Cloud Wars Live with Bob Evans

In today's Cloud Wars Minute, I review Oracle's Q1 cloud revenue and how its business model innovation could propel the growth rate to rise even higher.
Highlights
00:54 — Oracle reported Q1 cloud revenue of $11.6 billion, which is up 62%. $7.4 billion came from cloud infrastructure, with OCI having a growth rate of 121%. Oracle's RPO (remaining performance obligation), or its backlog that hasn't been recognized as revenue yet, jumped 46% to $664 billion. So, there's this enormous backlog waiting to be converted to revenue.
01:41 — Over the last several quarters, the OCI growth rate has been steadily, and often dramatically, rising. While it's already at 121%, I think this is going to go up more as this giant RPO number gets kicked over to revenue.
02:10 — It's not just the technology propelling this, but the business model innovation. Oracle CEO Clay McGuirk mentioned three ideas during the earnings call:
Suppliers are willing to defer payment that Oracle has to make to those suppliers until Oracle customers have begun to pay for the delivery of their data center services.
Customers are supplying some of the hardware, reducing the outlay that Oracle has to make up front.
Customers pay in advance: From startups to big established companies, customers are putting together big pools of money and are willing to pay in advance for the services they want.
03:42 — Hyperscalers need to determine how to get these services that everybody wants and is willing to pay a lot of money for into the hands of customers in ways that don't just require blunt-force spending by vendors.

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In today's Cloud Wars Minute, I look at OpenAI’s decision on Cursor and what it reveals about the importance of mutual trust across the AI industry.
Highlights
00:04 — OpenAI has announced that it's planning to wind down its contract with Cursor following the company's acquisition by SpaceX, meaning OpenAI models will no longer be available through Cursor after November 12 this year.
00:22 — So, just a quick recap: Cursor is an AI-powered code editor that was acquired by SpaceX on August 14 this year. Now, OpenAI says it's made this decision because it can't be confident that SpaceX will use its technology in line with its terms of service.
00:40 — It explicitly points to Elon Musk and his other companies, saying that after Musk acquired Twitter, the company violated terms of its contract with OpenAI. Then, it also says that Musk admitted under oath that xAI had violated OpenAI's terms of service in that case as well.
01:01 — The most interesting aspect of this decision is what it says about trust in the AI industry. We journalists and industry analysts often talk about trust between AI companies and their customers, but as AI becomes increasingly collaborative, trust between the companies building and rolling out these technologies is just as important.
01:26 — Now, what's been created is an AI ecosystem where companies are becoming dependent on one another for models, for infrastructure, for distribution, and the scale of this collaboration is really unprecedented, making this idea of mutual trust incredibly important. And the OpenAI-Cursor situation that we've talked about today really shows what can happen when that trust breaks down.

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In today's Cloud Wars Minute, I explore Oracle’s blowout Q1 and the numbers signaling its growing power in AI and cloud infrastructure.
Highlights
00:03 — Yesterday, Oracle reported what I'm calling a blowout Q1, and let me talk about some of the key numbers here that formed that impression for me. Its overall cloud revenue was up 62% to over $11 billion. It breaks that out in two ways. Its cloud apps business grew about 10%, a little over $4 billion in revenue.
00:26 — But this is the star now: the cloud infrastructure business grew 121% to $7.4 billion. And that is, of course, revenue — a measure of the recent past.
00:54 — Its RPO, which is similar to backlog or pipeline, but it's fully contracted business, was up 46% to $664 billion. So, its revenue for the most recent quarter grows, its RPO for future business is also growing very rapidly. Plus, the company guided in Q2 that its cloud revenue will grow again, accelerate again, going into Q2.
02:28 — So, Microsoft's current cloud revenue is about five times larger than Oracle's cloud revenue, right? So, much bigger. And you might say, well, it's got a much bigger cloud revenue right now; its RPO or backlog is probably on a similar level. But, Oracle has almost matched the RPO or backlog that Microsoft has: Oracle, $664 billion; Microsoft, $678 billion.
03:37 — More and more customers now are betting that while some of the other cloud vendors have been very strong and the dominant players coming up, Oracle is going to be an even bigger player going into the future. I think that's a big part of what these numbers tell us.

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In today’s Cloud Wars Minute, I look at how Google Cloud is combining AI agents, enterprise data, specialized skills, and partners to transform industry-specific solutions.
Highlights
00:04 — Over the last few years, Google Cloud has made different moves to address what I believe is an enormous opportunity in industry-specific solutions. It's gone about this a few different ways, always leaving the door open to work very closely with partners, whether that's integrators or ISVs. And, I think it's on to now the right way, as they have now gone industry-specific with Gemini Enterprise.
00:32 — It's putting around what Thomas Kurian calls a system that involves skills plus data plus agents plus partners moving forward on this. It's probably going to go across a lot of different vertical industries. The first two they're addressing are financial services and legal. Kurian said general-purpose AI is terrific, but it's just not enough to be able to handle these industry-specific solutions.
01:34 — And, one of the things he said here this is only the beginning. That could mean going deeper into financial services and legal, but also expanding broadly across other industries. It's laid the foundation: skills that can be encoded into the software, access to relevant data, agents that can get real work done and complete projects, and an ecosystem that’s completely open to partners.
03:08 — Kurian said, "We put together nice scaffolding for partners on which they can develop specific solutions." And he said, "We also make it very easy for those solutions to be discoverable by customers or prospects," and how this has worked together. He kept emphasizing, "We want this to be simple, easy."
04:37 — And I think, paired up now with the hugely successful Gemini Enterprise, it's going to give businesses now looking to move into AI — not just in a broad sense, but for industry-specific capabilities — I think this is going to be a big boost, and I think this is going to be a model that other vendors in the Cloud Wars Top 10 follow.

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In today's Cloud Wars Minute, I look at how Microsoft is bringing Arabic-language AI models into its ecosystem through its strategic collaboration with HUMAIN.
Highlights
00:09 — Microsoft has announced a long-term strategic collaboration with HUMAIN. They're a Saudi Arabian AI company owned by the Public Investment Fund. That's Saudi Arabia's sovereign wealth fund. So, what we're looking at here, and this is why I think it's particularly interesting when we're analyzing Microsoft's strategy, we're looking at something that isn't necessarily an infrastructure deal.
00:35 — We've seen quite a few of those recently. Instead, this is more of a deployment and go-to-market situation. So, the crux of this partnership includes a number of steps from both sides. HUMAIN will bring its Arabic-language ALLaM models to the Microsoft ecosystem through Microsoft Foundry.
00:54 — Those models will also be integrated into Microsoft 365 Copilot, which will allow companies to create specialized agents using ALLaM for Arabic-language tasks. And beyond this, HUMAIN's AI specialists are going to work alongside Microsoft forward-deployed engineers with customers to really accelerate AI from experimentation to production.
01:18 — Now, further down the line, the two companies are going to explore deeper ties and use cases, including productivity, devices, models, perhaps infrastructure, and joint go-to-market initiatives. Now, this is, of course, going to start in Saudi Arabia, but both companies can see these efforts expanding across the broader Middle East and Africa region.
01:43 — I think it really highlights the importance of not just seeing AI as an English-language technology. And by explicitly focusing on bringing Arabic-language AI models into its ecosystem, Microsoft has positioned itself to build a much larger and powerful presence in that region.

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