Oracle was founded in 1977 as a (yawn) database solutions vendor.
Today, it has a market cap of $244B but has fallen far behind 2 other tech firms also launched in the mid-1970s (i.e., Apple @ $2.8T, Microsoft @ $2.5T).
One big reason: It missed the cloud computing revolution, which Larry Ellison — founder, CTO, and chairman of Oracle — called a fashion trend and “complete gibberish” in 2008.
Turns out, Ellison was very wrong
Revenue for global cloud computing infrastructure is projected at ~$150B for 2021. And Oracle only has a sliver of the pie, per Statista:
- Amazon Web Services: 32% global market share
- Microsoft Azure: 20%
- Google Cloud: 9%
- Oracle: 2% (womp, womp, womp)
However, the company is moving in the right direction. Its latest quarterly earnings showed the cloud division grew +22% YoY (with an $11B+ run rate).
Can a big acquisition change its fortunes?
Oracle announced a $28B+ deal for electronic medical records firm Cerner. Per The Wall Street Journal, Ellison wants to buy his way into health care.
The plan makes sense: health care accounts for ~20% of US GDP, and software for medical records is a $29B+ industry that has mostly not migrated to the cloud.
Oracle calls Cerner the “anchor asset” of this ambition. (It’ll also be a blow to Amazon, which is currently Cerner’s largest cloud provider.)
The all-cash deal…
… will be Oracle’s biggest deal ever but still needs approval. Notably, UK’s antitrust regulators are reviewing Microsoft’s recent $16B acquisition of Nuance Communications, a speech recognition firm popular in health care.
Winning Cerner may put Oracle’s failed TikTok acquisition in the past (we still can’t believe this was a thing) and help it gain ground in the cloud race.
Ellison — the world’s 5th richest person ($120B+) — probably likes the sound of that fashion trend.
