Vineet Nayar, CEO of information technology company HCL talks about managing growth and taking on the big boys of tech.

CEO Benioff goes from "cloud" to crowd.

Benioff chats about Chatter. Photo: Salesforce.com

Marc Benioff, the man who invented cloud computing at least as much as Al Gore invented the Internet, is pushing a new idea. It's called Chatter, a mashup of Facebook and Twitter for the workplace that his company, Salesforce.com (CRM), plans to begin selling next year.

Salesforce.com's main product is something most worker bees will never see. It's an online tool that salespeople use to record their prospects and completed deals. It has done so well because it mimics far more expensive software pioneered by Siebel Systems, which is now owned by Oracle (ORCL), where Benioff began his career. Benioff, a relentlessly effective marketer, pioneered the concept that companies could rely on Web applications for what previously had been complicated software programs that resided on corporate computers. Salesforce.com is so successful (and popular with investors) that it's worth $8 billion, a mere 100 times Wall Street's estimated earnings for the company's current fiscal year.

The reason Benioff is jazzed about Chatter is that it represents an opportunity for everyone in the corporate world to use Salesforce.com software, not just salespeople. Chatter gives all employees the ability to broadcast and tune in to people in their own company, much in the way the two buzziest social-media sites enable communication among groups of like-minded people and, more specifically, their friends. "Twitter and Facebook have opened the door to the enterprise world to  walk through," says Benioff.

I saw Benioff Wednesday at his San Francisco office, where a couple of his people — he has lots of them — gave me a demo of Chatter. In short, I was impressed. It allows users to post their corporate activities as well as to choose whose activities in the company they want to follow. The key is that it's a walled garden. You only follow or broadcast to colleagues. In effect, Chatter does what IBM's Lotus Notes and Microsoft's Sharepoint do, only Chatter is far more flexible, and, at the risk of sounding silly, fun.

The corporate possibilities  are many. People involved in a specific deal can form a group. An embedded Twitter application makes it easy to track comments about competitors — or your own company. Routine business events, like purchasing data, could be posted online, but shared only with employees who have permission to view it. The allure is that all these  concepts work within an easy-to-use online tool that's already been around for a decade and has been refined accordingly.

I have no idea if customers will cotton to this idea, and, more importantly, if they'll pay. (Existing Salesforce.com users will get Chatter for free. Salesforce.com will try selling a Chatter-for-the-rest-of-us edition for $50 per user per month.) It looked cool to me, though.

I tend to squirm at the request LinkedIn makes of me to update my profile with information about what I'm doing. There's no way I'm telling my competitors what I'm doing. Ditto for Facebook, where my "friends" are an assorted lot that may not care about my work. Twitter gives me a way to communicate to strangers, which I appreciate, but I'm going to be guarded in how much I share with that audience. Would I post to a select group of Fortune editors and writers, however, what story I'm pursuing and who my next meeting is with? Might it improve communication for a distributed team whose left hand often doesn't know what the right hand is doing? Absolutely.

Undoing the dupe: A way out of your Big Software contracts

By Roger Burkhardt, CEO, Ingres

(Last month Burkhardt wrote about how Big Software companies lock customers into restrictive software licensing agreements and continue to raise prices, even during tough economic times. Here Burkhardt offers some tips for effectively renegotiating contracts with your current Big Software suppliers.)

Burkhardt tells how to untangle your company from Big Software. Photo: Ingres

For decades now many of us in corporations have been paying loads of money to work with Big Software companies like Oracle (ORCL), Microsoft (MSFT), IBM (IBM) and SAP (SAP). Our information technology employees are familiar with these software vendors and their technologies (and their proprietary licensing models) and may even identify their careers with them. So, while we may suspect we are being overcharged, and could spend millions less running our IT departments, we have remained comfortably, and expensively, locked-in.

But we want to be back in charge. And we deserve to be; we’re the customers that line the pockets of all Big Software companies. Without us, who would buy all that software?

