EK: Can you give anything rough in terms of capex numbers?
MH: No. We won’t do that. We’ve never really done that over the past several years, although you can see in our balance [sheet] over the past couple or three years the billions of dollars of capex that we’ve invested. I’m not going to give you a forward-looking capex, but in terms of backward, it’s all out in the public domain how much capex.
EK: But to be clear, you do plan to own and operate that infrastructure. You’re not going to be partnering with others to provide that globally?
MH: When you say partnering, we do a combination of [colocation] as well as our own, so we have a mix, depending on whether it’s a SaaS capability, PaaS capability, or infrastructure capability.
JG: I want to explore this again from the perspective of a CIO and make sure we understand your strategy in that IaaS market. One, is what you’re doing make that more enterprise ready than perhaps the other IaaS offerings out there? The other is, I guess philosophically, why be in the market at all? It’s a price-driven market. It’s going to be brutal competition in that market over time. We’re already seeing some of that. Why does Oracle need to be in that rather than simply competing in the SaaS and PaaS world, which are much higher-value worlds?
MH: It’s what customers want. [But] I like the crux of your question. If you take a step back and look strategically, what’s happened in the market? The market has historically been there’s a trillion worth of spend in IT. Half of it is consumer, half of it is spent by enterprise. That’s everything to me that’s not a consumer. The half that’s enterprise has not grown much.
When you look at the problems, you actually look at cloud as an economic issue, not just a technical issue. The problem you have is that most CEOs are going against a market with 2 percent GDP growth, 1 percent S&P 500 growth, so there’s not a lot of revenue growth. The only way to get revenue growth is to steal market share from somebody.
Most CEOs are doing two things at the same time. They’re cutting expenses. When you see S&P up 5 percent and revenue growth up 1 percent it tells you something real quick. They’re cutting expenses. They’re cutting expenses at the same time as they’re trying to steal market share. When you try to align an IT strategy against those two initiatives, you tell the CIO: Get me systems focused on better understanding customers, better understanding the market, and cut the damn expenses.
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