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WHEN: Today, Monday, September 19th
WHERE: CNBC's "Squawk on the Street"
Following is the unofficial transcript of a FIRST ON CNBC interview with Oracle CEO Mark Hurd on CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET) today, Monday, September 19th. Following is a link to the interview on CNBC.com:http://video.cnbc.com/gallery/?video=3000552197.
All references must be sourced to CNBC.
JON FORTT: HERE WITH ME IS ORACLE CEO MARK HURD. WE'RE GETTING DEEP THIS MORNING INTO ORACLE OPENWORLD AT A TIME WHEN THE CLOUD BATTLES ARE AS INTENSE AS EVER. AMAZON TOOK A SHOT AT YOU GUYS, SPECIFICALLY, LAST YEAR. THEY'RE TRYING TO MOVE INTO DATABASE. YOU GUYS HAVE CALLED THEM OUT THIS MORNING. TELL ME, WHAT ARE THE TECHNOLOGY INNOVATIONS THAT YOU GUYS ARE PUSHING THIS YEAR TO TRY TO CONVINCE PEOPLE THAT AS LARRY ELLISON SAID YESTERDAY, AMAZON'S LEAD IS OVER. TALK ABOUT DATABASE, TALK ABOUT THE APPLICATIONS.
MARK HURD: WELL JON, LISTEN, A LOT OF STUFF GOING ON AT THIS EVENT. WE HAVE OVER 60,000 PEOPLE HERE, SO A LOT OF CUSTOMERS HERE. THIS IS REALLY GOING TO BE, JON, AN EXTENSION OF THE STRATEGY WE'VE BEEN TALKING ABOUT FOR SEVERAL YEARS. OUR CLOUD STRATEGY HAS BEEN TO GO ALL-IN ON THE CLOUD. WE STARTED WITH APPLICATIONS OR WHAT'S CALLED SAS. LAST YEAR WE REALLY FOCUSED ON PLATFORM. PLATFORM AS A SERVICE OR PAS. THIS YEAR, TO YOUR POINT, AND LARRY MENTIONED IT LAST NIGHT, FOCUSING ON INFRASTRUCTURE AS A SERVICE. NEXT GENERATION SUITE OF SERVICES AND INFRASTRUCTURE. BUT IT'S ALSO, AGAIN, AN EXTENSION OF THE ENTIRE STRATEGY WE'VE BEEN WORKING ON FOR SEVERAL YEARS.
FORTT: WHAT GIVES YOU CONFIDENCE THAT YOU UNDERSTAND THE RATE AT WHICH NEW SOFTWARE LICENSE, WHICH IS A NUMBER THAT WALL STREET LIKES TO LOOK AT WITH YOU GUYS, THE RATE THAT THAT IS SORT OF SLOWING DOWN WILL CONTINUE TO BE OUTSTRIPPED BY CLOUD GROWTH? I BELIEVE SAFRA KATZ, YOUR OTHER CEO WHO WE'LL TALK TO TOMORROW, MENTIONED ON THE CALL THAT THE DOLLAR GROWTH IN CLOUD HAS NOW OUTSTRIPPED THE DOLLAR DECLINE IN NEW SOFTWARE LICENSE. ARE YOU CONFIDENT THAT THAT RATE OF DECLINE IN NEW SOFTWARE LICENSE WON'T ACCELERATE AND THAT THE RATE OF GROWTH IN CLOUD WILL?
HURD: I WOULD SAY, JON, JUST LOOK AT THE NUMBERS, RIGHT? SO IF YOU WENT SEVERAL YEARS AGO, WE MADE THE DECISION AS PART OF THIS OVERALL STRATEGY TO GO ALL-IN ON THE CLOUD. WE CHANGED OUR ORGANIZATION TO DO THAT. WE CHANGED OUR INCENTIVES TO DO THAT. IN ADDITION TO REALLY SEEING A LOT OF GREAT PRODUCTS. IN Q1, OUR CLOUD GROWTH IN DOLLARS COMBINED WITH OUR NEW SOFTWARE LICENSE DOLLARS GREW 16%. SO REALLY, TO US, IT'S THE COMBINATION OF THOSE TWO THAT ARE IMPORTANT. AND THE FACT THAT CLOUD GROWTH WAS SO HIGH – I MEAN, WE GREW OUR CLOUD IN Q1 82%. I JUST WANT TO REPEAT THAT. WE GREW 82%. SO THAT IS THE SEVENTH CONSECUTIVE QUARTER WHERE OUR GROWTH RATE HAS INCLINED. OUR GROWTH RATE. SO OUR GROWTH RATE HAS BEEN GOING UP AS OUR DOLLAR – SIZE OF OUR CLOUD HAS GOTTEN BIGGER. AND THEN WHEN YOU COMBINE THAT NUMBER WITH NEW SOFTWARE LICENSES, WE HAVE AGGREGATE GROWTH AND THAT'S BEEN OUR STRATEGY.
