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Warren Buffett Joins the Crowd Struggling to Understand Oracle

99 points by partingshots 8y ago

andyjohnson0 8y ago
Related discussion from four days ago: https://news.ycombinator.com/item?id=19289583 https://news.ycombinator.com/item?id=19289583
ahartmetz 8y ago
Yeah, I've been scratching my head, too. Oracle's P/E ratio implies the expectation of great growth, but to me Oracle looks kind of floundering with competition from F/OSS databases and all the failed acquisitions / new lines of business such as "cloud". I would short Oracle if the overvaluation wasn't so old and stable. Hard to guess if or when it will end.
- chollida1 8y ago
  > Oracle's P/E ratio implies the expectation of great growth, but to me Oracle looks kind of floundering with competition from F/OSS databases and all the failed acquisitions / new lines of business such as "cloud". Umm, ORCL's PE is currently 18.7 and the average PE of the S&P 500 is currently around 21 so your statement about a PE that is pricing in "great growth" is dubious at best:). The average S&P 500 PE ratio is also above 18 if you start at a reasonable date of say 1980.. http://www.multpl.com/ http://www.multpl.com/
  - ahartmetz 8y ago
    Yeah, looks like I misremembered the degree of overvaluation. That said, you have to compare it to valuations of dividend stocks (~15 - Apple, uh... OK, difficult. McD's, Procter & Gamble 25?!, Ford 10...) and growth stocks (~25 - Google, Microsoft, Facebook). Oracle is more of a shrinkage stock IMO...
- dehrmann 8y ago
  F/OSS dbs AND hosted versions of those. It used to be that if you wanted to mitigate career risk, you buy Oracle so if the DB has issues, you bought the best. If Mysql fails, you were cheap. Now you can play the AWS card. If Aurora fails, you picked a hosted DB from a known vendor. And adding to your point, F/OSS DBs have gotten really good, and they're commoditized.
- deleted 8y ago
  [deleted]
- basch 8y ago
  Are you really looking at their acquisitions? They own an SD-WAN company, NetSuite, a massive construction software business (Textura, Aconex, etc), a pretty massive marketing cloud to compete with Adobe and Salesforce. I think people who are calling Oracle just a database company are really underselling how much value they sell above the database abstraction, they are much closer to Microsoft and AWS (and SAP, Adobe, Autodesk) than people think. They own and sell a ton of cloud "services" that arent "database" but instead specific tasks. Their "divisions" are Servers, Storage, and Networking; Middleware; Industry Solutions including Communications and Media, Construction and Engineering, Health Sciences, Hospitality and Retail, Utilities; and Applications. They tend to focus on more specific purpose software, compared to Microsoft and Adobe more general purpose software for all industries.
  - guitarbill 8y ago
    It doesn't matter how many things they do if they do them all badly, and can't figure out a coherent strategy. See also IBM.
    - basch 8y ago
      They dont necessarily need an overall strategy between some of these units. What is the chance a Talari and Aconex integration is useful? They act more like a holding company or vc, who owns a bunch of individual businesses. Nobody criticizes Berkshire Hathaway for not integrating its different businesses together.
jaclaz 8y ago
Well, the quote by Warren Buffet is IMHO great: >“Larry Ellison has done a fantastic job with Oracle,’’ Buffett said Monday in a CNBC interview. “I’ve followed from the standpoint of reading about it, but I felt like I didn’t understand the business. Particularly after my experience with IBM, I don’t think I understand exactly where the cloud is going.’’
- ausbah 8y ago
  “Never invest in a business you cannot understand.”
  - mromanuk 8y ago
    or "never invest in a business you consider bs"
    - tabtab 8y ago
      Which ones are not BS? Something tells me a fully honest company would not survive, just like honest politicians don't survive.
  - tabtab 8y ago
    Buffett is a numbers guy: he likes to see the numbers coming in and numbers going out. He follows the insurance market closely because insurance is about probabilities: numbers. Technology is more about standards, integration, trade-off balancing, and dealing with change; things that are hard to put numbers on. His firm got burned by IBM, so he's extra jittery dealing with "big tech" now. IBM created this program to better track and maximize revenue by cranking up revenue incentives for middle managers. It looked good on paper: fine-tune the reporting of and increase incentives. But their customers began to feel squeezed and milked. You can often gain short-term revenue by skimping on customer service, and eventually customers revolted, damaging IBM's cred.
    - basch 8y ago
      marketing, naming, bundling, network effects, sla's. theres a lot more to tech than tech.
stevespang 8y ago
The SEC dogs Elon Musk but doesn't dare lock horns with Larry Ellison, the pathological corporate sociopath whose company locks users into seemingly never ending software leases with threatened audits and whose corp has teams of lawyers and only offers "limited breakdowns in its financial disclosures" . . . Larry recently bragged how even Amazon is under his cloak using Oracle because there is nothing out there better. Bezos response: We'll build our own database no matter what the cost and then we'll compete against you signing up what were your customers. How do you like that Larry ?
- smt88 8y ago
  None of the Oracle behaviors you’re describing are the responsibility of the SEC.
- mistermann 8y ago
  Did Bezos really say something like this?
  - ckozlowski 8y ago
    I don't think so. But Andy Jassy has not been quiet in his criticism of their model. AWS Aurora wasn't built out of spite, however. It was/is designed to be a cloud-native database from the start because there was a perceived desire for the product. As it's AWS's fastest growing service, the team deduced correctly. Disclaimer: I work for AWS.
- bufferoverflow 8y ago
  Amazon has developed Aurora and DynamoDB. And they are free to use any of the open source ones. Your narrative makes little sense.
  - ceejayoz 8y ago
