Oracle made a $300B bet on OpenAI. It's paying the price

https://finance.yahoo.com/news/oracle-made-a-300-billion-bet-on-openai-its-paying-the-price-205441863.html

89•pera•2h ago

Comments

taylodl•1h ago

Oracle has bigger problems than OpenAI. They've been selling large enterprise contracts for the past 10 years and they're coming up for renewal. A lot of those enterprises don't feel they got a good value. If 10% to 20% of those enterprises fail to renew for another 10 years, then that could have a severe impact to Oracle. Their other issue is a lot of those enterprises are looking at migrating to PostgreSQL so they can migrate off of Oracle's RDBMS. Many have already deployed PostgreSQL for their department-level applications, so they can get the experience they need before tackling their enterprise-level applications.

OccamsMirror•1h ago

Can confirm. There is zero good will towards Oracle in my organization, and AWS have positioned themselves in a way to push the enterprise team to using PostgreSQL on RDS, and helping development teams make the move with training and proservices. Oracle's greed is finally coming back to haunt them.

adabyron•1h ago

But how hard is it for your companies to migrate?

Is it worth the risk/work to move everything over? For a lot of enterprises, their needs to be a huge cost savings or risk reduction. Risk usually being the most important factor the bigger the company.

zamadatix•1h ago

If it's the same for others as it was for us recently then very difficult... but the cost savings were so massive in terms of margin the risk was worth it. What taylodl mentioned about growing institutional knowledge and experience with Postgres in other apps first rang true as well. We are not 100% Oracle free, but we have migrated much away already.

In the larger discussion, I also wonder what their new contract rate is for these solutions. Even if 0% were migrating off, if 0% were migrating on then the net rate would still be decently negative because of natural business/app attrition.

hylaride•1h ago

I know of one largish bank moving away from Oracle middleware and RDMS. It's happening in pieces starting with low hanging fruit and for awhile the two will run in parallel (with the new data stores starting off as a comparison check to reconcile any bugs that crop up). Some early wins were account transaction logs that can go into better suited DBs, etc.

My understanding is that they were relatively lucky in that most of the hard parts are in the middleware layer and rarely the DB itself - the bank has been around since the 1800s, so has a huge mishmash of technologies that go from old IBM mainframes up to more modern cloud infra. So they're already kind of used to using middleware logic to stitch together various data sources.

The funny thing is that my contact there said the primary impetus is that they see the writing on the wall for a lot of their "legacy" Sun hardware, and figure if they're going to have to redo a lot of it, they may as well re-architect the rest. There'll still be oracle DBs running in the bank for a looong time, but there'll be less and less of it.

cameldrv•23m ago

"Do not fall into the trap of anthropomorphizing Larry Ellison"

https://www.youtube.com/watch?v=-zRN7XLCRhc?t=2300

thedougd•1h ago

In my organization we've worked hard for several years to insulate ourselves from Oracle.

We've implemented aggressive desktop monitoring and blocked downloads from Oracle to avoid the Java subscription. Where it's needed, an OpenJDK distribution is used.

Where we must still use Oracle database, in some small, bespoke legacy use cases (heavy PL/SQL), we've moved to RDS with license included to avoid the direct relationship with Oracle. I get it, a big RAC customer will have a harder time, but they'll also likely have alternatives (e.g. SAP implementation to HANA).

I know of at least one vendor (Hyland) who's dropping Oracle support and providing a migration path to MS SQL. Shame not a FOSS database, but still a trend away from Oracle.

otterley•1h ago

Aren’t contract expiration dates distributed over time? Why would now be a particularly vulnerable time? Granted, we’re coming up on the end of the calendar year, but 2025 doesn’t feel particularly special.

foobarian•1h ago

Also, how does one come upon these kinds of bits of industry lore? Asking for a daytrader friend. Ahem

cj•14m ago

I've found the only stocks where I can personally be successful stock picking are companies I have some sort of unique relationship or experience with that is uncommon or unavailable to sophisticated investors or analysts.

