 25 to 30 years not a single startup has said to itself "we need a database, we should go with Oracle".
To be fair, Oracle has grown to be a lot more than just databases
few companies I worked don’t save money going to cloud it’s actually more expensive daily use
Cloud is more spendy for the clients than on-premise? Interesting. Well if that's the case it's hardly an easy sell. You know this isn't the only firm we've looked at proposing this ARR uplift value proposition so there's probably some "there there." But as you said, not always the case.
With the advent of Terraform and their open sourced counterparts. The whole argument for cloud being more robust in disaster recovery went out the window. We have an AWS account and enough terraform scripts to build our entire infrastructure in the cloud in the event of a disaster. We kept our 2 datacenters on prem and are saving a ton of money.
@@Nanalyze where I was working we got quotes for aws , and other but on prem was better cost for overall
@ yup we used terraform worked great
@@nobodynever7884 Interesting to hear. Thank you for the comment.
What do you think of AI’s impact on oracles growth potential. There is talk of AI replacing SaaS, which to me sounds overblown. I think Oracle in both the database and enterprise apps space have incredible history , domain knowledge of respective requirements and that with the right AI sitting atop, they could crush the enterprise B2B Ai race. Thoughts?
Aside from what was said in the video, not much to add ;) AI replacing SaaS seems overblown, agree.
What do you mean by Oracle cloud application $3.5b, are you referring to Oracle on premises applications stack like EBS etc.? because Fusion is Oracle cloud which is $0.9b?
Also, the 10.9 billion cloud services and license support, how much is license support? infrastructure cloud and fusion cloud?
Moreover, how did you come to a conclusion that gross profit of Oracle cloud is better than the support revenue? isn't support still a 90% GP business for Oracle?
Lots of rapid fire questions here. We used their SEC filings and/or the investor deck to produce this video. If you believe some number is incorrect, state the number we presented and the number you think it ought to be, and we'll have someone go make sure we didn't state something incorrectly. Let's start there.
And please provide time stamps in the video to make it easier to verify what you're referring to ;)
i still prefer Amazon's strategy if I was a sys admin. Open standards can be more compatible with more tools than proprietary ones. Oracle has been keeping up and sometimes going faster than Apache tools, but might not always be the case.
Always good to hear from people in the trenches
one reason ORACLE FUSION Cloud computing
Per Wikipedia: "Oracle Fusion, consists of two parts: Oracle Fusion Applications and Oracle Fusion Middleware, both of which run on the open architecture ecosystem Oracle Fusion Architecture." So this would largely represent the apps noted at 9:07 ?
I can’t say from experience how Oracle and Snowflake compare, but I can say that a huge chunk of Oracle’s bread and butter, their very roots, government agencies, are increasingly moving away from Oracle and to Azure DB offerings. Just like they’ve been moving away from IBM mainframes, slowly, but surely.
Wish there was a formal metric that could be used to monitor this
But Oracle doesn’t seem to account for the growth of Postgres and open source.
There are lots of competing database solutions out there but Oracle still seems to be ticking along.
“Oracle hasn’t performed that well “ just the 1300% over twenty years
You left out a crucial piece of info. How did the benchmark perform over that same time frame?
@@Nanalyzegreat question, i would like to know. I’m new to the channel.
@@derrickpigatt5195Welcome to the channel. It's in the video at 0:51. The point is, 1,385% sounds impressive but not when the Nasdaq returned 1,247%. So you would have taken on a lot of company-specific risk to beat the benchmark by that amount.
@@crispyduck1706 No just 750% roughly. I bought in 2001 and never touched it so I know. Wish I bought more though
Most would say that the security breach speaks for itself.
While security breaches are rather scandalous, it seems like most companies get over them with minimal reputational damage. Any exceptions to that rule?
Cloud is stuck with a crossover point where on-prem becomes cheaper above a certain size, so old-school vendors like Oracle are still the best-of-breed for F100 etc. Smaller vendors like Snowflake don't have much incentive to complicate their products by adding the scaling features that the incumbents have, so the market is split into smaller accounts where cloud is attractive and larger ones with economy of scale.
That means that Snowflake isn't much of a lure to Oracle's big on-prem accounts, but Oracle cloud isn't either. I wouldn't bet on many $10M on-prem Oracle accounts switching to $50M cloud; that's Larry smoking crack.
Ah, so the secret to his youth is crack. (Scribbles in notebook.)
Great comment! Very insightful, thank you.
Love
We love to receive love
If you want to see why they are so successful, go compare the complexity of adopting various systems. Oracle is effortless to adopt, but the competitors are nightmarish. If you want to switch to Oracle it is designed to be extremely ergonomic. But if you want to switch away to a competitor, the competitors have no reasonable way to do so. It’s like pulling teeth… out your dickhole. It doesn’t take a genius to understand why administrators adopt Oracle and avoid switching away from them.
Good boots-on-the-ground comment, thank you
I wouldn't call marginally beating the S&P underperforming. It's just no longer the latest greatest growth stock. Which they know, hence the dividend.
The verbiage used was "hasn't performed that well" but you are correct. One wouldn't say it has underperformed, especially when you extend the time frame beyond just a few decades. Indeed it has begun the journey from growth to value, though we're now being promised lots more growth. Joe P.
Richest in world by 2029. Does the world include Mars?
Martians gotta have a voice too
2:51 😉
We shall see ;)
❤
We'll take all the love we can get ;)
I still don’t know what oracle does… seriously 😮
That's a fair point ;)
Siems Hlthrs moving somethings frm Orclo to wrkdy. Not the best idea on their part to mention that customer
Joe P. here. I should have been more clear about this. They never said Siemens and were careful to avoid saying that. However ;) they said (and I'm paraphrasing here) large German firm producing lots of equipment that begins with "S" and everyone seemed to understand he was talking about Siemens, at least we did. They did not actually say Siemens.
@@Nanalyze thank you for putting the time doing this
Buy
This is the sort of articulate comment people come to the comments section to read. Thank you for taking time out of your busy day yachting in Santorini to send us this critical buy signal ;)
Who’s buying?
Are you?
That’s a question with a question Joe but no I’m not!😃
@@terryklender4209 ;) We only invest in disruptive growth and dividend growth so Oracle isn't on our radar.
The problem of channels like these is, you are always too late capitalizing on publicity after a rally but bring no value whatsoever. If you came with predictions that are even just 60% correct then it would be interesting.
The other problem with channels like this is that they focus on teaching you something so that you can become a better investor. ;) That said, we do have a fortune teller who accurately predicts the future 60% of the time. Unfortunately, she lost all her chakras at an art installation somewhere in Deep Playa during the greatest tech networking event ever - Burning Man. We expect her to be back to normal just after the coming elections. In the meantime, there are plenty of 25-year-old life coaches out there who will gladly fill the void on predictions.
ORACLE is a CIA company, thats how they get its business
They do have a good relationship with the CIA, but with over $50 billion in annual revenue, it's more than just that. ;)