    Ellison claims (https://www.zdnet.com/article/amazons-consumer-business-moves-from-oracle-to-aws-but-larry-ellisons-wont-stop-talking/ https://www.zdnet.com/article/amazons-consumer-business-move...) Aurora is Oracle's because it's MySQL based: > So this is another claim I'm going to make, Aurora, not built by Amazon, built by us, called MySQL. Amazon just gave it a new name. It's also true of Redshift. Amazon didn't build Redshift, that's not what they do. These are -- they just open-sourced pieces where they built -- that they used to build their cloud. They did a great job. They did a great job of making those pieces available in a coherent -- deliver them in a coherent cloud. I give them a lot of credit. But they don't build databases. Amazon still runs all of their -- all of Amazon on Oracle Database. They are trying, they promised because they don't like me reminding them of that publicly. They said they're trying to get off Oracle by 2020. > Aurora is our other database. It's our low-end database. It's our database. It's not theirs. Well, it's open source. Anyone can use it for nothing. (This is bullshit, of course.)
redleggedfrog 8y ago
That's pretty easy. If Oracles numbers for cloud were awesome they'd certain disclose that. Since the don't we can safely assume they're struggling and want to hide it.
ProAm 8y ago
The head scratcher is no one likes being an Oracle customer. I've never met one.
- scottlocklin 8y ago
  Believe it or not, I have. They're usually all-in, and they basically outsource their tech stack to Oracle pretty much completely, rather than trying to build an in-house team on open-source stuff, which has a lot of other kinds of risk baked in. Since the culture is sales oriented rather than tech oriented, they can concentrate on their main mission.
- giardini 8y ago
  They apparently like it better than being a IBM DB2 customer or a Microsoft SQL Server customer or a Sybase customer or a Teradata customer or a ...[I think you get my point]. Oracle is good at extracting the maximum profit from their sales. They're aggressive about sales and policing usage and they don't often cut customers slack. They've learned that clients will try to give them the shaft and they do their best to not get shafted. They're good capitalists as well as the best database developers in the world.
  - sodosopa 8y ago
    We run all of those and Oracle is the one we just thankfully retired. It is also very telling that people are moving from Teradata and Oracle to Sailfish.
  - mr_overalls 8y ago
    Wow. Today I learned that "capitalist" means "treating the customer as the enemy" and "legitimized exploitation". Honestly curious - have you absorbed these attitudes from an MBA program, or did you develop them more organically?
    - giardini 8y ago
      I did not say that but I've said this before and it is well worth repeating: *“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” - Adam Smith, "The Wealth of Nations" This is almost a definitive description of capitalism both by its origin and by its very nature.
quelsolaar 8y ago
Warren Buffet doesn't understand that you shouldn't anthropomorphize the lawnmower. https://youtu.be/-zRN7XLCRhc?t=1983 https://youtu.be/-zRN7XLCRhc?t=1983
- nabla9 8y ago
  good roast.
- teddyh 8y ago
  Quote is at https://www.youtube.com/watch?v=-zRN7XLCRhc#t=38m25s https://www.youtube.com/watch?v=-zRN7XLCRhc#t=38m25s
anoncoward111 8y ago
As a former Oracle employee, it's easy to see Oracle's shitty business model-- "Extort everyone for obscene license fees because we currently can, and force them to buy cloud credits they'll never use because Amazon."
- umvi 8y ago
  I hate tech companies that turn into law firms. Many companies (Oracle, Qualcomm, etc.) have chosen this path and I avoid all of them like the plague if I can. I'm hoping we as a society can ensure this is a ruinous path for said companies, but it seems like my two aforementioned examples are still going strong in terms of their market stranglehold/extortion/rent-seeking practices.
- swarnie_ 8y ago
  Oracle consultant here. There's nothing more disheartening then digging into an issue on a new site and realizing someone checked (or didn't uncheck) a box during install years ago and the system is not complying with its licensing. The licence fees for small features you might not even know your using can be pretty brutal.
  - tabtab 8y ago
    Reminds of those "free" software install dialogs that did everything they could to trick you into installing extra spam-ware using double negatives: "Do you not want to skip installing the Great Deals browser tool-bar?" Microsoft got into similar hot water tricking people into installing Windows 10 via confusing dialog boxes.
    - sombremesa 8y ago
      I won't not never uncheck a box that isn't unlike that one.
      - majewsky 8y ago
        I think what you were meaning to say is that you won't never not uncheck said boxes.
adventured 8y ago
There's minimal need to understand their $40 billion in sales. Do they have growth or not, and what is the quality of the growth in producing profit. It's that simple ultimately. Sales 2014: $38.2 billion; sales 2018: $39.8 billion No growth beyond inflation. Net income hasn't climbed (roughly stuck at $9-$10 billion for the last five years). Annual debt interest costs have more than doubled to $2 billion as they've made a mess of their balance sheet. In two years AWS will be as large as their entire business. In the five years Oracle has seen zero growth, Salesforce has gone from $4b to $10.5b in sales. It's likely that over the next five years Oracle will again see near zero growth and Salesforce will double in size. Here's what a successful cloud transition with growth actually looks like: Adobe's business was stagnant for years. Then.... Sales 2014: $4.1b; 2015: $4.8b; 2016: $5.8b; 2017: $7.3b; 2018: $9b. Their profit skyrocketed from $268m in 2014, to $2.6b for 2018. They earned as much last quarter as they did for all of 2015. The stock has gone from $60 to $250 / share. You can tell exactly how well Oracle's cloud transition is going by the fact that everybody around them is eating their lunch and seeing growth, from AWS, to Microsoft, to Salesforce, to dozens of other enterprise software companies. Microsoft had watched its top line stagnate for several years as they struggled to find new growth. And then suddenly a big jump: $96b in sales, to $110b in sales, over the prior year. Another example of cloud transition growth in action.
