MH in a stroke of genius has decided to take Oracle from a 40 billion plus software company and turn it into a 10 billion plus cloud company.
Software takes zero dollars to mass produce when written. Its does take money to maintain software, upgrade and patch. This money, however is limited to developer salaries, sales salaries and support salaries.
Cloud companies take tens of billions to mass produce and deploy globally in infrastructure costs. It does take money to maintain hardware, refresh hardware in addition to developer salaries to maintain the cloud orchestration source code. This is in addition to the software written and maintained already by the other development team. It requires networking, troubleshooting and its own support staff. It requires developer salaries, sales salaries and support salaries.
I think the plan is to offset the decline in software sales by an increase in cloud sales, with out investing 10s of billions of dollars. Oracles plan is to let the customer pay for the infrastructure costs with a "just in time" inventory model. You write us the check and we will buy the infrastructure.
The idea is to milk declining software sales while "pivoting to the cloud"
Problem is that the only notable "cloud" sales was at AT&T where an "Exadata Cloud Machine" was dropped on premises. Most customers are not rushing in to buy the Oracle cloud. The market is expecting more growth than what it sees.
Oracle beat earnings expectations in Q2 of FY18 and the stock is taking a tumble. What will happen if Oracle misses earnings expectations? What will happen if cloud growth continues to "grow" at a less than expected pace?