But we question whether it is even possible to break away from this perverse reality where software leviathans dictate both economic terms and the technology road maps that are critical to our business.

Is there a way to move towards an alternative model, where IT costs are variable and aligned with actual business needs? Yes, but we just don't like change. And perhaps we lack 100 percent confidence in the ability of new, alternatives to perform the mission-critical processes that must run our companies 24×7, reliably and securely.

I understand these requirements well. In my former role, I was responsible for the New York Stock Exchange’s technology, and the continuous availability of our trading systems was paramount. My team showed me a better way to deliver that reliability by using innovative Open Source software and open standards. This gave me the tools to combat the hardball negotiating tactics of Big Software and to substantially drive down costs.

Over the last decade, alternative IT models have matured across a broad range of software technologies and a growing number of customer success stories demonstrate that it is eminently feasible for well-lead IT organizations to move to this better model. And in doing so, gain substantial cost savings and rapid innovation benefits of a New Economics of IT.

You don't need to continue signing over your business' bottom line to Big Software companies that keep you locked-in to contracts with no end to escalating costs.

A way out

If you’re ready to embrace change and begin looking at more cost efficient and innovative ways to run your IT infrastructure, here are five tips to help you extract yourself from expensive Big Software contracts that are holding your company hostage:

1. Introduce real competition to the software license cartel. We know that introducing real competition for any product or service is the key to avoiding expensive and inflexible contracts.  The key in software is to introduce competition from companies with a disruptive and competitive business model. Consolidation in the proprietary software industry has created an oligopoly of proprietary players which demonstrate their power by raising prices in the middle of a recession. In fact, the software leviathans such as IBM, Microsoft and Oracle compete with each other about as vigorously as OPEC members and we need new business models to provide real competition.

The proven alternatives are Open Source software from companies such as Ingres and Red Hat (RHT) and Software-as-a-Service (SaaS) offerings from players like Salesforce.com (CRM). Both models provide low and variable costs and create real competition to the proprietary software model. By adopting these models for at least 10-15% of your software you can negotiate better prices on the other 85%.

2. Understand and adopt the new software business models.. Open Source software has no license fee and support is provided under an annual software subscription that is substantially less than the annual maintenance fee charged in the proprietary model. The subscription includes product usage rights, support services, access to new features and goes up or down year to year depending on your actual business usage. This subscription model is used by both Open Source and SaaS providers and aligns costs directly with the value the software provides in actual use. Another benefit: the end of Big Software shelfware. Consider donating your remaining unused software to not-for-profit organizations that could surely use it.

3. Strategically avoid technology lock-in. For competition to work, you need to be able to switch vendors over time and this requires an IT strategy that mandates open standards and so won’t lock your company into a particular vendor. This is true of proprietary software and Open Source and SaaS alike. Remember, having a low cost and variable cost model isn’t sufficient in itself; over time you may still want to switch technologies to support new business strategies. The good news is that mature open standards are available for the full range of software technologies and they bridge both proprietary and Open Source worlds. For example, half of all programmers use the open Java language and Ingres customers are running critical financial systems written in Java that process billions of dollars a day on a completely open source infrastructure.

4. Demonstrate an open competitive environment. In order to drive down your software costs, you need to adopt mature alternatives for a significant portion of your software and use this leverage to negotiate better terms overall. Proven alternatives to Big Software are available at virtually all levels of IT – from the operating system up to the application layers. You won’t eliminate proprietary software overnight – you are often dealing with multi-year contracts after all – but by eliminating 10% to 15 %, you will save up to 95 % in those areas and will be empowered to negotiate substantial cost reductions for the remaining 85% of your environment.

5. Re-read your software contracts and plan your escape from Big Software. Check the fine-print of your Big Software contracts to make sure there is a cap on the maintenance costs after the license deal ends. If not, ask for one well in advance of the renewal date and if you don’t get it (surprise!), re-double your efforts to build your negotiating leverage by bringing in open subscription-based software technologies for 10-15% of your portfolio.

