ORACLE EXECUTIVE CHAIRMAN LARRY
ELLISON AND CEO MARK HURD
SITTING DOWN IN A FOX BUSINESS
EXCLUSIVE.
THEY WEIGHED IN ON COMPETITION
AND WHY ORACLE CLOUD TECHNOLOGY
THEY SAY IS THE BEST IN THE
BUSINESS.
CEO MARK HURD REVEALING A HUGE
BUMP IN R&D SPENDING.
>> IT WAS SIX, SEVEN YEARS AGO,
WE SPENT $3.7 BILLION IN R&D.
WE'LL SPEND OVER $6 BILLION IN
R&D THIS YEAR, SO YOU GET A
CONTEXT OF HOW MUCH WE'VE
INVESTED INTO THESE NEW COOL
PRODUCTS, ALL THE STUFF WE'VE
GOT THAT'S AVAILABLE IN THE
CLOUD.
THE CUSTOMERS SPENT 25 YEARS
BUILDING UP THESE EXTREMELY
HETEROGENEOUS ARCHITECTURES,
LIKE A LEGO SET LIKE WE TALKED
ABOUT YESTERDAY.
THIS IS A VERY HARD ENVIRONMENT
TO MODERNIZE, TO UPGRADE, TO
SECURE, TO LARRY'S POINT.
SO ONE THING WITH OUR CUSTOMERS
N. PROBABLY ON AVERAGE HAVE
HUNDREDS OF CONFIGURATIONS AND
OUR CLOUD, WE HAVE ONE MANY ONE
CONFIGURATION.
IT'S SCALED.
MUCH EASIER FOR US TO UPGRADE,
MODERNIZE AROUND SECURE.
MARIA: THE REASON I SAID
UNLIMITED SPEND, I WAS SPEAKING
TO SOME FINANCIAL SERVICES
EXECUTIVES THE OTHER DAY, JAMIE
DIMON TOLD ME THEY WILL SPEND
ALMOST $1 BILLION ON SECURING
THEIR DATA, ON CYBER IN THE NEXT
YEAR.
WHICH IS -- THAT'S WHAT I'M
SAYING.
THESE COMPANIES CANNOT AFFORD TO
HAVE ANY SLIP-UPS.
>> WELL, --
MARIA: HAVE ANY
VULNERABILITIES.
>> FIRST OF ALL, I LOVE JAMIE
DIMON.
HE'S PROBABLY THE WORLD'S
PREEMINENT BANKER.
I PROBABLY MADE ENEMIES SAYING
THAT.
HE'S AN INCREDIBLE GUY,
INCREDIBLE EXECUTIVE.
IF GOOGLE CAN'T PROTECT THEIR
NETWORK, IF FACEBOOK CAN'T
PROTECT THEIR NETWORK, IT'S
CHALLENGING FOR JP MORGAN CHASE
TO PROTECT THEIR NETWORK.
THIS IS NOT A TRIVIAL EXERCISE.
THEY CAN SPEND $1 BILLION.
WE SPEND MORE THAN $1 BILLION
SECURING OUR NETWORK.
SO DOES FACEBOOK.
SO DOES GOOGLE.
IT'S A HARD PROBLEM.
MARIA: WHO ARE THE BAD ACTORS?
WHAT DO THEY WANT?
DO THEY WANT TO JUST -- THEY
WANT ANYTHING, STEAL MONEY?
WHAT DO THEY WANT?
WHO ARE THE BAD ACTORS.
>> THERE ARE TWO CLASSES.
THERE ARE PEOPLE WHO WANT TO
STEAL CREDIT CARDS AND MAKE
MONEY.
THEN THERE ARE STATE ACTORS WHO
WANT TO GAIN INTELLIGENCE.
A GOVERNMENT AGENCY THAT --
BASICALLY THE MINISTRY FOR
PERSONNEL IN THE UNITED STATES
WAS HACKED BY A GOVERNMENT ACTOR
WHO WAS ABLE TO GET ALL OF THE
RESUMES FOR EVERYONE IN THE
WHITE HOUSE, ALL OF THE --
OFFICE OF PERSONNEL MANAGEMENT
IT'S CALLED.
