Oracle announced their numbers yesterday, and the company took a hit for having a soft quarter from a revenue perspective. As has been the case for quite a few quarters, hardware sales were soft (though Oracle said they saw signs that the slip would reverse shortly) except in the appliance area. Software had some issues too, and Oracle cited global economic factors as the cause. Since one of the areas of softness was middleware, I’m not sure that’s the case and I don’t think Oracle really believes it either.
In the Q&A, Ellison alluded to a major cloud software announcement coming shortly, and from the comments he made it sounds like it may be something like a “soft hypervisor”, a container-based multi-tenant management architecture rather than a fixed hardware partitioning. To improve security, Oracle will also provide its first true multi-tenant database in its 12c release. So it may be that part of the middleware issue was Oracle’s prepping for a fairly radical shift in its cloud platform strategy.
Clouds are a balance between efficiency and security, because the more rigorous the partitioning among tenants, the more tightly resources are bound to specific VMs, which means the hardware isn’t efficiently used. Solaris, Sun’s (IMHO best-in-the-market) OS has always had the ability to support “containers” that provided more isolation than simple multi-tasking but less than hardware hypervisors. It may be now that Oracle is going to enhance the container model and offer improved cloud efficiency while maintaining security at least at past levels. With the new DBMS, perhaps even better than past levels.
Oracle’s SaaS cloud stuff (Fusion) is doing quite well, and one truism with SaaS is that since the application layer is more under your control, you have to worry less about tenant security. The question is whether Oracle is tweaking cloud software to suit the mission of its own cloud, or reflecting a reality about the cloud—SaaS is where the money is. Certainly Oracle has every reason to push SaaS and push containers versus hypervisors in the broad market—it hits players like VMware whose ascendency in virtualization gives it an edge in the cloud that even Cisco seems to fear.
Speaking of Cisco, they’re still pushing their “traffic sucks” vision, meaning that traffic growth just sucks dollars out of operator pockets and into network (read, Cisco) equipment regardless of ROI. Their push is that the “Internet of things” will enhance business operations and so create more spending. Our model says that while Cisco may be right about the fact that spending on networking is driven by business benefits, they’re wrong to say that those benefits arise from connecting stuff. Applications enhance productivity, not information sources.
Cisco also made some comments on NFV, which confused a number of the financial analysts I talked with. They suggested that NFV would actually open a bigger market for Cisco servers (true) and finessed the questions on whether that bigger market came at the expense of the market for higher-priced network devices.
I can’t take Cisco too much to task for this, because the truth is that there will be little impact of NFV in a negative sense in the near term, and there could in fact be significant positive impact. Down the line as NFV concepts mature, there is likely a growing shift of budgets for operators from bit-pushing to service-creating. Cisco could be a beneficiary of that, but only if it stakes out a rational NFV position. It’s hard to say whether they have one at this stage; certainly they aren’t talking about it. But then neither are its primary competitors Alcatel-Lucent and Juniper.
Oracle’s potential shift toward a soft virtualization model could have implications for NFV, as it happens, and even for Cisco NFV. Like SaaS, NFV is a framework where tenant software is under pretty tight control and thus would likely not require as rigid partitioning. The NFV white paper started the body down the path of “virtualization” which most have taken to mean “hypervisors” rather than containers. Might Oracle with its supercontainer (hypothetical, at this point) architecture jump into a premier position as a host for NFV? The company, recall, did two acquisitions (Acme and Tekelec) that could be aligned with NFV aspirations. It has all the platform components, and while on one hand Oracle NFV might step on Cisco’s plans, it might also help Cisco unseat VMware. Which raises the question of whether Cisco might want to deploy its own container-based cloud stack down the line. There’s open-source Solaris-modeled software out there, and Joyent (a Dell cloud partner even before Dell got out of its public cloud business) has a container-based cloud stack and public cloud service. Things could get interesting.
The point with both Cisco and Oracle here is that the drivers of change in our industry are very real, but very different from the simplistic vision we tend to get fed by vendor PR mills. Something big is very likely to happen in the cloud and in NFV in the next year, but it probably won’t fit our naïve preconceptions of cloud evolution.