- spdionis 8y ago
  While your post is informative and I agree with it I can't see an argument that showcases why Oracle would not have the same exact jumpin the next few years like Microsoft and Adobe had.
snarfy 8y ago
As a US citizen I do not want a single cent of tax dollars going to Larry. It's infuriating the US government is Oracle's biggest customer.
- dmix 8y ago
  Same with IBM. I just read the Canadian prime minister praising the work done on a new payroll system, so I decided to look it up: https://en.wikipedia.org/wiki/Phoenix_pay_system https://en.wikipedia.org/wiki/Phoenix_pay_system > In June 2011, IBM won the contract to set up the system, using PeopleSoft software; the original contract was for $5.7 million, but IBM was eventually paid $185 million. ...that's 32x the original price. Everyone in software knows exactly how IBM and Oracle make their money. That part's not a mystery. The bigger mystery to me is why these governments and big companies keep spending money on these professional leeches and expecting a different result. Do other gov contractors charge 32x the original budget? Do construction, or ad companies, or accountants? Or is it just software?
  - entee 8y ago
    Defense contractors, construction occasionally. It's pretty nuts. The east span of the bay bridge was something like 5x the original cost estimate. I think some of this ends up being because of the same reasons that home general contractors end up charging far more than the estimate: modifications cost extra. "Oh you wanted this feature? It wasn't in the contract, we can do it but that'll be $X. Oh you need to include this other system? That's out of scope but for $Y we can solve it." Million here, a million there and pretty soon you're talking real money ;) https://www.wnyc.org/story/316201-brief-history-64-billion-bay-bridge/ https://www.wnyc.org/story/316201-brief-history-64-billion-b...
  - downrightmike 8y ago
    There was an article on HN yesterday that quoted about the SF Bay tunnel where the original bid was a fraction of the final cost and the legislators basically said, people wouldn't vote for it if they knew the 'real' cost. Of course schedule slips and overtime are abused.
  - 8y ago
blairanderson 8y ago
Have you read his shareholder letters? To be fair, Buffett doesn't understand anything cloud or computer related.
- nabla9 8y ago
  Often used Buffet quotes: "If you don't know jewelry, know your jeweler". I suspect that Larry Ellison is factor in the decision to drop Oracle.
chasd00 8y ago
I remember when Oracle bought Sun and the OpenSolaris guys didn't quite fit in. "don't make the mistake of anthropomorphising Larry Ellison" - Bryan Cantrell skip to 38:20 https://www.youtube.com/watch?v=-zRN7XLCRhc https://www.youtube.com/watch?v=-zRN7XLCRhc
- kakwa_ 8y ago
  Just yesterday I came across one of his other videos, and I guess Bryan Cantrill still as a bit of grudge against Oracle: Light ranting: http://www.youtube.com/watch?v=Pm8P4oCIY3g&t=10m10s http://www.youtube.com/watch?v=Pm8P4oCIY3g&t=10m10s A bit heavier ranting (with the fallout after his usenix ranting): http://www.youtube.com/watch?v=Pm8P4oCIY3g&t=14m21s http://www.youtube.com/watch?v=Pm8P4oCIY3g&t=14m21s Selected quote: "Any explanation of Oracle that doesn't end with a nazi allegory does not fully explain Oracle" Bryan Cantrill is really fun to listen to, is a tech veteran now, and is still as passionate and energetic as he was the first day (Another interesting video about programming languages he experienced during his (long by tech standards) career: https://www.youtube.com/watch?v=LjFM8vw3pbU https://www.youtube.com/watch?v=LjFM8vw3pbU)
dec0dedab0de 8y ago
In this day and age if I owned a company, and some Director or VP suggested using anything from Oracle or HP, I would assume they were getting some kind of fringe benefit from the sales person and fire them immediately.
- 420codebro 8y ago
  Yeah don’t worry you won’t ever own a company.
nateburke 8y ago
MongoDB would be a great acquisition target for Oracle. Their recent acquisition of mLab along with their Atlas offering could create a nice headline to help boost the perception that Oracle is actively moving its database business to the cloud. Mongo trades at a premium, but its market cap is in the single-digit billions & is nothing Oracle couldn't afford right now. Plus, Oracle's massive legal machine could move the licensing innovation needle even further in the direction of Mongo's recent move to SSPL. Disclaimer: I work for Salesforce
- deleted 8y ago
  [deleted]
- dragonwriter 8y ago
  > Plus, Oracle's massive legal machine could move the licensing innovation needle even further in the direction of Mongo's recent move to SSPL. Proprietary licensing that has a veneer of openness isn't a legal innovation issue, it's a PR innovation issue (how to get the goodwill and community support that comes with open source while using proprietary licensing that doesn't provide the freedom of open source.) Oracle doesn't have any particular special PR competence when it comes to targeting the audience for whom open source is a big draw, and seems quite happy locking anything that they don't want to share with the community behind traditional proprietary licensing, so I wouldn't see the SSPL game and Oracle having a lot to offer each other. SSPL is for people who want to be like Oracle but pretend they aren't, and even if Oracle cared about the pretense, there's not a lot of indication that the SSPL approach works.
fernandopj 8y ago