STATE ACTOR TOOK ALL OF THAT
INFORMATION, ALL THE GOVERNMENT
AGENCIES AND TOOK IT ALL AND
THEY WERE ABLE TO ANALYZE IT AND
THEY -- FOR EXAMPLE, THEY DID
SOMETHING VERY CLEVER.
THEY SAID THESE ARE THE PEOPLE
WHO WORK FOR THE GOVERNMENT.
THESE ARE ALL THE PEOPLE THAT
WORK AT THIS EMBASSY AT OUR
CAPITAL CITY.
HOW COME THERE ARE SOME PEOPLE
THAT WORK IN THE EMBASSY IN THE
CAPITAL CITY THAT AREN'T IN THE
LIST OF GOVERNMENT EMPLOYEES?
MAYBE THEY ALL WORK FOR CIA.
THEY WERE ABLE TO FIND OUT A LOT
OF THINGS ABOUT OUR INTELLIGENCE
AGENCIES BY HACKING INTO THE
OFFICE OF PERSONNEL MANAGEMENT.
AND JUST COMPARING DATA.
MARIA: THAT'S INCREDIBLE.
>> IT WAS AN EXTRAORDINARY
SETBACK FOR US AND WE HAVE TO DO
A MUCH BETTER JOB OF SECURING
DATA.
THERE ARE PLENTY OF FINANCIAL
SERVICES FIRMS, YOU READ ABOUT
THAT DON'T SECURE THEIR
DATABASES AND YOU END UP -- THEY
END UP ABOVE THE FOLD ON THE NEW
YORK TIMES REPORT AND THE CEO
GETS FIRED BECAUSE THEY DON'T
PATCH THEIR DATABASES IN A
TIMELY FASHION.
THE ONLY WAY YOU CAN HANDLE THAT
IS TO FULLY AUTOMATE THE
DATABASE PATCHING.
YOU HAVE TO FULLY AUTOMATE
THREAT DISCOVERY AND THE SECOND
IS DISCOVER, YOUR ROBOTS HAVE TO
PATCH IT.
IF THEY HAVE ROBOT ATTACKS ON
OUR CLOUDS AND DATA CENTERS AND
OUR GOVERNMENT AGENCIES, YOU
BETTER HAVE A ROBOTIC DEFENSES,
CYBER DEFENSES THAT ARE STAR
WARS-ISH.
MARIA: WOW, THIS IS A MOMENT IN
TIME WHERE THERE AREN'T MANY
THINGS MORE IMPORTANT THAN THIS.
>> THIS IS THE CEO LEVEL NOW,
MARIA.
THIS IS NOT A CONVERSATION THAT
PEOPLE LIKE JUST LARRY AND I
HAVE.
THIS IS A CONVERSATION THAT IS
AT THE CEO LEVEL.
THE EXAMPLE THAT LARRY BROUGHT
UP, THERE'S A CUSTOMER THAT
ACTUALLY BOUGHT ENCRYPTION TO
THEIR DATABASE AND ACTUALLY
DIDN'T IMPLEMENT IT.
SO TO MY KNOWLEDGE, NO CUSTOMER
-- NOBODY HAS EVER DE-EN CRYPTED
ANEN CRYPTED ORACLE DATABASE.
YOU TALKED ABOUT UNLIMITED
SPENDING.
LESS THAN 1%, I'M SURE I'M
ROUGHLY RIGHT, OF OUR DATABASES
AREEN
ARE ENCRYPTED.
OF THE PEOPLE THAT BOUGHT OUR
ENDESCRIPTION, HALF HAVE NOT
IMPLEMENTED IT.
IN OUR CLOUD, ALL OF THE
CUSTOMERS' DATA IS ENCRYPTED.
>> THERE'S NO OPTION.
HISTORICALLY, THE CUSTOMERS WERE
GIVEN A CHOICE, ENDESCRIPTION ED
GIVEN A CHOICE, ENDESCRIPTION ES
GIVEN A CHOICE, ENDESCRIPTION ER
GIVEN A CHOICE, ENDESCRIPTION EP
GIVEN A CHOICE, ENDESCRIPTION EI
GIVEN A CHOICE, ENDESCRIPTION EN
GIVEN A CHOICE, ENDESCRIPTION E,
OPTIONAL.
