Oracle's Ellison Skewers Latest Tech Trends

The CEO has a low opinion of cloud computing, VMware and Google's Android phone.
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SAN FRANCISCO - Oracle (ORCL) - Get Report CEO Larry Ellison doesn't think the future is bright for VMware (VMW) - Get Report, the Android phone and cloud computing.

Before a roomful of financial analysts here, the colorful chief executive on Thursday skewered the tech industry's love of hype. "The worst thing they can say about you in Silicon Valley is 'you just don't get it,' " Ellison said when asked about the industry's latest buzz-words -- cloud computing.

Ellison said Oracle will not invest in cloud computing centers, which he characterized as the latest fashion trend that, like on-demand software, lacks a profitable economic model. "Who's making money at cloud computing?"

As for on-demand software competitor

Salesforce.com

(CRM) - Get Report

it "barely makes money at all," he said.

Although Oracle's own on-demand service recently turned profitable, the company intends to stick primarily with its model of selling licensed business software.

An increasing number of tech giants such as

IBM

(IBM) - Get Report

have opened cloud computing centers. In IBM's case, the centers will be monetized through the company's consulting and outsourcing services business, providing computing centers for Big Blue's clients.

Asked about the future of virtualization leader VMware, Ellison said the company "is less protected than Netscape." "Although they are a pretty big company, they should be smaller," in terms of market cap, he added.

VMware's market advantage has been undermined by

Microsoft

(MSFT) - Get Report

products that also virtualize Windows environments, Ellison says. "Netscape had a better chance of competing

against Microsoft with a browser than VMware does" with its virtualization software, which is a feature of the operating system, he said.

VMware asserts that basic virtualization software should be independent of the operating system. Noting that VMware's dominance is also threatened by software from Oracle and

Sun Microsystems

(JAVA)

, Ellison estimated VMware's market cap should be worth only a fraction of what it was at the stock's height a year ago, when it surpassed $40 billion.

Not saving his barbs for competitors, Ellison also discounted the viability of

Google's

(GOOG) - Get Report

Android mobile operating system.

Noting that the software now powering

Apple's

(AAPL) - Get Report

iPhone went into development more than two decades ago, Ellison said the Android OS won't compare to the iPhone or

Research in Motion's

(RIMM)

BlackBerry.

"RIM has a huge constituency and a great product. The iPhone is fabulously successful," Ellison said. While acknowledging that Google is great at search, he added, "Android is like Microsoft's old model -- selling telephone software to the telephone company."

Observing that the Android had been in development for just a few years, Ellison said Google will have "a difficult road" to make it a successful product. The Android "is too much hype. I don't think the mobile market is hype. The mobile phone is the next computer platform, and Apple's is doing extremely well. That's not hype at all."