I've worked with a public company whose stack is Oracle services. Pretty much every company on that field is Oracle as well, that explains (to me) much of how is Oracle's customer base: this field has been under Oracle & Java database->bus->services->cms since forever, why would one company start and not hire them to have access to the same features, be able to grap a few engineers, and skip "reiventing the wheel"? What this company (and every other in that field) is doing: moving small, microservice-able tasks to AWS. Scale and costs are way cheaper. But it's a very long-term move: a couple of years pass and bam!, here's another Oracle multi-million extension contract they must pay to continue to have the lights on. But to the executive's perspective, this is just the cost of doing business in that field, it's the same for the competition. You could argue this is the same "no one ever got fired for hiring Microsoft/IBM" mentality. Oracle stack is obsolete, but as a business they aren't, simply because it will still take a very long time until most companies reliant of their stack be able to move out without great risk to core business.
- tabtab 8y ago
  Oracle blew a great opportunity. Internal CRUD apps developed by Oracle Forms worked pretty well, were quick to make, had a well-fitting CRUD-centric programming API, and did the job. Even though they were ugly and visually out of style, they made CRUD easy. Our Forms developers were about 4x more productive than our MVC devs. The MVC devs can put all kinds of fancy-dancy JavaScript widgets on pages that dazzle users, but they are always breaking. But then Oracle moved their Forms client to Java, creating all kinds of versioning headaches and security risks. They should have stuck with the dedicated stand-alone EXE Forms client: a kind of GUI browser. It was a very practical tool for in-house and specialty apps, but Oracle ruined it with Java.
eeeeeeeeeeeee 8y ago
Seems pretty obvious — Oracle isn’t disclosing specific cloud data in their financials because the data would be embarrassing.
voidhorse 8y ago
Yeah, idk. I used to work at Oracle and from what I could discern (as a pretty low-level employee) Thomas Kurian was largely responsible for spearheading the cloud efforts on the technical side of things. He's since left the company. I worked with great people at Oracle but I disliked working there immensely. Compared to a lot of other big-name tech companies, their approach to managing employees and their approach to innovation is extremely outdated and somewhat draconian (in certain arenas). Furthermore, I got the sense that any customers we had were largely the result of good salesmanship and unforgiving lock-in. I'm sure it's probably not like this on every team at Oracle, but that was my experience. It was also incredibly clear from the scarce (once a year? if that?) corporate wide pow-wows and communications from above that the company's top executives not only don't understand their employees but also quite clearly don't care about them, their advancement, or happiness. Hell, Oracle was just starting to bring macs into the workplace in the name of appeasing employees and improving employee-executive relations when I left in early 2018.
dalbasal 8y ago
Realistically, a lot of "tech giant" business models are somewhat weird. Google is a search engine + search engine monetisation engine. They have some third parties participating in the ad market (notably other search engines) and some non-search properties (eg YouTube) that contribute some as revenue but search+AdWords is still the core. Meanwhile, most of the notable things google do are in unrelated or marginally related to the business model. Android, chrome, self driving cars... It's as if most of the company has nothing to do with the business. They used to explain this with a VC metaphor, but that seems to be gone. FB & twitter are even stranger. Why do they have 100X more employees and costs than they had a few years ago, while not apparently outputting much more than they were outputting before. They're still "just" social media sites. With all due respect to ad-tech and content ranking algorithms... The common denominator is a revenue stream that comes from dominating a niche and very little relationship between what the company invests in and how it makes money. They didn't/couldn't have actually directed themselves towards those things as goals. Oracle is similar. They're deeply embedded in their customer's businesses. That means a captive market. This generates a revenue stream. There's no predictable way of turning that revenue into a cloud service, no matter how much they're willing to spend. Ultimately, the problem is that the market as a whole is overfunded. Investors don't want dividends, so they get highly speculative/dubious investments instead.
- swarnie_ 8y ago
  I'd argue against some of this with relation to google. All their products are positioned to inhale data and spit relevant advertisements back out. Chrome, Andriod, Cars, DNS. They all help collect data about a person to better train their core business model which is advertising.
- iwintermute 8y ago
  Alphabet (and not Google) is actually trying to be like berkshire hathaway - conglomerate holding company (at least according to Eric Schmidt)
ckozlowski 8y ago
I could help explain it for him. Take something like RAC. Call it "Cloud On-premises." Viola! Cloud sales are up.
tim333 8y ago
>[interviwer] What two industries are the first you should learn when developing your circle of competence? >[Buffett] Look for simple businesses. If I gave you $10M to invest right now and you only had three weeks to spend it and you could only spend it in Omaha, you’d look for simple, understandable, strong businesses. You look at the Nebraska Furniture Mart (NFM). You wouldn’t look at the third best fast food chain. You might look at McDonald’s, because it is number one and will probably always been number one. They have share of mind. What about Oracle? Too hard. GM? Too hard. You can’t predict the future for these two companies. Too many variables. That was 2009. Looks like he's decided that was still the case. Also going by the top comment in https://news.ycombinator.com/item?id=19289583 https://news.ycombinator.com/item?id=19289583 three days ago: ... "I probably met nearly 100 developers, and when I asked all of them what they use Oracle for EVERY SINGLE ONE OF THEM openly told me that their companies use Oracle right now but they hate it and they were all in the process of transitioning to other providers or open source solutions."... I'd guess shorting Oracle might be more the thing to do. Typically customer reaction proceeds the financial numbers moving.

