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Oracle Versus Salesforce: Trip Chowdhry Says Salesforce's Woes Are 'Fixable'

Oracle Versus Salesforce: Trip Chowdhry Says Salesforce's Woes Are 'Fixable' - Salesforce.com Inc NYSE:CRM, Oracle Corporation NASDAQ:ORCL

According to Global Equities Research's Trip Chowdhry, salesforce is in an "uncomfortable position" compared to its peer, as it is "technology light and marketing heavy" and faces near to mid-term challenges — although these are "fixable."

The Situation

Salesforce uses branded vendors to power its software-as-a-service (SaaS) offering, Chowdhry noted. These include storage providers (EMC and NetApp), server provider (HP and Sun/Oracle), network provider (Cisco Systems, Inc. CSCO 0.26%) and database provider (Oracle.)

Salesforce has to pay money to each of these vendors, "and it is not cheap."

Moreover, salesforce's technology stack was "influenced by marketing" in the past, but today its technology is outdated. Also, salesforce's platform was built at a time when Amazon.com, Inc. AMZN 0.2%'s AWS and Microsoft Corporation MSFT 0.01%'s Azure never existed, so it uses Oracle's database merely for historical reasons.

As such, salesforce's SaaS stack is "expensive," especially compared to Oracle, which uses "most of its own technology" to power its SaaS. Specifically, Oracle's storage, server, network (also provided by Juniper) and database is provided by Oracle itself.

However, Chowdhry added that Oracle's infrastructure cost is "still too expensive when compared" to Supercloud providers AWS and Azure, but still cheaper than Salesforce's infrastructure.

How Salesforce's Problems Can Be Fixed

According to Chowdhry, salesforce's woes can be fixed using a three-step approach. First, salesforce can replace Oracle's database with any opensource database. Second, salesforce can replace HP, Dell and Sun with a custom whit box. Finally, salesforce can replace Cisco's networking with a custom network card that is similar to AWS ENA — Elastic Network Adapter.

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DateFirmActionFromTo
Aug 2016OTR GlobalDowngradesPositiveMixed
Jul 2016Morgan StanleyMaintainsOverweight
Jul 2016CitigroupMaintainsBuy

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