Oracle Faces Serious Challenges Following Death of Co-CEO Mark Hurd

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Database giant Oracle faces an uncertain future in a rapidly changing technology industry following the death of co-CEO Mark Hurd on Friday. But even before his passing, the company was struggling to keep up.

Under Hurd, Oracle embarked on an ambitious strategy to compete directly with tech titans like Amazon and Microsoft in cloud computing, in which companies sell on-demand computing to business clients. However, Oracle has failed to gain significant traction, analyst firm Gartner noted in a report in July, which categorized Oracle as a “niche player.”  

In 2009, Oracle founder Ellison ridiculed cloud computing, referring to it as a passing fad. Fast forward a few years, and he changed his tune and cited cloud computing as instrumental to Oracle’s future.

One reason for Oracle’s reversal with cloud computing is Hurd, said Constellation Research principal analyst and founder R “Ray” Wang. Hurd, who joined Oracle in 2010, preached Oracle’s shift to cloud computing, and acted as the company’s public face for the strategy, taking the occasional interview about the topic with reporters instead of Ellison or the more press-averse co-CEO Safra Catz.

“He was basically the big evangelist for cloud,” Wang said. “He made Oracle more approachable.”

Hurd’s death is a major adjustment for Oracle and Ellison, a personal friend of Hurd’s, Wang said. “They were tennis partners,” Wang said. “Larry gave Mark a home after H.P.,” he added, referring to Hurd joining Oracle in 2010 after leaving Hewlett Packard following allegations of an inappropriate relationship.

One of Hurd’s biggest responsibilities at Oracle was overseeing its sales team, including recruiting a young sales staff and creating sales bootcamps about how to sell cloud products and services, Wang said. Previously, Oracle had no such training programs.

Still, Oracle never managed to seriously seize market share from competitors like Amazon or Microsoft. In September 2018, long-time Oracle executive Thomas Kurian stepped down to become leader of Google’s Cloud computing unit, which is ranked above Oracle in market share.

It’s no wonder that Oracle appears to now be shifting its business strategy from selling computing on-demand to selling cloud versions of its database technologies and business process management software, as Bloomberg News reported in October. Instead of competing directly with Amazon and Microsoft, Oracle is copying the playbook of business software rival Salesforce by selling cloud-software rather than computing infrastructure.

“They are now working on some of the industry cloud solutions,” said Forrester analyst Liz Herbert in an email. “Mark has stated that industry solutions represent even more potential revenue for Oracle than the horizontal ones.”

Some financial analysts are pleased with the new strategy, despite one from Credit Suisse describing Oracle’s latest quarterly results as mixed. Even though Oracle had $9.22 billion in first quarter sales, missing analyst estimates, Credit Suisse said in a research note that cloud-versions of its enterprise software and database services would one day be a source of major sales.

But Morgan Stanley analysts were less enthusiastic, saying that a recent sales reorganization at Oracle and the leave of absence that Hurd took in September “add execution risk, adding to our fears revenue could continue to disappoint versus consensus expectations through the year.”

Herbert said that under Hurd, Oracle is “now talking more about being a partner who can help their customers transform business.”

“Time will tell if Mark will get credit for this major transformation but clearly it began and was announced under his reign,” she added.

It’s unclear whether Oracle will replace Hurd as co-CEO. If it does, it could choose among several internal candidates including executive vice president for worldwide sales and marketing Dave Donatelli, chairman for Europe, Middle East, Africa, Asia Pacific, and Japan Loïc Le Guisquet, and chief corporate architect Edward Screven, news site Business Insider speculated in October.

Wang said Oracle may also chose executive vice president of cloud infrastructure Don Johnson, a former Amazon Web Services executive, or Steve Miranda, the executive vice president of the company’s applications unit.  

Regardless of whether it fills the co-CEO role, the company needs growth. In June, Oracle said that its overall sales for fiscal 2019 were $39.5 billion, slightly down from the $39.8 billion it logged for 2018.

In the rapidly changing technology landscape, and with fast-growing competitors like Amazon and Microsoft, Oracle can’t afford to sit still. 



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