Larry Ellison, founder of Oracle (Nasdaq: ORCL), has decided that Software-as-a-Service is falling short of expectations. He pointed to Salesforce.com as an example of a SaaS firm that hasn't improved its profitability as much as some might have hoped, even after 10 years of solid performance.
To me, this sounds a lot like the naysayers of the early 1980's. There were those who simply couldn't believe that an individual would have any need for their own personal computer. I wonder if Mr. Ellison is worried that his company, built on the now traditional big upfront licensing costs plus scandalously high "maintenance" fees, will follow in DEC's footsteps. Perhaps he believes that he can give a few prospects second thoughts about throwing in with a rival SaaS vendor.
If this belief represents the extent of Oracle's strategic thinking, then their future is not terribly bright. That Mr. Ellison made these remarks during an earnings call makes me even more bearish on thier long-term prospects. Oracle seems to be betting their success on the failure of a business model that is gaining market acceptance with each passing quarter.
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