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The Death of the Corporate Data Center

NEW YORK (TheStreet) -- The big Salesforce.com (CRM) Dreamcast conference, co-starring Green Day, Huey Lewis and a host of other celebrities (including our own Jim Cramer), had this message for the market:

Fake cloud is beating private cloud and, in the process, killing the corporate data center.

For the last several years the cloud industry's assumption was that once big enterprises finished experimenting with the public cloud, they would want to put their crown jewels -- the database-driven applications that run big business -- into private clouds under their control.

But that's not what is happening.

Businesses are putting those applications into Software as a Service (SaaS) offerings like those of Salesforce and NetSuite (N), which offer some of the savings of cloud but aren't really based on cloud hardware, rather than hosting high-end servers from Oracle (ORCL).

At stake is the future of key enterprise applications. These include Customer Resource Management, or CRM, which describes both customers and prospects; Enterprise Resource Planning, ERP, which shows what you have available to get the job done, and Human Capital Management, HCM, used to get and keep the best employees.

These are the kinds of database-driven applications Oracle made its living on in the old client-server world through data centers located on the premises of its customers. Cloud technology, in which racks upon racks of commodity hardware are turned into a single virtual computer with infinite scale and at modest cost, was an existential threat to this business model.

Oracle's response is called Oracle Cloud, but it mainly consists of its own Exadata servers along with Oracle software, at an Oracle price.

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