99 points by partingshots 8y ago

Related discussion from four days ago: https://news.ycombinator.com/item?id=19289583 https://news.ycombinator.com/item?id=19289583

ahartmetz 8y ago

Yeah, I've been scratching my head, too. Oracle's P/E ratio implies the expectation of great growth, but to me Oracle looks kind of floundering with competition from F/OSS databases and all the failed acquisitions / new lines of business such as "cloud". I would short Oracle if the overvaluation wasn't so old and stable. Hard to guess if or when it will end.

chollida1 8y ago
> Oracle's P/E ratio implies the expectation of great growth, but to me Oracle looks kind of floundering with competition from F/OSS databases and all the failed acquisitions / new lines of business such as "cloud". Umm, ORCL's PE is currently 18.7 and the average PE of the S&P 500 is currently around 21 so your statement about a PE that is pricing in "great growth" is dubious at best:). The average S&P 500 PE ratio is also above 18 if you start at a reasonable date of say 1980.. http://www.multpl.com/ http://www.multpl.com/
- ahartmetz 8y ago
  Yeah, looks like I misremembered the degree of overvaluation. That said, you have to compare it to valuations of dividend stocks (~15 - Apple, uh... OK, difficult. McD's, Procter & Gamble 25?!, Ford 10...) and growth stocks (~25 - Google, Microsoft, Facebook). Oracle is more of a shrinkage stock IMO...
dehrmann 8y ago
F/OSS dbs AND hosted versions of those. It used to be that if you wanted to mitigate career risk, you buy Oracle so if the DB has issues, you bought the best. If Mysql fails, you were cheap. Now you can play the AWS card. If Aurora fails, you picked a hosted DB from a known vendor. And adding to your point, F/OSS DBs have gotten really good, and they're commoditized.
deleted 8y ago
[deleted]
basch 8y ago
Are you really looking at their acquisitions? They own an SD-WAN company, NetSuite, a massive construction software business (Textura, Aconex, etc), a pretty massive marketing cloud to compete with Adobe and Salesforce. I think people who are calling Oracle just a database company are really underselling how much value they sell above the database abstraction, they are much closer to Microsoft and AWS (and SAP, Adobe, Autodesk) than people think. They own and sell a ton of cloud "services" that arent "database" but instead specific tasks. Their "divisions" are Servers, Storage, and Networking; Middleware; Industry Solutions including Communications and Media, Construction and Engineering, Health Sciences, Hospitality and Retail, Utilities; and Applications. They tend to focus on more specific purpose software, compared to Microsoft and Adobe more general purpose software for all industries.
- guitarbill 8y ago
  It doesn't matter how many things they do if they do them all badly, and can't figure out a coherent strategy. See also IBM.
  - basch 8y ago
    They dont necessarily need an overall strategy between some of these units. What is the chance a Talari and Aconex integration is useful? They act more like a holding company or vc, who owns a bunch of individual businesses. Nobody criticizes Berkshire Hathaway for not integrating its different businesses together.

jaclaz 8y ago

Well, the quote by Warren Buffet is IMHO great: >“Larry Ellison has done a fantastic job with Oracle,’’ Buffett said Monday in a CNBC interview. “I’ve followed from the standpoint of reading about it, but I felt like I didn’t understand the business. Particularly after my experience with IBM, I don’t think I understand exactly where the cloud is going.’’

ausbah 8y ago
“Never invest in a business you cannot understand.”
- mromanuk 8y ago
  or "never invest in a business you consider bs"
  - tabtab 8y ago
    Which ones are not BS? Something tells me a fully honest company would not survive, just like honest politicians don't survive.
- tabtab 8y ago
  Buffett is a numbers guy: he likes to see the numbers coming in and numbers going out. He follows the insurance market closely because insurance is about probabilities: numbers. Technology is more about standards, integration, trade-off balancing, and dealing with change; things that are hard to put numbers on. His firm got burned by IBM, so he's extra jittery dealing with "big tech" now. IBM created this program to better track and maximize revenue by cranking up revenue incentives for middle managers. It looked good on paper: fine-tune the reporting of and increase incentives. But their customers began to feel squeezed and milked. You can often gain short-term revenue by skimping on customer service, and eventually customers revolted, damaging IBM's cred.
  - basch 8y ago
    marketing, naming, bundling, network effects, sla's. theres a lot more to tech than tech.

stevespang 8y ago

The SEC dogs Elon Musk but doesn't dare lock horns with Larry Ellison, the pathological corporate sociopath whose company locks users into seemingly never ending software leases with threatened audits and whose corp has teams of lawyers and only offers "limited breakdowns in its financial disclosures" . . . Larry recently bragged how even Amazon is under his cloak using Oracle because there is nothing out there better. Bezos response: We'll build our own database no matter what the cost and then we'll compete against you signing up what were your customers. How do you like that Larry ?

