theCUBE’s David Vellante At #OOW14

There’s a new business model in town for technology stalwart Oracle Corp., now based on the three layers of cloud: infrastructure as a service, platform as a service, and the company’s enormous portfolio, led by applications. In this new model, applications are what drive infrastructure, explained Dave Vellante in a deep analysis discussion with Stu Miniman, broadcasting live from theCUBE’s QLogic studio at Oracle OpenWorld 2014.

“Most infrastructure companies start by building a platform, a solution. Oracle starts with an application,” Miniman stated, pointing out that Oracle was the first converged infrastructure company in the market and remains in a great position for this sector.

The company’s messaging at this week’s event is heavy on cloud messaging, analytics, and Hadoop. “Oracle’s messaging might be a couple years behind the bleeding edge,” Miniman said, going on to note that it’s the sweet spot for adoption for most companies, which is perfect for Oracle’s huge install base.

Commenting on Oracle founder and Chairman Larry Ellison’s past statements about the cloud being little more than vapor, Vellante explained that the point of that statement was the cloud is still in the datacenters — it’s storage, microprocessors and databases. “The cloud is really a business model,” Vellante emphasized, and Oracle is now starting to recognize it as revenue. “They’re running now at almost $2 billion a year in cloud revenue,” he added.

Looking comparitively at a cloud rival’s business model, Amazon.com Inc’s strategy to “bring your own software” is a way for the company to strong-arm software companies to be in the Amazon Marketplace. “Oracle does not want to sell software in the Amazon marketplace if they don’t have to,” explained Vellante, saying Oracle wants it purchased on top of their own platform.

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Also contributing to Oracle’s cloud strategy is the open source play, where non-proprietary initiatives have disrupted the market and attracted investment from many of Oracle’s top rivals. Discussing Oracle’s launch of an OpenStack distribution, Miniman said that “Oracle is not the first company you think of when you think of open source.” However, OpenStack shows the promise of being the platform for the public cloud, he went on, saying that “if there’s a growing infrastructure around it, [Oracle] needs to get involved. “

Oracle’s angle with OpenStack has a two-pronged justification, according to Miniman. First, from a cloud standpoint, if Oracle builds a cloud, they want to be able to answer ‘yes’ when asked if the cloud is based on OpenStack. “It reduces customer concern on lock in,” Miniman explained, enabling Oracle to address the growing trend towards data center component agnosticism. Second, Miniman went on, Oracle are looking to extend ongoing projects around Oracle Linux and Oracle virtual machines.

Vellante mentioned that part of his research as the chief analyst at Wikibon.org involved asking customers if they’re using OpenStack, and if they’ve even heard of it, finding very few actual users. What Oracle is doing with OpenStack is very similar to their shifting attitude towards VMware, Inc., where they once had a rather negative perspective of the virtualization company.

One remaining challenge is Oracle’s strategy revolves around shipping its applications, which could resurface customer perception of Oracle locking-in services. Miniman explained, “if I want to build my business, I have more than one application. That is a limiting factor for Oracle.”