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Computing World Moves Away From Oracle

NEW YORK ( TheStreet) -- For investors, the worst news can be news you don't hear.

Oracle (ORCL - Get Report) made that kind of news Wednesday, missing analyst revenue estimates for the fifth time in 10 quarters.

It's getting to be a habit. It's getting to be such a habit it's not news anymore. When it's not news anymore investors may not hear that it's time to get out.

It's time to get out.

Oracle was the last company standing in the old client-server era. It bought Sun Microsystems, and it bought most of its competitors in the database space. The rest it seemed to crush. When CEO Larry Ellison hired Mark Hurd as co-president in 2010, it seemed he could put his full attention on transforming, and defending, sailing's America's Cup, which has become his passion.

That didn't work out so well either. Despite transforming the rules and moving the races onto San Francisco Bay, it looks like rival Emirates Team New Zealand is going to take the prize away, perhaps as early as today, as the America's Cup Web site reports.

What went wrong? For Oracle, technology changed. Cloud computing -- masses of low-cost servers using virtual operating systems -- have proven themselves far more cost-effective than the architectures Oracle made its living on.

It's not so much the "cloud stack" as the result of building such a stack that's the problem for Oracle. When software becomes a service, when you can replace your whole IT department with something you buy like you buy electric power, and at a low, low price, that's compelling.

The company sells an "Oracle Cloud," based on its proprietary hardware and software, but many analysts have been calling that "faux cloud" since it doesn't deliver the full savings of cloud to customers, and I agree.

Oracle has long been known for having an iron grip on its customers, making the costs of switching away from its architecture appear prohibitive. But you don't have to switch to make an impact on Oracle's numbers. Just slow your upgrades, experiment with cloud, and don't grow your Oracle stack -- that's enough.

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