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

by pera • 7 months ago

136 127 7 months ago

finance.yahoo.com

taylodl3• 7 months 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• 7 months 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• 7 months 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.

cameldrv• 7 months ago

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

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

thedougd2• 7 months 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.

panarky2• 7 months ago

I watched from the sidelines with grim interest as my organization tried to decide between Oracle and SAP.

The team defined requirements, ran an RFP and demo process and did site visits to clients of each company. The SAP reference clients weren't exactly thrilled with SAP, the product was too complex and too expensive, but it was rock solid and SAP was a reliable partner. The Oracle reference clients had the usual complaints about features and flexibility, but their real beefs were that Oracle was a predatory and untrustworthy partner.

Oracle made claims in their RFP response that were proven false in the demos and site visits, confirming the claims from reference clients about the company's ethics. In contrast, SAP's RFP responses were validated by the team's due diligence.

So management decided to go with SAP. In response, a senior Oracle person tracked down all of the company's board members and made outrageous claims of incompetence against the company's executives, and alluded ominously about bad faith and conflicts of interest.

Oracle was completely hostile and off the rails when they figured out they lost the deal. I will never, ever do business with Oracle.

Unfortunately, while the SAP application seemed solid, the organization went with their HANA database which was astronomically expensive, and had a bad habit of returning different and provably incorrect results to the same deterministic SQL query every time it ran, and then the entire database would crash for all users.

senectus1• 7 months ago

yup same thing here. their bullshit legal antics has made us allergic to oracle

otterley• 7 months 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• 7 months ago

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

stronglikedan2• 7 months 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.

lateforwork• 7 months 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.

collingreen3• 7 months ago

Now imagine you save $10M a year doing it

anal_reactor• 7 months ago

Once technologies mature enough, they converge to roughly the same set of features. Case in point: I was an avid Windows user, but then decided to switch to Linux. While it was problematic, it was much less so than I had anticipated.

Imagine switching between Firefox and Chrome. Between Ford and Toyota. Between Seagate and Western Digital. Between USB-C and Lightning.

justapassenger• 7 months 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• 7 months ago

Sources for any of these claims?

moralestapia3• 7 months ago

In business since 1977.
Market cap of half a trillion.
Somehow they're "in trouble".

Mega LMAO.

SvenL2• 7 months 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.

kev0092• 7 months 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• 7 months 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• 7 months ago

I read very similar comments … 10-15 years ago

mbesto• 7 months 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• 7 months ago

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

vips7L3• 7 months 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• 7 months 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.

jeffbee4• 7 months 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.

collingreen3• 7 months 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).

snarf21• 7 months 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.

bigmutant• 7 months ago

Pretty common attitude from folks who have never worked in one of the BigTech companies where Java rules (Amazon being a prime example). Since they never encounter Java in the "SF-style Startup" world, they assume that it must be dead. Meanwhile hundreds-of-thousands of Engineers deal with hundreds-of-millions (billions?) of lines of Java every day

orochimaaru• 7 months 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.

swarnie2• 7 months ago

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

voakbasda• 7 months ago

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

vkou• 7 months 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• 7 months ago

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

cmiles8• 7 months 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 starting. Credit default swap values are also now heavily leaning towards a bunch of AI investments going bust.

cyanydeez2• 7 months ago

Well, lets be fair here. Oracle is a predatory company that extorts its customers for the highest price. Adopters of AI in the enterprise are going to be building such shitty and shoddy products using AI that they'll need huge support contracts just to keep these poorly made AI products alive.

Adding AI to the oracle infrastructure cancer will certainly a boon to it's business model. Sure it might kill 10-20% of it's customers, but if it can become a pure AI parasitic play and spread it's seed, it's going to grow.

People dont realize that capitalism is size agnostic: As long as you can sell 1 boner pill for $1 million, you only need one customer rather than say 1 million pills for 1$. And, isn't it easier to keep one customer happier if they pay your bills?

1970-01-01• 7 months 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• 7 months 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• 7 months ago

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

knallfrosch• 7 months 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.

cyanydeez2• 7 months ago

go on with your day

Unless they decide to ~~extort~~audit you.

redox992• 7 months ago

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

ElectricalUnion2• 7 months ago

On Oracle Cloud Infrastructure, on my region, "Oracle Database - Base Database Service" (single node database) costs the same as a much more powerful cluster of managed "Database with PostgreSQL", or a managed cluster of "MySQL HeatWave".

