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Salesforce CEO Marc Benioff rarely says anything good about Oracle, the database company founded by his archrival, Larry Ellison.
It may have to do with the two tech magnates' complicated history that traces back nearly 30 years, but it's also because of the increasingly competitive nature between the two companies in cloud services, a space that Ellison once ridiculed as "gibberish."
That rivalry intensified only after Ellison recently pledged to make Oracle the first cloud company to reach $10 billion in annual revenue, a goal Benioff has repeatedly set over the past few years. And in a move that's clearly aimed at expanding its cloud business, Oracle doled out another $9.3 billion to buy NetSuite last month.
So does Oracle's NetSuite acquisition concern Benioff at all?
"No," Benioff told Business Insider when asked about the deal. "Oracle's scrambling to get growth in the cloud, but it obviously has not met its goals."
Benioff pointed out that Oracle was late to the game, even though the rest of the industry's been working on cloud development for the past 20 years. Oracle had about $2.9 billion in pure cloud revenue last year, less than half of Salesforce's $6.7 billion. Of course, Oracle generates an additional $35 billion from non-cloud businesses.
"They're the farthest behind among all of these companies. Of course, Salesforce, Amazon, Microsoft, and Google are much farther ahead," he added.
Justin Sullivan/Getty ImagesIt's no surprise that Benioff isn't too impressed by the Oracle-NetSuite deal. But it's not just Benioff who believes that the deal won't really move the needle for Oracle.
John Rizzuto, an analyst with market-research firm SunTrust, wrote in a recent note that the deal will help Oracle expand its cloud-software business, but "does little to change the market landscape, the effectiveness, or growth trajectory of either organization."
Rizzuto believes that Oracle should have spent the money elsewhere, since there's no "meaningful" benefits aside from growing revenue. NetSuite is expected to do about $1.2 billion in revenue this year.
"We would not expect the combination of these companies to create any meaningful technology/product synergies," he writes.
UBS's Brent Thill also notes that it was a rich deal that has "modest" product overlap. He also believes that it's a sign of Oracle's cloud-app development road map "stalling," and it could potentially cause customer confusion over Oracle's cloud offerings.
In any case, all of this points to what's shaping up to be one of the most competitive M&A seasons in cloud-software history. We've already seen the most software deals in the past five years, and Wall Street doesn't expect it to slow down anytime soon.
"The M&A environment is as robust in software as we've seen at any point in the past three to four years," Tom Roderick, Stifel's research analyst, told us previously.
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