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August 3, 2016

Salesforce CEO Marc Benioff unimpressed by Oracle’s $9.3 billion Netsuite deal

News: Oracle is getting an increasing amount of revenue from the cloud.

By Alexander Sword

Salesforce CEO Marc Benioff is reportedly unconcerned by Oracle’s $9.3 billion buy-out of Netsuite.

Benioff said that Oracle was “scrambling to get growth in the cloud”, adding that it “obviously [had] not met its goals”, in comments to Business Insider.

Asked if he was concerned, he said “no”. He said that Oracle was the “farthest behind” in the cloud market, behind Salesforce, Amazon, Microsoft and Google.

Oracle announced on 28 July that it was acquiring Netsuite for $9.3 billion in a move to accelerate its cloud strategy. The buy is Oracle’s sixth major acquisition this year, after buying Opower, Textura, Crosswise, Ravello Systems and AddThis.

In a statement, Oracle referred to NetSuite as the “very first cloud company”, with CEO Mark Hurd stating that the cloud applications of the two vendors were “complementary and will coexist in the marketplace forever”.

“We intend to invest heavily in both products—engineering and distribution,” said Hurd.

The main advantage Oracle will hope to gain from buying NetSuite is being able to reach the mid-tier cloud market.

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The cloud is becoming an increasingly important part of Oracle’s revenue mix.

In the company’s Q4 2016 results, cloud plus on-premise software revenues were $8.4 billion, flat in U.S. dollars and up 2 percent in constant currency. Cloud software as a service (SaaS) and platform as a service (PaaS) revenues were $690 million, up 66 percent in U.S. dollars and up 68 percent in constant currency.

Total cloud revenues, meanwhile, including infrastructure as a service, were $859 million, up 49 percent in U.S. dollars and 51 percent in constant currency.

At the time, Oracle Executive Chairman and CTO, Larry Ellison, commented that the results gave the company a “fighting chance” to be the first cloud company to reach $10 billion in SaaS and PaaS revenue.

Zach Nelson, Chief Executive Officer, NetSuite said that NetSuite would benefit from Oracle’s global scale and reach, while founder, CTO and Chairman Evan Goldberg said that the combination would be a “winner for NetSuite’s customers, employees and partners."

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