FORTT: HOW LONG IS THAT GOING TO CONTINUE, BY THE WAY? BECAUSE NORMALLY, WHEN THE DOLLAR AMOUNTS GET BIGGER, THE GROWTH RATE COMES DOWN. DO YOU HAVE A SENSE BASED ON WHERE THE INFLECTION POINTS ARE AND AT WHAT POINT – AND EVENTUALLY IT MUST – AT WHAT POINT THAT TOPS OUT?
HURD: WELL, IF YOU LOOK AT OUR BOOKINGS NUMBERS, WHICH IS, REALLY, PROBABLY A GOOD INDICATOR OF WHAT WE DESCRIBED. OUR BOOKINGS NUMBERS WE'RE EXTREMELY BOOKED MORE CLOUD BOOKINGS LAST YEAR THAN ANYBODY IN THE INDUSTRY. WE ALSO PREDICTED THAT OUR CLOUD BOOKINGS THIS YEAR WOULD BE VERY STRONG FOR THE ENTIRE YEAR, NOT JUST Q1. WHICH WOULD INDICATE THAT YOU WILL SEE CONTINUED CLOUD GROWTH FOR AWHILE. YOU GOT TO UNDERSTAND, JON, FOR US, IT ISN'T JUST ABOUT THE CLOUD ITSELF. IT'S NOT A STATIC THING. WE CONTINUE TO ADD MORE SERVICES, MORE PRODUCTS. YOUR COMMENT ABOUT INFRASTRUCTURE AND LARRY'S COMMENTS LAST NIGHT, WE'RE ADDING MORE SAS PRODUCTS. ACTUALLY, WE'RE ADDING NOT JUST MORE SAS PRODUCTS, BUT WE'RE NOW LOCALIZED IN MORE COUNTRIES. SO WE HAVE MORE COUNTRIES, MORE PRODUCTS AND SO WE ARE – IT MAY NOT COME ACROSS WITH ALL OF MY COMMENTS – WE ARE REALLY OPTIMISTIC ABOUT OUR POSITION IN THE CLOUD AND OUR GROWING LEADERSHIP IN MANY OF THESE SERVICES.
FORTT: YOU ARE A GLOBAL BUSINESS, AS YOU MENTIONED. YOU SERVE GOVERNMENTS. I KNOW THIS IS SENSITIVE, BUT NATIONAL SECURITY AND SECURITY ISSUES ON A LOT OF PEOPLE'S AND INVESTORS' MINDS THIS MORNING. IS THE TECHNOLOGY IN DATABASE, FOR EXAMPLE, GETTING BETTER AT A RATE THAT IT'S GOING TO BE EASIER TO CATCH THE BAD GUYS NO MATTER WHAT GOVERNMENT YOU'RE SERVING, NO MATTER WHAT COUNTRY YOU'RE TALKING ABOUT, EASIER TO CATCH THE BAD GUYS WHEN WE HAVE INCIDENTS LIKE WE DID IN NEW YORK AND NEW JERSEY OVER THE WEEKEND?
HURD: WELL JON, FIRST, WE TRY TO HELP IN EVERY WAY THAT WE CAN. BUT REALLY WHEN YOU LOOK AT IT, SECURITY CONTINUES TO IMPROVE IN THE DATABASES ITSELF, PERFORMANCE CONTINUES TO IMPROVE IN DATABASE, ANALYTICS CONTINUE TO IMPROVE IN DATABASE AND ALL THOSE BECOME THE NECESSARY PARTS OF HELPING THAT EFFORT THAT YOU DESCRIBED.
FORTT: TALK TO ME ABOUT ARTIFICIAL INTELLIGENCE, BECAUSE THAT'S ONE OF THE BIG TOPICS IN ENTERPRISE THESE DAYS. YOUR FRENEMY MARC BENIOFF OVER AT SALESFORCE TRIED TO STEAL A LITTLE OF YOUR THUNDER BY ANNOUNCING SALESFORCE EINSTEIN A COUPLE DAYS AGO. WHAT'S ORACLE'S APPROACH TO APPLYING THAT TECHNOLOGY TO WHAT YOU ARE DOING IN THE CLOUD?