smt88 8y ago
None of the Oracle behaviors you’re describing are the responsibility of the SEC.
mistermann 8y ago
Did Bezos really say something like this?
- ckozlowski 8y ago
  I don't think so. But Andy Jassy has not been quiet in his criticism of their model. AWS Aurora wasn't built out of spite, however. It was/is designed to be a cloud-native database from the start because there was a perceived desire for the product. As it's AWS's fastest growing service, the team deduced correctly. Disclaimer: I work for AWS.
bufferoverflow 8y ago
Amazon has developed Aurora and DynamoDB. And they are free to use any of the open source ones. Your narrative makes little sense.
- ceejayoz 8y ago
  Ellison claims (https://www.zdnet.com/article/amazons-consumer-business-moves-from-oracle-to-aws-but-larry-ellisons-wont-stop-talking/ https://www.zdnet.com/article/amazons-consumer-business-move...) Aurora is Oracle's because it's MySQL based: > So this is another claim I'm going to make, Aurora, not built by Amazon, built by us, called MySQL. Amazon just gave it a new name. It's also true of Redshift. Amazon didn't build Redshift, that's not what they do. These are -- they just open-sourced pieces where they built -- that they used to build their cloud. They did a great job. They did a great job of making those pieces available in a coherent -- deliver them in a coherent cloud. I give them a lot of credit. But they don't build databases. Amazon still runs all of their -- all of Amazon on Oracle Database. They are trying, they promised because they don't like me reminding them of that publicly. They said they're trying to get off Oracle by 2020. > Aurora is our other database. It's our low-end database. It's our database. It's not theirs. Well, it's open source. Anyone can use it for nothing. (This is bullshit, of course.)

redleggedfrog 8y ago

That's pretty easy. If Oracles numbers for cloud were awesome they'd certain disclose that. Since the don't we can safely assume they're struggling and want to hide it.

ProAm 8y ago

The head scratcher is no one likes being an Oracle customer. I've never met one.

scottlocklin 8y ago
Believe it or not, I have. They're usually all-in, and they basically outsource their tech stack to Oracle pretty much completely, rather than trying to build an in-house team on open-source stuff, which has a lot of other kinds of risk baked in. Since the culture is sales oriented rather than tech oriented, they can concentrate on their main mission.
giardini 8y ago
They apparently like it better than being a IBM DB2 customer or a Microsoft SQL Server customer or a Sybase customer or a Teradata customer or a ...[I think you get my point]. Oracle is good at extracting the maximum profit from their sales. They're aggressive about sales and policing usage and they don't often cut customers slack. They've learned that clients will try to give them the shaft and they do their best to not get shafted. They're good capitalists as well as the best database developers in the world.
- sodosopa 8y ago
  We run all of those and Oracle is the one we just thankfully retired. It is also very telling that people are moving from Teradata and Oracle to Sailfish.
- mr_overalls 8y ago
  Wow. Today I learned that "capitalist" means "treating the customer as the enemy" and "legitimized exploitation". Honestly curious - have you absorbed these attitudes from an MBA program, or did you develop them more organically?
  - giardini 8y ago
    I did not say that but I've said this before and it is well worth repeating: *“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” - Adam Smith, "The Wealth of Nations" This is almost a definitive description of capitalism both by its origin and by its very nature.

quelsolaar 8y ago

Warren Buffet doesn't understand that you shouldn't anthropomorphize the lawnmower. https://youtu.be/-zRN7XLCRhc?t=1983 https://youtu.be/-zRN7XLCRhc?t=1983

nabla9 8y ago
good roast.
teddyh 8y ago
Quote is at https://www.youtube.com/watch?v=-zRN7XLCRhc#t=38m25s https://www.youtube.com/watch?v=-zRN7XLCRhc#t=38m25s

anoncoward111 8y ago

As a former Oracle employee, it's easy to see Oracle's shitty business model-- "Extort everyone for obscene license fees because we currently can, and force them to buy cloud credits they'll never use because Amazon."

umvi 8y ago
I hate tech companies that turn into law firms. Many companies (Oracle, Qualcomm, etc.) have chosen this path and I avoid all of them like the plague if I can. I'm hoping we as a society can ensure this is a ruinous path for said companies, but it seems like my two aforementioned examples are still going strong in terms of their market stranglehold/extortion/rent-seeking practices.
swarnie_ 8y ago
Oracle consultant here. There's nothing more disheartening then digging into an issue on a new site and realizing someone checked (or didn't uncheck) a box during install years ago and the system is not complying with its licensing. The licence fees for small features you might not even know your using can be pretty brutal.
- tabtab 8y ago
  Reminds of those "free" software install dialogs that did everything they could to trick you into installing extra spam-ware using double negatives: "Do you not want to skip installing the Great Deals browser tool-bar?" Microsoft got into similar hot water tricking people into installing Windows 10 via confusing dialog boxes.
  - sombremesa 8y ago
    I won't not never uncheck a box that isn't unlike that one.
    - majewsky 8y ago
      I think what you were meaning to say is that you won't never not uncheck said boxes.

adventured 8y ago

There's minimal need to understand their $40 billion in sales. Do they have growth or not, and what is the quality of the growth in producing profit. It's that simple ultimately. Sales 2014: $38.2 billion; sales 2018: $39.8 billion No growth beyond inflation. Net income hasn't climbed (roughly stuck at $9-$10 billion for the last five years). Annual debt interest costs have more than doubled to $2 billion as they've made a mess of their balance sheet. In two years AWS will be as large as their entire business. In the five years Oracle has seen zero growth, Salesforce has gone from $4b to $10.5b in sales. It's likely that over the next five years Oracle will again see near zero growth and Salesforce will double in size. Here's what a successful cloud transition with growth actually looks like: Adobe's business was stagnant for years. Then.... Sales 2014: $4.1b; 2015: $4.8b; 2016: $5.8b; 2017: $7.3b; 2018: $9b. Their profit skyrocketed from $268m in 2014, to $2.6b for 2018. They earned as much last quarter as they did for all of 2015. The stock has gone from $60 to $250 / share. You can tell exactly how well Oracle's cloud transition is going by the fact that everybody around them is eating their lunch and seeing growth, from AWS, to Microsoft, to Salesforce, to dozens of other enterprise software companies. Microsoft had watched its top line stagnate for several years as they struggled to find new growth. And then suddenly a big jump: $96b in sales, to $110b in sales, over the prior year. Another example of cloud transition growth in action.