Software subscription models make it easy to prove the value of software before you make significant investments. They reduce the total cost of ownership by eliminating expensive license fees and a whole range of subsequent “gotchas”. It’s simply a better, smarter way to buy, one that finally puts the customer back in charge.

No duping involved.

Burkhardt is president and CEO of Ingres. He previously spent six years as CTO and executive vice president of the New York Stock Exchange, where he and his team transformed  the NYSE to a fully electronic model.

How enterprise software giants separate you from more of your company’s money

By Roger Burkhardt, CEO, Ingres

Burkhardt reveals Big Software's secrets. Photo: Ingres

Here’s how the software business really works: A software company charges your firm an enormous upfront licensing fee and locks you into escalating costs for decades to come, often using a set of hardball tactics.

But with the growing popularity of pay-as-you-go and subscription-based software and services, the old way is being exposed for the unfair financial model that it actually is. And the new open, more flexible models are starting to make the old ones look downright deceitful, especially when you show them against the backdrop of a deep recession.

Many companies have been forced to downsize to make it through these tough economic times. And as information technology and C-level executives examine the financial books together, many are discovering the unfortunate news that their Big Software contracts are harming their business’ bottom line and cannot be downsized – at least now without a fundamental change of approach.

Perhaps it’s not always intentional, but if you’re an IT decision maker with several of these licensed-based software contracts on the books, it’s very likely you’re getting duped.

How the duping works

Big Software Goliaths like Oracle (ORCL), Microsoft (MSFT), Sybase (SY) and SAP (SAP) use multi-year enterprise license agreements that lock you into annual fees that go up, but can almost never be reduced. They encourage you to make large upfront purchases of software licenses by providing significant volume discounts. Volume discounts are common in the software industry and help you achieve a lower price-point on your software licenses and annual support fees. However, encouraging you to purchase larger quantities than you need often leads to “shelfware”, i.e., owning a whole lot of software you don’t use.

What if you want to downsize? Because annual support fees are tied to the net license price, the discount is tied to the original volume of license purchased. Therefore, the Big Software companies argue that you lose the discount originally granted on the contract. Their typical tactic is to re-price right back to list price, not a reduced discount, and with typical discounts in the 25 to 85 percent range it is financially infeasible to downsize. It’s this kind of aggressive tactic that ensures that Big Software’s revenue streams never go down, and in fact continue to go up as annual escalators are applied.

Duped and trapped

If you don’t need to downsize your usage but want to just hold steady and pay maintenance you’ll be caught in the renewal trap. When your multi-year contract comes up for renewal, you’ll find that your contract has no cap on subsequent increases to the annual support contract. The high-paid sales person will then warn that your original discount will evaporate if you don’t buy more licenses. It will be cheaper to buy more “shelfware” than to pay list price for your maintenance.

In addition, if you ever want to reinstate support on the unused portion of your licenses, you would be required to pay all the back-support fees for the period you cancelled. It would be like getting a large service bill for services never rendered from your former auto mechanic – the guy whom you haven’t taken your car to in two years because you found a better shop. No wonder Oracle’s margins on maintenance are over 90 percent!

More deeply duped

The enormous consolidation of the software market has created a few behemoths that have enormous pricing power over their customers because of their large market shares and a strategy of vertical integration, which raises customer-switching costs. If you try and get out of being locked-in, you’re likely to pay a big price.

Big Software players have demonstrated their power by raising prices during the worst economic period since the Great Depression – not exactly a tactic that supports the customers through tough times. In the last year and half, for example, Oracle has seen fit to raise overall software and maintenance fees by 15-18% and to raise prices on acquired technologies by 45%. Many companies locked in to an Oracle contract, for instance, have signed a contract where they agree to pay these unexpected price hikes, often without reading the fine print and realizing the true cost of what they have signed up for.

Many price increases are hidden behind additional fees that penalize customers for taking advantage of industry advances such as modern multi-core chips which reduce hardware costs or even just external access to your own data over the Internet. Yes indeed, even in the 21^st century Internet access is often excluded from Big Software’s standard licensing terms.