E.g. you're an IT admin at Big Co overseeing software contracts. You can often get interesting insights by looking at things like how aggressive their sales reps are with end of quarter discounts (how desperate are they to meet numbers that quarter?). Or if you see a company completely dropping the ball within your org, but on CNBC you constantly hear how great the company is by pundits and analysts -- maybe you know something the pundits don't.

Often times the consensus view of a stock trails reality by a few weeks to a month - there's a lot of non-public but also non-confidential information that isn't readily available to analysts, but exposed to employees of customers/vendors/partners/end-users.

TLDR: when stock picking or day trading, pick companies within the niche of the world where you're a SME.

stronglikedan•1h ago

I also have to wonder how many customers actually signed a 10 year contract (which is extremely long for software of all things), unless I'm misunderstanding the comment.

financetechbro•33m ago

Yeah 10yr long contracts aren’t the norm. Typically 3-5 years if it’s not on annual basis

lateforwork•1h ago

> If 10% to 20% of those enterprises fail to renew for another 10 years

Think about how hard it would be for you to switch from iPhone to Android. Now multiply that by 10000. That's how hard it is to switch enterprise software.

collingreen•1h ago

Now imagine you save $10M a year doing it

jt2190•1h ago

Why would any Enterprise Software vendor leave $10M on the table?

boringg•49m ago

Lack of capability, mismanagement, misinformation to name a few

esafak•29m ago

Because vendors are not fungible in the eyes of the buyer.

arjie•19m ago

Just not that straightforward in practice. You have all of these product lines that people are building that you're hoping will grow the business. They all depend on your backend stuff that's just an implementation detail. You have to somehow convince everyone across the org to stall their product development to perform a "migrate to Postgres" thing? It's not going to be easy.

There was a recent big company that posted on Twitter about "shutting down our last Oracle server" and that was the last thing in a multi-year process or something like that.

Coordination is sometimes harder than the technology itself.

sharpy•1h ago

Once upon a time, our team was paying Oracle $6 million a year in DB licenses alone. We ended up building our own bespoke storage solution.

Invictus0•30m ago

Now imagine the switch is going to cost you $100M in downtime and change consultants, if it succeeds at all, and your new provider will up the price in a few years time anyway.

PunchyHamster•26m ago

Then just don't migrate to MS SQL but to Postgres

0cf8612b2e1e•23m ago

Big enterprise businesses want support contracts for someone to blame. Yes, you can find Postgres support, but switching to a different devil is the far more common option.

Invictus0•13m ago

"just"

0cf8612b2e1e•24m ago

It’s rarely that clean. Sure, there is the immediate sticker price, but you have to factor in the migration costs as well. Depending on how deep the integration goes, it could take years of effort. All of which is going to take political capital to get people to migrate perfectly working systems without any operational gain. Plus you have the old guard who actively fight you-maybe they have spent their career in Oracle and that is all they know.

Even if you do move mountains and make it happen, suddenly any outages after the transition become your fault. “This never happened on the old system.”

mystifyingpoi•18m ago

True words. I've seen this technique used to force people to think realistically. It goes like this (example):

- Is it possible for a 3 person team to manage 1000 distinct Kubernetes clusters?

- No way in hell!

- What if we hypothetically pay you $2M salary each?

- Well, let me think about it, we could figure this out...

0cf8612b2e1e•8m ago

How is that realistic? If you offer me insane money, I will of course bluster that I can do the impossible. When I inevitably fail, I still have a pocket full of cash.

mystifyingpoi•15m ago

It's not really going to benefit ME anything. It will benefit my employer this amount. I might get an extra bonus for successful migration, but it's peanuts compared to the savings.

So in such situation, I'd be tempted to actively oppose this initiative.

justapassenger•1h ago

Oracle has been selling large enterprise contracts for many decades and those enterprises were looking to migrate off Oracle since then too (I've been working on a project like that almost 20 years ago, at my first real job).

websiteapi•1h ago

Sources for any of these claims?

moralestapia•59m ago

>In business since 1977.