Under most circumstances, you should still pick non-oracle-DB on Oracle Cloud Infrastructure.

0cf8612b2e1e5• 7 months 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.

grandiego• 7 months ago

In my experience, it is from technical management in medium/big companies you'll listen some good things about Oracle as a database product (regardless of its actual merits), like stability, scalability, compliance checks, and other "enterprisy" features (like database encryption). Also, it is offered as a default database option for many enterprise applications from their vendors. While many people points to Postgresql as "the alternative", in many places outside USA its commercial support is not available, or too limited. Other commercial alternatives (like MSSQL) have the (more or less) the same bad reputation regarding licensing costs.

on_the_train2• 7 months ago

My old boss literally said they don't trust other databases. I tried to push for postgres. But they insisted only oracle is professional. Our software only worked with an oracle backend. I no longer work there.

ElectricalUnion2• 7 months ago

Isn't the whole "thing" about JPA (and all other ORMs ever) that you're supposed to "use it" instead of directly doing well optimized native queries on your database so that you can jump ship if the database provider turns out to be shit?

rurp• 7 months ago

A few years ago I had the head of a devops team at a large company say that the project I was working on should switch from postgres to a "real" enterprise database like oracle. This happened while we were having zero issues with postgres, it was a perfect fit for our case, and it wasn't even relevant to the conversation. He just saw that's what we were using and reflexively thought that of course we should use Oracle.

It blew my mind at the time. Oracle is so widely hated among developers, entirely justifiably, that this guy's take really shocked me. I've literally never heard another glowing recommendation for that company before or since.

prepend3• 7 months ago

In 1998 I worked for a small nasdaq company that had a successful software as a service product that was growing quickly.

We used Clarion and MSSQL7 on windows because it was cheap. Since we started making real money, some figured we could finally afford Oracle and Sun (back when they were different).

I was a junior so my job was to evaluate the migration of one of our sql servers to oracle to test it out. I talks with the Oracle team who helps people plan purchases. They took my transaction level (~100M/year) and size (1-2GB/year) and came back with $1M for the system. This replaced a functioning $10k server. And we had maybe a dozen that would have to eventually move.

When I told them the current server was $10k, they revised their estimate to $100k. I recommended we not move.

I left the company a little while later and I think they ended up buying lots of Oracle.

Companies have money and don’t mind spending on useless stuff.

snarfy• 7 months ago

government contracts

paulpauper• 7 months 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.

robocat• 7 months ago

Debt markets are indicating that the OpenAI contracts are high risk. Debt markets analyse the risks carefully and mostly ignore fake news. Oracle is borrowing and betting billions, and the markets are saying that their bets are risky.

https://www.msn.com/en-us/money/topstocks/oracle-stock-slump...

tim333• 7 months ago

1.44% to insure the bonds for five years looks quite modestly risky. You read Ed Zitron or many skeptics here and you get the impression that it's all definitely going to crash within five years, not a 1.44% chance.

Lapsa2• 7 months ago

and it's up infinite% since the inception!

chickensong• 7 months ago

This particular flavor of schadenfreude is scrumptious.

PeterStuer2• 7 months ago

EU contracts for SAP over Oracle would be so much easier if SAP would wean themselves of US cloud dependency.

lousken• 7 months ago

is sap that much better as a product?

PeterStuer2• 7 months ago

Not at all. But in terms of EU sovereignty it could be.

wrathofmonads• 7 months ago

Oracle’s massive bet on OpenAI might be financially risky, but its investments in AI farms could accelerate Java’s evolution for AI. While Python dominates training, inference is where the money is. Projects like OpenJDK Babylon hint at a future where the JVM becomes a serious player in AI inference.

https://openjdk.org/projects/babylon/articles/auto-diff

koolba2• 7 months ago

If I'm reading the chart correctly, the current stock price of ORCL is 15% below the price before they announced the OpenAI deal in September. 40% down from the peak is one thing, but I see the net v.s. before the craziness as a better indicator of what's going on.

jauntywundrkind• 7 months ago

I wonder if Oracle is going to be the only ARM less hyperscaler, after pulling out of their Ampere investment.

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

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