YOU CAN TURN IT ON.
SOME THINK IT SLOWS PERFORMANCE.
IN OUR CLOUD WE HAVE NO OPTIONS,
EVERYTHING IS ENCRYPTED,EN
CRYPTED AT REST, ENCRYPTED IN
TRANSIT.
INSIDE OF DIFFERENT CUSTOMERS,
AS I SAY, THE HARDEST THING IS
TO KNOW WHAT YOU EVEN HAVE.
THIS ONE BIG CUSTOMER WHO HAD TO
GO TO THE CEO, FOUND THAT THEY
HAD PATCHED -- THEY HAD A
DATABASE CALLED APACHE STRUTS.
THERE WAS A BIG SECURITY VOL
NEARABILITY.
-- VOL
-- VULNERABILITY.
THEY PATCHED 80% OF THE APACHE
STRUTS DATABASES.
THEY COULDN'T FIND ALL THEIR
DATABASE SOCIAL SECURITY.
UNFORTUNATELY THE ONES THEY
DIDN'T PATCH LOST MILLIONS AND
MILLIONS OF CONSUMER FINANCIAL
RECORDS.
MARIA: YOU'VE GOT A LOT OF
COMPETITORS AT YOUR HEELS.
WE KNOW THAT.
SO LET ME ASK YOU ABOUT THAT,
MARK, BECAUSE THESE MARKETS ARE
NERVOUS, ANOTHER 600 POINT
SELLOFF TODAY BECAUSE PEOPLE ARE
WORRIED ABOUT GROWTH.
DOES THIS EVEN BECOME PART OF
THE CONVERSATION?
YOU CANNOT GIVE UP OR GIVE IN ON
THIS KIND OF SPEND IN TERMS OF
SECURING YOUR DATA.
>> FIRST OF ALL, WE'RE THE ONLY
ONE THAT HAS THIS CAPABILITY.
SO WHEN YOU LOOK AT MARKET
DEPENDING ON WHICH COMPETITORS
YOU'RE TALKING ABOUT, WE INVEST
IN TECHNOLOGY.
I THINK THE CORE OF ORACLE -- I
MEAN, WE HAVE OUR FOUNDER'S DNA
IN THE ENTIRE COMPANY WHICH IS
TO CONTINUE TO INNOVATE.
AND FOR US, WHEN YOU TALK ABOUT
THESE THINGS WE JUST TALKED
THROUGH, PATCHING, WHETHER IT'S
ENCRYPTION, THESE ARE INHERENT.
THE SEPARATION AND SEGREGATION
OF DATA ON THE CONTROL FROM
WHERE THE CUSTOMER'S DATA IS,
THESE ARE FUNDAMENTALS OF WHAT
WE'RE BRINGING TO MARKET AND
FRANKLY WE'RE HIGHLY
DIFFERENTIATED IN THIS AREA.
MARIA: HAVE YOU SEEN ANY CHANGE
IN MATERIALS OF THE GLOBAL
OUTLOOK THAT WOULD WARRANT THIS
KIND OF NERVOUSNESS IN TERMS OF
GROWTH?
>> I TOLD YOU WHAT I THOUGHT
YESTERDAY.
I THINK THE U.S. ECONOMY IS
GOING FINE.
WHEN WE LOOK PARTICULARLY AT
MID-MARKET AND I GAVE YOU THE
EXAMPLE OF SOME OF OUR --
MARIA: NET SUITE.
>> OUR NET SUITE BUSINESS HAS
HAD AN UNBELIEVABLE RUN.
SOME OF THAT HAS BEEN CAUSED BY
THINGS WE'VE DONE, ADDING MORE
SALESPEOPLE AND ENGINEERS.
OUR NET SUITE BUSINESS GREW OVER
70% IN FISCAL Q4, GREW OVER 40%
IN FISCAL Q1 IN BOOKINGS.
MOST OF THAT GROWTH WAS IN THE
UNITED STATES.
THAT'S INDICATIVE OF WHERE WE