Meanwhile, contract consolidation and the co-termination of contracts further reduce options, as more software is covered under a single contract. You may ask for a consolidation, but more likely than not, the vendor will argue that the entirety of the new contract is open for re-pricing, if you attempt to modify one component of that contract. This is happening with increased regularity for product lines that have been acquired, as vendors consolidate the newly acquired product lines in single corporate purchasing agreements and use their increased leverage to extract more revenue and lock the customers in even more firmly in the future.

To learn more about how to get out of Big Software contracts and/or negotiate current ones to your advantage, stay tuned for my next article.

Burkhardt is president and CEO of Ingres. He previously spent six years as CTO and executive vice president of the New York Stock Exchange, where he and his team  transformed  the NYSE to a fully electronic model.

Remember how cloud computing was supposed to kill client/server? Turns out it’s more of a wedding than a funeral.

First, some background: The hype surrounding cloud computing in recent years has been nothing short of wild. If you believed the popular wisdom, the traditional computing model was toast. Businesses were going to stop loading specialized programs onto workers’ PCs and buying expensive software and servers for data centers.

Instead, we’d have the cloud. Service providers like Salesforce.com (CRM) and Amazon (AMZN) would own the hardware and software, and let companies plug in over the Internet and use it on demand.

Things aren’t working out that way. A survey commissioned by Avanade, a joint venture between Microsoft (MSFT) and Accenture (ACN), shows that enterprises are taking a more cautious approach to cloud computing. While 62% of the 500-plus executives surveyed said they plan to increase their use of cloud-based software over the next year, they had no intention of simply shipping their proprietary data out to some third-party service provider n the process. Some 80% of U.S. enterprises will instead embrace what’s being called a “hybrid” cloud model – they’ll let third parties handle basic stuff in external clouds, but keep vital information on company-owned servers inside the firewall.

Meanwhile, tech titans are also taking aim at the “everything in the cloud” crowd. According to a CNET report, Hewlett-Packard CEO Mark Hurd this week said that security is a major issue that doesn’t get enough attention in the cloud debate; if HP CIO Randy Mott told him he wanted to put the company’s financial records in the cloud, “I’d say, ‘Go back to work, we’re not doing that.’” Oracle (ORCL) CEO Larry Ellison has also taken shots at cloud boosters.

It might be tempting to dismiss all this as self-serving resistance from the old-school techs – but even the biggest cloud cheerleaders are now embracing the hybrid concept. On a stage near the Oracle Openworld conference last week, Salesforce CEO Mark Benioff embraced Dell (DELL) CEO Michael Dell to announce a partnership to sell customers on the hybrid cloud idea – an initiative called “The Best of Both Worlds.”

For Benioff, who until now has marketed Salesforce with a “Software is Dead” slogan, that’s quite a shift. But since enterprises aren’t about to ditch their client/server IT investments and put all their secrets on the Internet, it’s also a wise one.

Is it time to dust off the party hats?

From the cheery headlines accompanying the latest round of tech earnings, you’d think so. Google (GOOG) CEO Eric Schmidt declared last week that, “the worst of the recession is behind us.” IBM (IBM) actually boosted earnings targets for the year. Taken along with the stimulus potential of Windows 7, Microsoft’s (MSFT) critically acclaimed PC operating system that launches this week, some say happy times are here again.

Not so fast. As we head into week two of this round of tech earnings, it’s important to keep in mind what these numbers show, and what they don’t.

What they show is this: we seem to have dodged the worst-case scenario. In those dark post-Lehman days at the beginning of the year it seemed the global economy was headed off a cliff, and nary a big tech CEO dared predict a recovery in 2009; as stock prices plunged and customers bolted, the sunniest forecast most would offer was carnage this year, followed perhaps by less carnage in 2010.