>Market cap of half a trillion.

>Somehow they're "in trouble".

Mega LMAO.

SvenL•32m ago

There are enough examples which one might mention here: Nokia, MySpace, Yahoo, Kodac, AOL, Blockbuster, toys‘r‘us … all ones big. Yes, oracle might not vanish, but it definitely needs some change.

moralestapia•26m ago

???

None of those were in business since 1977 (w/ the exception of Nokia, which I would argue is still a successful company today, I wouldn't put it on that list).

None of those were ever valued (even close to) half a trillion, even adjusting for inflation.

kev009•39m ago

Probably nobody here is an Oracle fan but the miss on sentiment like this is you could have written the same comment minus OpenAI 10 and maybe even 20 years ago.

jl6•25m ago

Definitely true, but a lot of Oracle sites are that way because of decisions made decades ago. Opportunities to re-architect are rare. But when those opportunities do come along, nobody is choosing Oracle RDBMS for their future state.

What I do see is orgs choosing other Oracle apps like ERP which sneak the Oracle RDBMS in as part of the bundle.

Anyone using Oracle purely as a database is going to migrate to PostgreSQL eventually, but there are a lot of orgs where the database is just one part of a wider Oracle ecosystem with world-class vendor lock-in features.

bdangubic•21m ago

I read very similar comments … 10-15 years ago

mbesto•15m ago

Oracle's growth and value is in SaaS apps (NetSuite) and their cloud offering, not DB licensing. The economic impact of enterprises moving off Oracle DB is massively overstated here.

rachr•1h ago

It seems fitting. They destroyed Sun, destroyed Java, destroyed any developer or customer goodwill...and now they are destroying themselves.

vips7L•1h ago

Java is in the best shape it's ever been in. Jdk development and performance are through the roof and the developer experiences gets better with every release.

davey48016•45m ago

Java's in great shape now, but the period between when Oracle bought Sun (~2010) and about 2017 wasn't great, and there was a lot of concern about Java's future. I think most people who moved away from Java then haven't looked back.

vips7L•21m ago

I believe that is mostly due to Sun's stagnation and lack of funding. Oracle released Java 7 in 2011 and Java 8 in 2014, which is arguably the start of modernizing Java.

0cf8612b2e1e•13m ago

I assumed it was Kotlin and/or Android. Oracle otherwise seemed fine to treat Java like IE6. It was only as alternatives (rise of Go, Rust, Clojure, etc) increasingly made the language look bad that really started to push development.

jeffbee•1h ago

The idea that Java has been destroyed is pretty wild. I don't see how that belief could survive contact with the real world.

collingreen•1h ago

My assumption is the poster wants to imply Oracle destroyed the good will and interest for people to start new Java projects after the licensing changes and subsequent shakedown. Java clearly still runs all over the place and will for a while (although plenty of people trying to keep java but get away from oracle).

manphone•1h ago

The Java goodwill is mostly gone and I see zero new orgs trying it so while Java is still alive and well the mindshare has definitely been squandered given the capability that Java has.

stronglikedan•1h ago

new orgs chase the shiny new things. nothing new there

dangus•40m ago

And then those new orgs become established orgs and some old orgs decline.

It’s not even really a “chase,” it’s a question of “if I’m building something new, what am I choosing?”

Eventually that momentum can turn into the old thing being worth actively removing.

jeffbee•54m ago

Java is one of the giants and there are tons of existing and new projects that use it. Hotspot is the choice for high performance programs. Approaching its performance even with C++ requires a dedicated team of experts. Look at QuestDB, or Netflix, as current examples of projects choosing Java.

The languages that get a lot of airtime on HN like Rust, Go, and OCaml are way down in a tier of languages that get a lot of blog posts but enjoy relatively little traction in reality.

dangus•43m ago

The languages that get a lot of airtime on HN are the ones the young people will just use by default.

Hotspot is the current choice for high performance programs, but is Rust lower performance in some way or are the only downsides related to its younger age?

