Posted January 14, 2019 05:53:58Oracle is making big bets in the next several years.
The company’s first new products since taking the reins in 2016 were released in 2019, with the first of the new models for a database-management system to hit the market in 2021.
Oracle’s next big bet in this time is the acquisition of MongoDB, a data storage system that the company says is expected to generate $6 billion in revenue in 2019.
“Mongo is going to be a huge revenue driver for us,” said Doug Everson, Oracle’s chief executive officer, in a presentation at the company’s new $5.8 billion headquarters in Sunnyvale, California, where he spoke to analysts and investors.
Oracle also has its eye on the enterprise market.
It says it plans to spend $8 billion in the same period to build out its infrastructure for data warehouses, data centers and more.
The company expects the new Mongo products to be sold at $1,000 per year, which is still a lot of money.
But, Everson said, “it’s not like you could buy this thing at a discount.”
Forbes estimates Mongo to have a market value of about $3.5 billion.
Mongo is currently the largest vendor of storage for large enterprises, according to the company.
The deal has raised eyebrows among analysts.
One analyst at Cowen and Company, however, sees it as an opportunity to “expand Oracle’s enterprise offerings, particularly in the datacenter.”
“Oracle’s growth model is to be able to have the largest database in the world at $5,000 and then scale it up to be worth $20,000 to $30,000 a year,” said Jim McBride, analyst at the firm.
“But we’re seeing more and more companies buying Mongo as a backup store.”
But Mongo CEO Alex Stamos says the deal will be profitable.
“It’s not about taking the cake,” Stamos told CNBC.
“This is a great opportunity to take a step back and see if we can do better.”
The deal also helps Oracle in its quest to gain the trust of enterprise customers.
Mongo has been at the center of a growing competition between Google and Amazon, both of which offer more sophisticated storage systems that require greater amounts of storage.
“It’s a good thing for us to have that partnership,” said Stamos.
“Mongo provides a very good alternative to Google and we can now go into that enterprise world with a lot more confidence.”
The company also said it has secured a deal with Microsoft that will allow the two companies to work together to develop a new database software.
“We have a lot in common with Microsoft, and we’re committed to building a database that delivers the highest-quality data service to our customers,” Stamets said.