There were a couple of contrasting news stories about Oracle this week that suggest the cloud part of the business is ascending, while some older pieces like the hardware business could be in decline.
Let’s start with the bad news first with reported layoffs at Oracle’s hardware unit. That the business that was created when Oracle dropped $7.4 billion to buy Sun back in 2010. As Steven J. Vaughan-Nichols points out on ZDNet, nothing is official yet, but the writing appears to be on the wall for employees at the unit, according to several reports like this one.
Whatever you thought of that acquisition, and it seemed to be out of Oracle’s area of expertise at the time, the fact is that as the company began to make the shift from on-prem hardware and software company to cloud company over the last couple of years.
When a company does a pivot as Oracle has done — and really had to do to survive — there are bound to be casualties in other parts of the business. It appears that’s exactly what we are seeing now with the reported large-scale layoffs on the hardware side of the business.
It’s not just the hardware business that’s feeling it. Traditional licenses for on-prem software were down five percent in its most recent earnings report in June, which translated into a 16 percent decline from the previous quarter, according to Reuters. No layoffs reported in that part of the company, but you see the trend.
The cloud rising
While one part of the company is on a down-bound train, the other one is apparently making up for it. In that same quarterly report in June that reported the decline in on-prem revenue, the company saw cloud revenue rise 58 percent.
Meanwhile, even as the company reportedly laid off hundreds of workers in the hardware side of the business, it was announcing a push for 5,000 new cloud jobs for in the US this year. This and the growth numbers show exactly where the company’s priorities are now as the cloud takes center stage at the company and everything else begins to fade to secondary status.
While Oracle’s Larry Ellison once famously dissed the cloud back in 2008, calling it fashion-oriented nonsense, he and his company definitely see where the money is now. That means the cloud takes priority in terms of resources and the other parts of the company begin to get phased out or take a much smaller role than in the past.
It’s surely a difficult situation for the employees who find themselves on the wrong side of the equation but it’s consistent with the direction the company has been taking for some time. Oracle is clearly a cloud company now, and that has become its primary focus.
Photo: Oracle PR on Flickr. Used under CC by 2.0 license.