It’s perhaps useful look at what languages brand new projects are being started with rather than just looking at what languages large established companies like Netflix are choosing.

kakacik•30m ago

Depends where you are, in startup world definitely yes. Elsewhere, not so much.

Companies couldn't care less about the underlying platform or language, they want reliability, stability and tons of easy to find people who can work with it from Day1. Java delivers all that, and will keep delivering for upcoming decades. Big businesses and big money love this (or hate the least out of IT stacks).

jeffbee•27m ago

Rust is not inherently slower but then again neither are C and C++, but in practice all of those tend to be less efficient than realistic Java systems. Rust is displacing C in contexts where Rust's less than amazing performance are not noticeable in contrast to C's also-not-amazing level of performance. And I also think there is a cognitive bias under which a developer will reach for Rust to supplant a legacy C program, because that developer reflexively dislikes managed language runtimes.

ecshafer•42m ago

The fact of the matter is that you read through a lot of these start up blogs on how they scaled X technology to some amazing number like 1000 users a day or whatever. But your average Java Spring app on Postgres is doing some far heavier workloads.

snarf21•12m ago

To be fair, Oracle acquired Java (via Sun) specifically so they could sue Google for billions. They may not have killed Java but it wasn't altruism.

orochimaaru•1h ago

Java is one thing they did right. Most enterprises are looking to move away from Oracle. I think there will be niche cases where rewrites don’t make sense. But for one of the big telecom providers I work for - the decision was made in 2020 to move off of Oracle. It’s not a flash cut but we’ve significantly reduced reliance. There are some critical apps that are still on it, but those are capped in maintenance mode until their replacements are ready.

swarnie•1h ago

I still have Java on just over 1k enterprise devices, its dead?

voakbasda•53m ago

More like a zombie. It is still shuffling along, but the life left it long ago.

vkou•45m ago

Java's not gone anywhere, but it's been years since I've interviewed anyone who has made it their language of choice. Developer sentiment for it isn't exactly great.

A decade ago, a good ~80% of applicants chose to use it or C#.

I personally don't have any issues with working with it, but nobody's learning it outside of work.

On the other hand, it is quite easy to learn, so there's that going for it.

wiseowise•35m ago

Destroyed Java? What are you even on, lol? Oracle resurrected Java.

cmiles8•1h ago

Oracle bet the farm on AI, and that’s starting to look like a really bad idea. Commentary about delaying new data center buildouts for AI is freaking out the markets today that the bubble burst is stating. Credit default swap values are also now heavily leaning towards a bunch of AI investments going bust.

1970-01-01•1h ago

Tip: Ask your AI to design their DCs so that they can be easily converted into low income apartments. When you hear the bubble popping sound, it just means you're ready to pivot into the rental business.

antoniuschan99•57m ago

Will be interesting. Also the Paramount Skydance takeover bid is still pending. Paramount is ~15 billion market cap and the deal for Warner is ~77 billion.

deepriverfish•49m ago

I've never heard good things about Oracle, I don't understand how people keep using their products.

knallfrosch•39m ago

Then it's probably business requirements.

Single-sign on, in-person support, certificated software, offering training courses to onboard people, undeletable logs, help with upgrading major versions..

All from a single vendor so you can pick up the phone, yell "fix it" and go on with your day.

redox99•21m ago

Oracle Cloud has really good price and many locations. That's why I use it.

0cf8612b2e1e•16m ago

It is legacy decisions going back decades. Thirty years ago, you did not have a wealth of database alternatives. You picked Oracle and built the business around it. More and more business processes accumulate around the data store, all using some proprietary Oracle extensions. Eventually, the thought of disentangling the dependency is so daunting you are locked in forever until an existential risk materializes.

paulpauper•11m ago

This is such fake news. Oracle was paid $300 billion by Open Ai to develop server infrastructure, not that it's betting $300 billion on Open AI. The headline gets it 180 degrees backwards. That is why Oracle stock surged so much a few months ago. Oracle stock is still up 15% this year.

chickensong•11m ago

This particular flavor of schadenfreude is scrumptious.

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