Now it’s a different story. Since the March market rebound and some calming statements from Fed Chairman Ben Bernanke, the suits have changed their tune. Intel not only reported a blowout quarter, but also pointed to a healthy holiday season; even embattled Advanced Micro Devices (AMD) said it expects a modest rise in sales. No one knows exactly what Apple (AAPL) will say when it reports earnings this week, but it probably involves an obscene volume of iPhones. In a turnabout from a year ago, all across Silicon Valley executives are whispering about an upbeat Q4.

So what’s not to like? Well, what these numbers don’t show is sustained revenue growth – the stuff that healthy earnings, stock prices, and economies are built on. IBM’s quarterly sales were down from a year ago, as were Intel’s. Other companies saw modest increases, but it’s too soon to tell whether the credit belongs more to a mounting recovery or to easier comparisons with last year – remember, things got bad right at the end of the third quarter, making these reports look impressive by comparison. Even the holiday season numbers won’t shed much light on whether this is a strong tech recovery or a weak one; last year’s Q4 numbers were so horrible that it won’t take much to blow them away.

No, to get a true read on the strength of this recovery, we’ll have to wait until April, when the big techs start reporting Q1 numbers. By then the euphoria of averted disaster will have worn off, and we’ll see if consumers and businesses have anything left to spend after the holiday season.

If sales slow down dramatically, we could be in for something like the uninspiring “L-shaped recovery” that Oracle (ORCL) CEO Larry Ellison predicted last month. If they continue chugging along despite high unemployment and foreclosures, then those party hats might be in order.

Shaw is the latest non-technologist to ascend at Intel. Photo: Intel.

Who rules techland? Increasingly, it isn't the inmates.

In May, when Craig Barrett retired as chairman of Intel (INTC), the choice of his replacement marked a momentous occasion for the granddaddy of the semiconductor industry.

That Jane Shaw became nonexecutive chairman of Intel is a big deal, but not because she is Intel's first outsider to chair the board or because she is the first woman.

What makes her role noteworthy is that she is the first non-technologist in that seat. Yes, she has a science background, with a doctorate in physiology and a career in the pharmaceutical industry. But she's not a technologist in the Silicon Valley sense.

Considering that Intel's CEO, Paul Otellini, is the first non-technologist to run the company (see my 2005 profile of him) and that his most likely successor, Sean Maloney, isn't a silicon guy either, it's a remarkable turnabout.

Revenge of the anti-nerds

Now, this isn't a piece about Intel, though it could be.  Shaw is perfectly well qualified to be Intel's chairman, having served on the board — loaded with academics, retired government officials and three corporate types, not one of whom has a commercial semiconductor background — for 16 years. (She shows up in Brent Schlender's 2004 take on how Andy Grove was trying to re-make Intel's board and himself.)

The point is that Intel's experience represents one of the quietest yet fiercest battles going on across the Valley: the technologists versus the business people.

Time after time I come across people in the Valley who want to talk about this, most of whom are technologists bemoaning their loss of power. Hewlett-Packard (HPQ) hasn't had a gearhead at the helm for years. Yahoo (YHOO) ditched its engineer/founder/CEO who missed key turns in the Internet industry. Google (GOOG), firmly run by engineers, struggles to retain its top business talent because they know they can't move up.

Most careful Apple (AAPL) and Oracle (ORCL) watchers dread the day when their tech-savvy CEOs no longer are around to work their innovative magic.

Growing up, or selling out?

The company that seems to be biggest exception is Cisco, (CSCO) where salesman-in-chief John Chambers has skillfully guided the company for years.

Cisco, however, isn't lauded for its innovation. It is known for superior execution, deft acquisitions and a clear understanding of market opportunities — not the sorts of things that makes the hearts of engineers go pitter-patter.

The charitable explanation for all this is that Silicon Valley is becoming mature. It has grown up into  a real industry, not a frontier collection of maverick companies, and its leaders approach their tasks in an industrial fashion.

The less cheerful interpretation is that the glory days are gone, that Silicon Valley is little more than a bunch of careerists and, worse, venture capitalists.