spdionis 8y ago
While your post is informative and I agree with it I can't see an argument that showcases why Oracle would not have the same exact jumpin the next few years like Microsoft and Adobe had.

snarfy 8y ago

As a US citizen I do not want a single cent of tax dollars going to Larry. It's infuriating the US government is Oracle's biggest customer.

dmix 8y ago
Same with IBM. I just read the Canadian prime minister praising the work done on a new payroll system, so I decided to look it up: https://en.wikipedia.org/wiki/Phoenix_pay_system https://en.wikipedia.org/wiki/Phoenix_pay_system > In June 2011, IBM won the contract to set up the system, using PeopleSoft software; the original contract was for $5.7 million, but IBM was eventually paid $185 million. ...that's 32x the original price. Everyone in software knows exactly how IBM and Oracle make their money. That part's not a mystery. The bigger mystery to me is why these governments and big companies keep spending money on these professional leeches and expecting a different result. Do other gov contractors charge 32x the original budget? Do construction, or ad companies, or accountants? Or is it just software?
- entee 8y ago
  Defense contractors, construction occasionally. It's pretty nuts. The east span of the bay bridge was something like 5x the original cost estimate. I think some of this ends up being because of the same reasons that home general contractors end up charging far more than the estimate: modifications cost extra. "Oh you wanted this feature? It wasn't in the contract, we can do it but that'll be $X. Oh you need to include this other system? That's out of scope but for $Y we can solve it." Million here, a million there and pretty soon you're talking real money ;) https://www.wnyc.org/story/316201-brief-history-64-billion-bay-bridge/ https://www.wnyc.org/story/316201-brief-history-64-billion-b...
- downrightmike 8y ago
  There was an article on HN yesterday that quoted about the SF Bay tunnel where the original bid was a fraction of the final cost and the legislators basically said, people wouldn't vote for it if they knew the 'real' cost. Of course schedule slips and overtime are abused.
- 8y ago

blairanderson 8y ago

Have you read his shareholder letters? To be fair, Buffett doesn't understand anything cloud or computer related.

nabla9 8y ago
Often used Buffet quotes: "If you don't know jewelry, know your jeweler". I suspect that Larry Ellison is factor in the decision to drop Oracle.

chasd00 8y ago

I remember when Oracle bought Sun and the OpenSolaris guys didn't quite fit in. "don't make the mistake of anthropomorphising Larry Ellison" - Bryan Cantrell skip to 38:20 https://www.youtube.com/watch?v=-zRN7XLCRhc https://www.youtube.com/watch?v=-zRN7XLCRhc

kakwa_ 8y ago
Just yesterday I came across one of his other videos, and I guess Bryan Cantrill still as a bit of grudge against Oracle: Light ranting: http://www.youtube.com/watch?v=Pm8P4oCIY3g&t=10m10s http://www.youtube.com/watch?v=Pm8P4oCIY3g&t=10m10s A bit heavier ranting (with the fallout after his usenix ranting): http://www.youtube.com/watch?v=Pm8P4oCIY3g&t=14m21s http://www.youtube.com/watch?v=Pm8P4oCIY3g&t=14m21s Selected quote: "Any explanation of Oracle that doesn't end with a nazi allegory does not fully explain Oracle" Bryan Cantrill is really fun to listen to, is a tech veteran now, and is still as passionate and energetic as he was the first day (Another interesting video about programming languages he experienced during his (long by tech standards) career: https://www.youtube.com/watch?v=LjFM8vw3pbU https://www.youtube.com/watch?v=LjFM8vw3pbU)

dec0dedab0de 8y ago

In this day and age if I owned a company, and some Director or VP suggested using anything from Oracle or HP, I would assume they were getting some kind of fringe benefit from the sales person and fire them immediately.

420codebro 8y ago
Yeah don’t worry you won’t ever own a company.

nateburke 8y ago

MongoDB would be a great acquisition target for Oracle. Their recent acquisition of mLab along with their Atlas offering could create a nice headline to help boost the perception that Oracle is actively moving its database business to the cloud. Mongo trades at a premium, but its market cap is in the single-digit billions & is nothing Oracle couldn't afford right now. Plus, Oracle's massive legal machine could move the licensing innovation needle even further in the direction of Mongo's recent move to SSPL. Disclaimer: I work for Salesforce

deleted 8y ago
[deleted]
dragonwriter 8y ago
> Plus, Oracle's massive legal machine could move the licensing innovation needle even further in the direction of Mongo's recent move to SSPL. Proprietary licensing that has a veneer of openness isn't a legal innovation issue, it's a PR innovation issue (how to get the goodwill and community support that comes with open source while using proprietary licensing that doesn't provide the freedom of open source.) Oracle doesn't have any particular special PR competence when it comes to targeting the audience for whom open source is a big draw, and seems quite happy locking anything that they don't want to share with the community behind traditional proprietary licensing, so I wouldn't see the SSPL game and Oracle having a lot to offer each other. SSPL is for people who want to be like Oracle but pretend they aren't, and even if Oracle cared about the pretense, there's not a lot of indication that the SSPL approach works.