HURD: YEAH, WELL, AS LARRY TALKED A LITTLE BIT ABOUT LAST NIGHT – I'M REFERRING BACK TO HIS KEYNOTE LAST NIGHT WHERE HE RELEASED A NUMBER OF PRODUCTS – WE TALK NOT JUST ABOUT A.I., BUT REALLY ABOUT MACHINE-TO-MACHINE LEARNING AND THE APPLICATION OF THAT DIRECTLY WITH OUR EXISTING SERVICES. SO THE INTEGRATION OF MACHINE-TO-MACHINE LEARNING WITH MANY OF OUR APPLICATIONS, SO THAT YOU'LL ACTUALLY SEE SOME OF THE USER INTERFACE WORK CHANGE. I MEAN THAT YOU'RE HOLDING A DEVICE IN YOUR HAND. AND I THINK, YOU KNOW, FIVE YEARS FROM NOW, TEN YEARS FROM NOW, PEOPLE WILL BE LOOKING BACK AT US PUNCHING ON A PIECE OF GLASS AND WONDERING EXACTLY WHAT ALL OF US WERE DOING. THIS NOW HAS THE OPPORTUNITY FOR US THROUGH TEXT AND THROUGH VOICE TO ACTUALLY DO SOME OF THE THINGS YOU SEE IN CONSUMER IN ENTERPRISE APPLICATIONS. SO YOU COULD LITERALLY ASK ABOUT YOUR PAY, YOUR POSITION, ORDER SOMETHING THROUGH PROCUREMENT. ALL THROUGH MACHINE-TO-MACHINE PATTERN MATCHING LEARNING. AND THAT'S WHAT MACHINE-TO-MACHINE IS, IT'S REALLY PATTERN MATCHING.
FORTT: YOU ANNOUNCED AN ACQUISITION OF PALERRA, WHICH HAS TO DO WITH SECURITY IN THE CLOUD. THEY ALSO SERVICE SOME OTHER CUSTOMERS, INCLUDING MICROSOFT. TELL ME HOW MUCH OF YOUR STRATEGY WHEN YOU LOOK AT ACQUISITIONS, WHEN YOU LOOK AT TECHNOLOGY YOU WANT, IS VERTICAL WITHIN THE ORACLE CLOUD. HOW MUCH OF IT HAS TO DO WITH SERVICE AND CUSTOMERS, NO MATTER WHICH CLOUD THEY'RE USING?
HURD: WELL, IT REALLY IS THE LATTER. WE HAVE ALL OF OUR ORACLE TECHNOLOGIES IN OUR CLOUD. BUT I THINK AS THE INDUSTRY, IN FACT IN MY KEYNOTE, I'LL TALK ABOUT THE FACT THAT I DON'T THINK YOU'RE GOING TO SEE CUSTOMERS WANTING TO DEAL WITH 50 CLOUDS 0R 40 CLOUDS, OR ANYTHING LIKE THAT. I THINK IT WILL ACTUALLY BE A FEW. THEREFORE, IN OUR CLOUD, WE HAVE TO KEEP LOTS OF TECHNOLOGIES AVAILABLE TO OUR CUSTOMERS. SO IF YOU GO TO THE ORACLE CLOUD, YOU JUST WON'T FIND JAVA AS A PROGRAMMING LANGUAGE. YOU'LL FIND JAVA SCRIPT, YOU'LL FIND PYTHON, YOU'LL FIND GROOVY, ALL SORTS OF CAPABILITIES BECAUSE THE CUSTOMER DOESN'T WANT TO COME TO THE ORACLE CLOUD AND THEN GO TO ANOTHER CLOUD AND ANOTHER CLOUD TO GET THINGS DONE. SO YOU'LL SEE A WHOLE SUITE OF CAPABILITIES IN THE ORACLE CLOUD.
FORTT: THEY ARE GIVING ME ONE MORE QUESTION. AND SO, I WONDER THIS. WHICH OF THE ENTERPRISE PLAYERS HAS WHAT IT TAKES TO REALLY SURVIVE AND THRIVE AT SCALE? YOU'RE GOING TO SAY ORACLE, I KNOW. AMAZON IS THE LEADER. MICROSOFT?
HURD: WELL, THEY ARE ALL A LITTLE DIFFERENT, JON.
HURD: I APPRECIATE THE OPPORTUNITY. I THINK REALLY THE REALITIES ARE ALL A LITTLE DIFFERENT. WHAT ORACLE IS DOING DIFFERENT FROM ANY OF THE COMPANIES YOU'VE REALLY MENTIONED IS, OUR STRATEGY IS REALLY A WHOLE SUITE OF CAPABILITIES AT THE SAS APPLICATION LAYER, PLATFORM LAYER, AND INFRASTRUCTURE LAYER. LONG RUN, WE BELIEVE SUITES WILL WIN. SUITES ARE BEST TO BREED CAPABILITIES. WE THINK WE'RE IN A UNIQUE POSITION TO TAKE ADVANTAGE OF THAT. TIME WILL HAVE TO TELL WHO EMERGES AS OUR CLOSEST COMPETITOR.
FORTT: NOT TAKING THE SHOT, BUT MARK HURD.
HURD: THANKS, JON.
FORTT: FIRST ON CNBC FROM ORACLE OPENWORLD. WE HAVE SAFRA KATZ TOMORROW. SO WE ARE LOOKING FORWARD TO THAT AS WELL. BACK TO YOU GUYS IN NEW YORK.
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