Oracle Introduces Corporate Cloud to Challenge Salesforce

Oracle Corp. (ORCL), the world’s largest database maker, has introduced a cloud-computing service to let corporate customers access data over the Internet, stepping up competition with Salesforce.com Inc. (CRM) and Workday Inc.

The Oracle Cloud will include more than 100 applications, the Redwood City, California-based company said yesterday. The service includes the Fusion business applications and online programs from acquired companies Taleo Corp. and RightNow Technologies Inc.

The debut vaults Oracle into the fast-growing market for software that is delivered over the Internet, using technology that can save customers money on hardware and speed up product updates. Expanding in the $113.8 billion business-applications market could help reduce Oracle’s reliance on hardware gained from its $7.4 billion purchase of Sun Microsystems in 2010.

“This was a gigantic effort,” Oracle Chief Executive Officer Larry Ellison said at an event at the company’s headquarters, adding that the cloud service will include software developed in-house as well as from acquisitions. “Simply buying things wouldn’t have been enough.”

Oracle rose 3.1 percent to $27.53 at yesterday’s close in New York. The stock has climbed 7.3 percent this year.

‘Forced March’

Oracle’s cloud service is a break from Ellison’s past, when he derided the concept as a new name for old technology. He said he had no choice but to adapt. “We started seven years ago this forced march into the cloud,” Ellison said.

Germany’s SAP AG (SAP) has been making acquisitions to expand in cloud computing, and Salesforce and Workday have based their businesses on it, winning deals against Oracle and SAP.

Computer-systems makers such as International Business Machines Corp. (IBM) and Hewlett-Packard Co. (HPQ) are also beginning to sell online processing power and software tools for developers.

Moving its financial, human-resources and sales applications online could boost use of Oracle software and services on tablet computers and other mobile devices, said Brent Thill, an analyst at UBS AG in San Francisco.

“All their apps will run on tablets eventually,” said Thill. “Have they done that yet? I haven’t met too many people running Oracle on tablets.” The Public Cloud is also late to market, he said -- at an event last October, Oracle said it would be available within weeks.

Oracle sells $1 billion a year of software delivered as Web services, making it the second-largest seller of online applications after Salesforce, co-President Mark Hurd said in an interview yesterday.

“We’re driving hard to get great growth” in sales of software as a service, he said. “We’re already $1 billion in SAAS revenue today. People say, ‘You guys are just starting.’ ”

New Applications

In the coming year, Oracle plans to release software for accounting, supply chain management and enterprise-resource planning as part of the Oracle Cloud, Hurd said. The company has more than 2,000 sales and technical presales staff pitching high-end hardware, cloud-computing software and business intelligence applications.

Ellison has spent more than $40 billion on more than 70 acquisitions, adding programs that help large corporations manage human resources and operations.

Over the past two weeks, Oracle bought two companies -- Vitrue Inc. and Collective Intellect Inc. -- that sell online software to analyze data from Facebook Inc.’s and Twitter Inc.’s websites to create marketing campaigns.

To contact the reporter on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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