Pro Analysis

Breakingviews: Oracle's cloud software growth is not without problems

Mark Hurd, CEO of Oracle.
Mark Neuling | CNBC
Mark Hurd, CEO of Oracle.

Oracle's outlook is looking brighter thanks to the cloud. Larry Ellison's $200 billion software goliath generated only a 3 percent rise in quarterly revenue, but its web-based storage and services business grew much quicker. The company's transition away from traditional databases also isn't hurting nearly as much as expected, thus setting up potential gains in profit. Amazon keeps growing fast, too, though, which means Oracle's forecast is only partly sunny.

Older software developers have been slow-footed to switch to cloud-based alternatives despite the fact that many enterprises find it simpler, cheaper and easier to save information and run applications on remote servers. Surrendering the upfront license fees is what has been tough. Cloud services involve promises of future payment instead. Conversion can depress revenue for a time, even though customers tend to eventually pay more for the convenience of not having to run their own data centers.