The truth probably lies somewhere in the middle: Yes, Silicon Valley has become a destination for new MBAs who see the tech biz as a money-making opportunity rather than a passion to pursue. But the Valley will continue to produce interesting new companies – founded by whip-smart engineers and technologists.

If those founders want their companies to evolve into the next Intel, they're probably going to need a few of those spreadsheet jockies to help them get there.

Ellison asks if Microsoft matters. Photo: Oracle

Oracle's Ellison gives the tech world a topic. Discuss among yourselves.

Does Microsoft matter? That's the question the noted Microsoft (MSFT) hater and Oracle (ORCL) CEO Larry Ellison found himself answering at a Silicon Valley event Monday night. The short answer, as Jon Fortt reported here, was yes.

The longer version of his answer on the one hand shows Ellison as the old zen master that he is, making a backhanded and self-serving swipe sound like an innocuous observation. At the same time Ellison raises a fascinating point that's worth exploring further.

First consider his comments in their entirety when asked about the relevance thing by former Sun (JAVA) president and Motorola (MOT) CEO Ed Zander.

They make a lot of money. I think they're clearly relevant. I divide the computer industry into two groups. And I know for a long time I was constantly picking a fight with Microsoft. Now Oracle's constantly picking a fight with IBM (IBM). Because you've got to pick your enemies very carefully, because you're destined to become most like those enemies you select.

Microsoft, culturally now, is a very consumer-centric company. They've got the Xbox. They've got Zune. … I think they are obsessed with Apple (AAPL). They're obsessed with Google (GOOG). … Under the new administration at Microsoft, I see all of their energies going into being successful in the consumer space.

Larry's rap v. Oracle's 10-K

The funny thing about Ellison's clever positioning is that Oracle considers Microsoft a major competitor in nearly every important market in which it competes. A quick look at Oracle's last 10-K, the regulatory filing where companies are required to list their significant competition (as opposed to musing about who they like to think they go up against), reveals how Oracle lines up against Microsoft.

"In the sale of database software," Oracle discloses, " our competitors include IBM, Microsoft, Sybase (SY)"  and others. (Presumably these are listed in order of market share because the order changes. Note that Microsoft is the No. 2 foe in Oracle's most important market.) "Our middleware competitors include IBM, Microsoft, SAP (SAP),"  and so on. "Our applications compete against offerings from . . .  SAP AG, IBM (through Maximo, MRO Software, Ascential Software, Cognos), Microsoft (through Dynamics GP, Dynamics NAV, Dynamics AX, Dynamics CRM, Dynamics Snap, Dynamics SL)," and others.

This shpiel continues as Oracle lists the enemy in content management and collaboration products (where Microsoft is listed first), development tools, operating systems (an understatement regarding Microsoft), and virtualization products. Microsoft appears in each grouping.

Enterprise software still rules

Suffice it to say that Oracle competes against Microsoft and it's awfully clever of Ellison to highlight Microsoft's grudges against two consumer-oriented companies with whom Oracle doesn't currently compete. (In fact, neither Apple nor Google appear anywhere in Oracle's filing.)

This still leaves the larger questions of Microsoft's relevance and to what extent it is culturally a consumer company. If you want to pick on Microsoft, Zune (its floundering iPod wannabe), its online business, and Xbox are good places to start. Only the latter has had a modicum of success, and even then not a profitable success.

But has Microsoft forsaken the "enterprise" for the home? Microsoft's two divisions that focus almost entirely on business customers — one called the"Microsoft Business Divison," also known as the Office franchise, and the other called "server and tools" — accounted for 57% of the company's revenues last year and 85% of its operating profits. Yes, Microsoft most certainly is a business-focused company.

Still, Ellison has a point. His old (and current) foe spends oodles on its flailing consumer businesses, and CEO Steve Ballmer certainly seems to devote a tremendous amount of energy to them. He's famous for saying Microsoft never quits and that these newer businesses will crush the ball eventually.

