Oracle made a $300B bet on OpenAI. It's paying the price
102 points
by pera
2 hours ago
| 10 comments
| finance.yahoo.com
| HN
taylodl
2 hours ago
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Oracle has bigger problems than OpenAI. They've been selling large enterprise contracts for the past 10 years and they're coming up for renewal. A lot of those enterprises don't feel they got a good value. If 10% to 20% of those enterprises fail to renew for another 10 years, then that could have a severe impact to Oracle. Their other issue is a lot of those enterprises are looking at migrating to PostgreSQL so they can migrate off of Oracle's RDBMS. Many have already deployed PostgreSQL for their department-level applications, so they can get the experience they need before tackling their enterprise-level applications.
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thedougd
1 hour ago
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In my organization we've worked hard for several years to insulate ourselves from Oracle.

We've implemented aggressive desktop monitoring and blocked downloads from Oracle to avoid the Java subscription. Where it's needed, an OpenJDK distribution is used.

Where we must still use Oracle database, in some small, bespoke legacy use cases (heavy PL/SQL), we've moved to RDS with license included to avoid the direct relationship with Oracle. I get it, a big RAC customer will have a harder time, but they'll also likely have alternatives (e.g. SAP implementation to HANA).

I know of at least one vendor (Hyland) who's dropping Oracle support and providing a migration path to MS SQL. Shame not a FOSS database, but still a trend away from Oracle.

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panarky
24 minutes ago
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I watched from the sidelines with grim interest as my organization tried to decide between Oracle and SAP.

The team defined requirements, ran an RFP and demo process and did site visits to clients of each company. The SAP reference clients weren't exactly thrilled with SAP, the product was too complex and too expensive, but it was rock solid and SAP was a reliable partner. The Oracle reference clients had the usual complaints about features and flexibility, but their real beefs were that Oracle was a predatory and untrustworthy partner.

Oracle made claims in their RFP response that were proven false in the demos and site visits, confirming the claims from reference clients about the company's ethics. In contrast, SAP's RFP responses were validated by the team's due diligence.

So management decided to go with SAP. In response, a senior Oracle person tracked down all of the company's board members and made outrageous claims of incompetence against the company's executives, and alluded ominously about bad faith and conflicts of interest.

Oracle was completely hostile and off the rails when they figured out they lost the deal. I will never, ever do business with Oracle.

Unfortunately, while the SAP application seemed solid, the organization went with their HANA database which was astronomically expensive, and had a bad habit of returning different and provably incorrect results to the same deterministic SQL query every time it ran, and then the entire database would crash for all users.

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otterley
1 hour ago
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Aren’t contract expiration dates distributed over time? Why would now be a particularly vulnerable time? Granted, we’re coming up on the end of the calendar year, but 2025 doesn’t feel particularly special.
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foobarian
1 hour ago
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Also, how does one come upon these kinds of bits of industry lore? Asking for a daytrader friend. Ahem
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cj
36 minutes ago
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I've found the only stocks where I can personally be successful stock picking are companies I have some sort of unique relationship or experience with that is uncommon or unavailable to sophisticated investors or analysts.

E.g. you're an IT admin at Big Co overseeing software contracts. You can often get interesting insights by looking at things like how aggressive their sales reps are with end of quarter discounts (how desperate are they to meet numbers that quarter?). Or if you see a company completely dropping the ball within your org, but on CNBC you constantly hear how great the company is by pundits and analysts -- maybe you know something the pundits don't.

Often times the consensus view of a stock trails reality by a few weeks to a month - there's a lot of non-public but also non-confidential information that isn't readily available to analysts, but exposed to employees of customers/vendors/partners/end-users.

TLDR: when stock picking or day trading, pick companies within the niche of the world where you're a SME.

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stronglikedan
1 hour ago
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I also have to wonder how many customers actually signed a 10 year contract (which is extremely long for software of all things), unless I'm misunderstanding the comment.
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financetechbro
55 minutes ago
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Yeah 10yr long contracts aren’t the norm. Typically 3-5 years if it’s not on annual basis
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OccamsMirror
1 hour ago
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Can confirm. There is zero good will towards Oracle in my organization, and AWS have positioned themselves in a way to push the enterprise team to using PostgreSQL on RDS, and helping development teams make the move with training and proservices. Oracle's greed is finally coming back to haunt them.
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cameldrv
44 minutes ago
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"Do not fall into the trap of anthropomorphizing Larry Ellison"

https://www.youtube.com/watch?v=-zRN7XLCRhc?t=2300

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adabyron
1 hour ago
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But how hard is it for your companies to migrate?

Is it worth the risk/work to move everything over? For a lot of enterprises, their needs to be a huge cost savings or risk reduction. Risk usually being the most important factor the bigger the company.

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hylaride
1 hour ago
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I know of one largish bank moving away from Oracle middleware and RDMS. It's happening in pieces starting with low hanging fruit and for awhile the two will run in parallel (with the new data stores starting off as a comparison check to reconcile any bugs that crop up). Some early wins were account transaction logs that can go into better suited DBs, etc.

My understanding is that they were relatively lucky in that most of the hard parts are in the middleware layer and rarely the DB itself - the bank has been around since the 1800s, so has a huge mishmash of technologies that go from old IBM mainframes up to more modern cloud infra. So they're already kind of used to using middleware logic to stitch together various data sources.

The funny thing is that my contact there said the primary impetus is that they see the writing on the wall for a lot of their "legacy" Sun hardware, and figure if they're going to have to redo a lot of it, they may as well re-architect the rest. There'll still be oracle DBs running in the bank for a looong time, but there'll be less and less of it.