fernandopj 8y ago

I've worked with a public company whose stack is Oracle services. Pretty much every company on that field is Oracle as well, that explains (to me) much of how is Oracle's customer base: this field has been under Oracle & Java database->bus->services->cms since forever, why would one company start and not hire them to have access to the same features, be able to grap a few engineers, and skip "reiventing the wheel"? What this company (and every other in that field) is doing: moving small, microservice-able tasks to AWS. Scale and costs are way cheaper. But it's a very long-term move: a couple of years pass and bam!, here's another Oracle multi-million extension contract they must pay to continue to have the lights on. But to the executive's perspective, this is just the cost of doing business in that field, it's the same for the competition. You could argue this is the same "no one ever got fired for hiring Microsoft/IBM" mentality. Oracle stack is obsolete, but as a business they aren't, simply because it will still take a very long time until most companies reliant of their stack be able to move out without great risk to core business.

tabtab 8y ago
Oracle blew a great opportunity. Internal CRUD apps developed by Oracle Forms worked pretty well, were quick to make, had a well-fitting CRUD-centric programming API, and did the job. Even though they were ugly and visually out of style, they made CRUD easy. Our Forms developers were about 4x more productive than our MVC devs. The MVC devs can put all kinds of fancy-dancy JavaScript widgets on pages that dazzle users, but they are always breaking. But then Oracle moved their Forms client to Java, creating all kinds of versioning headaches and security risks. They should have stuck with the dedicated stand-alone EXE Forms client: a kind of GUI browser. It was a very practical tool for in-house and specialty apps, but Oracle ruined it with Java.

eeeeeeeeeeeee 8y ago

Seems pretty obvious — Oracle isn’t disclosing specific cloud data in their financials because the data would be embarrassing.

voidhorse 8y ago

Yeah, idk. I used to work at Oracle and from what I could discern (as a pretty low-level employee) Thomas Kurian was largely responsible for spearheading the cloud efforts on the technical side of things. He's since left the company. I worked with great people at Oracle but I disliked working there immensely. Compared to a lot of other big-name tech companies, their approach to managing employees and their approach to innovation is extremely outdated and somewhat draconian (in certain arenas). Furthermore, I got the sense that any customers we had were largely the result of good salesmanship and unforgiving lock-in. I'm sure it's probably not like this on every team at Oracle, but that was my experience. It was also incredibly clear from the scarce (once a year? if that?) corporate wide pow-wows and communications from above that the company's top executives not only don't understand their employees but also quite clearly don't care about them, their advancement, or happiness. Hell, Oracle was just starting to bring macs into the workplace in the name of appeasing employees and improving employee-executive relations when I left in early 2018.

dalbasal 8y ago

Realistically, a lot of "tech giant" business models are somewhat weird. Google is a search engine + search engine monetisation engine. They have some third parties participating in the ad market (notably other search engines) and some non-search properties (eg YouTube) that contribute some as revenue but search+AdWords is still the core. Meanwhile, most of the notable things google do are in unrelated or marginally related to the business model. Android, chrome, self driving cars... It's as if most of the company has nothing to do with the business. They used to explain this with a VC metaphor, but that seems to be gone. FB & twitter are even stranger. Why do they have 100X more employees and costs than they had a few years ago, while not apparently outputting much more than they were outputting before. They're still "just" social media sites. With all due respect to ad-tech and content ranking algorithms... The common denominator is a revenue stream that comes from dominating a niche and very little relationship between what the company invests in and how it makes money. They didn't/couldn't have actually directed themselves towards those things as goals. Oracle is similar. They're deeply embedded in their customer's businesses. That means a captive market. This generates a revenue stream. There's no predictable way of turning that revenue into a cloud service, no matter how much they're willing to spend. Ultimately, the problem is that the market as a whole is overfunded. Investors don't want dividends, so they get highly speculative/dubious investments instead.

swarnie_ 8y ago
I'd argue against some of this with relation to google. All their products are positioned to inhale data and spit relevant advertisements back out. Chrome, Andriod, Cars, DNS. They all help collect data about a person to better train their core business model which is advertising.
iwintermute 8y ago
Alphabet (and not Google) is actually trying to be like berkshire hathaway - conglomerate holding company (at least according to Eric Schmidt)

ckozlowski 8y ago

I could help explain it for him. Take something like RAC. Call it "Cloud On-premises." Viola! Cloud sales are up.

tim333 8y ago

>[interviwer] What two industries are the first you should learn when developing your circle of competence? >[Buffett] Look for simple businesses. If I gave you $10M to invest right now and you only had three weeks to spend it and you could only spend it in Omaha, you’d look for simple, understandable, strong businesses. You look at the Nebraska Furniture Mart (NFM). You wouldn’t look at the third best fast food chain. You might look at McDonald’s, because it is number one and will probably always been number one. They have share of mind. What about Oracle? Too hard. GM? Too hard. You can’t predict the future for these two companies. Too many variables. That was 2009. Looks like he's decided that was still the case. Also going by the top comment in https://news.ycombinator.com/item?id=19289583 https://news.ycombinator.com/item?id=19289583 three days ago: ... "I probably met nearly 100 developers, and when I asked all of them what they use Oracle for EVERY SINGLE ONE OF THEM openly told me that their companies use Oracle right now but they hate it and they were all in the process of transitioning to other providers or open source solutions."... I'd guess shorting Oracle might be more the thing to do. Typically customer reaction proceeds the financial numbers moving.