Two companies will own 80 per cent of the software-as-a-service market by 2025 and one of them will be Oracle, the firm's co-CEO Mark Hurd has predicted.
Speaking at his keynote on the second day of Oracle OpenWorld in San Francisco, Hurd said that Oracle has spent the last five years rewriting its code base with the cloud in mind. This was essential because of a crisis of revenue in software companies. He said that in the past five years revenues have grown less than one per cent.
"IT expenses were fundamentally flat, and declined in 2015 by around 5 per cent," he said. "CEOs are thinking short term and earnings are rising because expenses are going down*. Meanwhile, SaaS companies are seeing revenue growing by around 15 per cent."
Hurd unveiled his five predictions for the cloud market in 2025. Some are actually pretty likely, and all were used to show off part of Oracle's product portfolio.
"It's not faux cloud," he said at the post-talk press conference. "It's rewritten on Fusion middleware and it's now at the point where 98 per cent of our software has been redone for the cloud."
His first prediction was that 80 per cent of "production" apps would be in the cloud by 2025. It's currently around 25 per cent, he said, but the lower costs and scalability of cloud apps will make sure they become preeminent within a decade.
The aforementioned second prediction, that two firms will dominate the market, had Hurd in a bullish mood. No other company can offer the same apps on premise and in the cloud, he opined, which rather jarred with Larry Ellison's assertion last night that Microsoft was operating in both spheres too. In the press conference after the keynote, Hurd declined to speculate on Oracle's duopoly cloud rival in the future.
His third prediction was that all software developer testing will be done in the cloud within the decade. It's currently around 30 per cent, he said, and would rise to 70 per cent by 2020, before going cloud-only.
'All enterprise data will be in the cloud by 2025'
Virtually all enterprise data will be in the cloud by 2025 was his fourth prediction, and this was essential for business economics, Hurd said. Only cloud access is going to give low-cost, secure access to enterprise data, he said, and companies will have to recognize that.
Hurd's last prediction is that cloud security will become unbeatable. If the US government came calling for an Oracle customer's data he would refuse to hand it over without a court order, Hurd said, and even then would only hand over encrypted gibberish, since Oracle staff won't be able to see it.
Hurd's predictions and Oracle's cloud-everywhere strategy is a huge shift from where the company was last decade, when cloud was a fad and on-premise computing was the Oracle way, according to King Larry. Hurd attributed the current state of the company to spending money where it counts.
When he joined Oracle, the company was spending $3.7bn in R&D, but that figure is now up to around $5.3bn as the firm gears up to shift all its apps onto the cloud. Oracle will keep spending big bucks on research, Hurd promised, and declared that while cloud is the big thing, the firm's legacy systems won't be abandoned. ®
* There were a few raised eyebrows when Hurd banged on about companies cutting expenses. Given his past history, he might have wanted to use the word "costs" instead.