Don't go away, IBM and SAP – Larry's not finished with you yet

SAP and IBM? Pah! Says Larry Ellison. Amazon and Salesforce – them’s my competition these days.

Only the truth is a little more nuanced.

Yes, there is competitive pressure from the cloud entrants but the more Ellison tries to re-invent Oracle, the more he’s going to have to scrap with his rivals IBM and SAP to haul past the new crew.

That’s because IBM and SAP are doing precisely the same thing, and will see Oracle as their number one challenge in getting into the cloud.

Ellison told a company event on Wednesday that SAP and IBM are in his rear-view mirror and Amazon and erstwhile SaaS rival and Salesforce are his new foes.

The CEO opined: "Our competitors are this whole new generation of cloud companies. We are focused on infrastructure companies, like Amazon and the SaaS companies like Salesforce.

"We just swapped a bunch of big guys – IBM and SAP – for a hunch of other guys; small but agile."

Ellison spoke just ahead of Amazon announcing continued and accelerating growth in its cloud business.

Amazon doesn’t say what it makes on cloud and the most we have it's the "other" category on its balance sheet, where revenue from AWS sits.

In Amazon’s fourth quarter, announced Thursday, this group made $1.234bn – up from $1bn in revenue in the third quarter and $892m in Q2.

That’s despite Amazon cutting AWS prices to see off Microsoft and Google. The growth has helped Amazon turn its usual overall loss in to a profit - $510m for the quarter

But, I’ll bear in mind Ellison’s comments about Amazon re: Oracle and SAP next time Oracle announces its results.

These quarterly results debriefs have turned into jocular locker room events with Ellison gamely snapping his bath towel off the butts of IBM and SAP.

The silence should be as deafening as it is disappointing - although we don’t think we’ll be disappointed.

That’s because it’s perfectly natural to associate yourself with winners in the hope that it reflects well on you. If Larry says he competes with Amazon etc, then he hopes we, too, will come to regard Oracle as a company just like Amazon.

But the corollary of associating yourself with those you aspire to compete with is to not mention those who are exactly the same as you.

Enter IBM and SAP.

Oracle is trying to take online market share that would have gone to Amazon and Salesforce in the field of platforms and infrastructure as a service and in the form of serving applications as a service but so, too, are IBM and SAP. And like Oracle, IBM and SAP are staples of enterprise IT in hardware and software and are both responding to the growth of cloud and SaaS by rolling their own.

Oracle, which believed it could get rich simply selling pickaxes to prospectors, is now in the land rush, floating its own developer and database clouds in while pitching its very large servers and chunky middleware as for private clouds.

All that remains to be seen is who will stake out the biggest claim and on that score, there’s two divisions.

The first is comprised of Amazon, Salesforce and Workday – also named checked by Ellison this week. These are cloud companies growing fast.

From a revenue perspective these are are smaller than Oracle, IBM and SAP – they make millions or are just scraping billions - they don't clear anything near the multiple billions the giants make, but they are growing in double digits.