Still, selling a lot of cloud will make a company look like its revenue has stalled. With a software contract, the revenue is recognized right away. But the cloud is a subscription billed over time. Revenue is only recognized when the monthly/quarterly/annual bill is paid. But cloud is better for a software company over the long haul. Customers will pay more money for it over time. They save in other ways, because they dont need to buy hardware. Eye On The Profitable Cloud, Not The Cheap OneThere are three types of cloud-computing services, and Ellison wants Oracle to dominate two of them because they are the most profitable. Oracle is focused like a laser on one goal over the next few years: becoming the No. 1 company in cloud computing in the two most profitable segments: Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS), Ellison said. SaaS is when companies rent software applications over a network like the internet. is the best-known SaaS company. PaaS is when companies use the cloud to host the apps that theyve written. This is what app developers use. The third is called Infrastructure-as-a-Service. Its currently dominated by Amazon, which keeps cutting prices, making it a low-margin game. IaaS is when companies rent servers and operating systems and run whatever software they want on that. Oracle offers IaaS, too, but Ellison is not keen on pushing that business, he said. Thats because hell reel in 40% to 50% margins for SaaS and PaaS, he says, the same margins as Oracle is making now selling software. It can do that because Oracle owns all the pieces necessary to run a cloud, including the hardware, the development software (Java), the database and the apps.
Posted on: Tue, 24 Jun 2014 20:57:24 +0000