They'd better. In a recent article I referred to Microsoft as a monopolist. I consulted a handful of experts on the term who assured me that hobbled or not a company operating under agreements with antitrust regulators can still be called a monopolist. Those monopolies are in its business segments, though, and they're under attack. At least today it seems laughable that Microsoft would ever become dominant on products like music devices, cell phones or search engines. Is Microsoft relevant? Absolutely. But for how long?

Billionaire Oracle CEO Larry Ellison doesn't expect the U.S. economy to significantly improve until halfway through the next decade – a gloomy scenario he dubbed an L-shaped recovery.

"The American consumer is so deeply in debt, this is not going to come back, certainly for five years," he told a packed ballroom at a Churchill Club event in San Jose. "I believe we're going through some fundamental changes."

In a wide-ranging and humor-filled chat with former Motorola (MOT) CEO and Sun Microsystems (JAVA) executive Ed Zander on Monday night, Ellison riffed about the state of innovation in the technology industry, Oracle's (ORCL) acquisition of Sun, his sailing hobby, and the cloud computing trend. The event was a rare opportunity to hear Ellison talk off the cuff – he tends to be guarded with the press, and lately has done few interviews.

Ellison, 65, said that even after 32 years at the helm of Oracle, he doesn't see retiring anytime soon. He intends to develop Oracle into a technology powerhouse that provides not just software, but computing, storage and networking gear. The company recently started mapping out its five-year plan, and he intends to continue at the helm at least long enough to execute it. "We'll see how I feel after five years," he said.

Below, some more gems from Ellison.

On the value of Sun to Oracle:

"If, just for one dollar, if we could buy IBM (IBM), HP (HPQ), Sun or any of these tech companies, I'm not sure we wouldn't pick Sun."

(As Ellison later pointed out, Sun is losing $100 million a month, while IBM makes a couple billion dollars a month. I think we know which he would actually buy for a dollar.) Ellison said he has no intention of spinning out MySQL, and said he feels confident that European regulators will approve the deal.

On his frustrations with how cloud computing has become a trendy term:

"Cloud? Clouds are water vapor. My objection to cloud computing is the fact that cloud computing is not only the future of computing, it is the present and the entire past. Google's (GOOG) now cloud computing. Everybody's cloud computing. … All it is, is a computer attached to a network. What are you talking about? What do you think Google runs on? It's databases and operating systems and memory and processors! What are you talking about?"

On Microsoft's (MSFT) relevance:

"They make a lot of money. I think they're clearly relevant. I divide the computer industry into two groups. And I know for a long time I was constantly picking a fight with Microsoft. Now Oracle's constantly picking a fight with IBM. Because you've got to pick your enemies very carefully, because you're destined to become most like those enemies you select."

"Microsoft, culturally now, is a very consumer-centric company. They've got the Xbox. They've got Zune. … I think they are obsessed with Apple (AAPL). They're obsessed with Google. … Under the new administration at Microsoft, I see all of their energies going into being successful in the consumer space."

On the Obama administration:

"I don't know anyone who's against universal healthcare coverage, but it's going to be very expensive."

"I voted for President Obama, and I'll kind of confess to that right now. And I am surprised at how much spending there is. I am surprised that there are so many huge spending programs."

On net neutrality:

"I think it's very dangerous for the government to engage in pricing for companies. So I'd be a little bit worried if the government came in and did all the pricing for Safeway, priced food, even though food's essential. I think net neutrality, or having lots and lots of government regulation about how the phone companies can price their network, which they built and they own, is very interesting. Now, it's great for Google. And it's really bad for the phone companies. In general I believe in free markets, and I think this is a case where government regulation is not necessary."

On Oracle's culture:

"We are the largest employer of MIT and Caltech engineers in the world. We are the largest employer of Stanford and Harvard, CMU mathematicians in the world. We are overwhelmingly dominated by engineering at Oracle. The idea that we are a sales and marketing company, which people will write about quite often, is ludicrous on the face of it. … The company is all about engineering. It's the only thing that works. "