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zamadatix
1 hour ago
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If it's the same for others as it was for us recently then very difficult... but the cost savings were so massive in terms of margin the risk was worth it. What taylodl mentioned about growing institutional knowledge and experience with Postgres in other apps first rang true as well. We are not 100% Oracle free, but we have migrated much away already.

In the larger discussion, I also wonder what their new contract rate is for these solutions. Even if 0% were migrating off, if 0% were migrating on then the net rate would still be decently negative because of natural business/app attrition.

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kev009
1 hour ago
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Probably nobody here is an Oracle fan but the miss on sentiment like this is you could have written the same comment minus OpenAI 10 and maybe even 20 years ago.
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jl6
47 minutes ago
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Definitely true, but a lot of Oracle sites are that way because of decisions made decades ago. Opportunities to re-architect are rare. But when those opportunities do come along, nobody is choosing Oracle RDBMS for their future state.

What I do see is orgs choosing other Oracle apps like ERP which sneak the Oracle RDBMS in as part of the bundle.

Anyone using Oracle purely as a database is going to migrate to PostgreSQL eventually, but there are a lot of orgs where the database is just one part of a wider Oracle ecosystem with world-class vendor lock-in features.

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kev009
22 minutes ago
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They have some funny accounting like Google and Microsoft where everything is "cloud" but the revenue streams are certainly diversified from straight Oracle DB such that PostgreSQL equivalence or superiority does not affect the viability of the company or the stock price. Communities like this often over index technical and personal opinion with reality.

I worked at a midsize that was core internet infra, where we had an in house OS and ODM hardware and FOSS DBAs. The one Oracle DB and Oracle HW was slipped in the door through finance for ERP as you say. Although I suspect that would be cloud hosted these days.

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justapassenger
1 hour ago
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Oracle has been selling large enterprise contracts for many decades and those enterprises were looking to migrate off Oracle since then too (I've been working on a project like that almost 20 years ago, at my first real job).
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lateforwork
1 hour ago
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> If 10% to 20% of those enterprises fail to renew for another 10 years

Think about how hard it would be for you to switch from iPhone to Android. Now multiply that by 10000. That's how hard it is to switch enterprise software.

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collingreen
1 hour ago
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Now imagine you save $10M a year doing it
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chasd00
20 minutes ago
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> Now imagine you save $10M a year doing it

only after the move is complete and assuming it's as successful as you think it would be. What usually happens is the migration takes on a life of its own and is a multi-year if not multi-decade project. It sucks up so much money and effort that a business could be using to actually build their business vs migration to a different database. Meanwhile, the account execs of the old system know you're moving off of it so say good bye to any kind of contract discounts or special treatment during emergencies.

There's entire graveyards of failed enterprise system migrations. The most likely outcome is eventually a compromise has to be made and now you have two systems to maintain and license, the legacy one, and the new one. With the promise of eventually getting off the old one but it never happens.

I'm on a project with a client that has 24 ERPs across their enterprise around the globe from acquisitions. Half of them are ERPs that were meant to replace another one but the transition was never completed. A big part of this project is integrating all of their sales pipelines, analytics, and history into, yet another, enterprise system.

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mystifyingpoi
40 minutes ago
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True words. I've seen this technique used to force people to think realistically. It goes like this (example):

- Is it possible for a 3 person team to manage 1000 distinct Kubernetes clusters?

- No way in hell!

- What if we hypothetically pay you $2M salary each?

- Well, let me think about it, we could figure this out...

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0cf8612b2e1e
30 minutes ago
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How is that realistic? If you offer me insane money, I will of course bluster that I can do the impossible. When I inevitably fail, I still have a pocket full of cash.
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chasd00
13 minutes ago
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It's not realistic, money doesn't make hard things easy. Paying someone more doesn't make them more capable, at best it an incentive to work longer/harder. That doesn't make them more capable either, it just makes them work more. If someone asked me to swim the English Channel I'd say no because i can't do it. If someone offered me $2M to do it i would still say no. Let's say i said "yes, i'll figure something out.", well i would still drown or need to be rescued even after being paid $2m.
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0cf8612b2e1e
46 minutes ago
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It’s rarely that clean. Sure, there is the immediate sticker price, but you have to factor in the migration costs as well. Depending on how deep the integration goes, it could take years of effort. All of which is going to take political capital to get people to migrate perfectly working systems without any operational gain. Plus you have the old guard who actively fight you-maybe they have spent their career in Oracle and that is all they know.

Even if you do move mountains and make it happen, suddenly any outages after the transition become your fault. “This never happened on the old system.”

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crackez
20 minutes ago
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That's about how much it cost my company to move the flagship off of z/OS. That kept the language (Cobol) and DB2 intact (moved to DB2LUW); just a new build target basically.

It took like 5 or 6 years and that $10M represents the cost of only 10 months of operations on Z.

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sharpy
1 hour ago
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Once upon a time, our team was paying Oracle $6 million a year in DB licenses alone. We ended up building our own bespoke storage solution.
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mystifyingpoi
37 minutes ago
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It's not really going to benefit ME anything. It will benefit my employer this amount. I might get an extra bonus for successful migration, but it's peanuts compared to the savings.

So in such situation, I'd be tempted to actively oppose this initiative.

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pfortuny
6 minutes ago
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Imagine you think you save… You only save after you have paid…
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Invictus0
52 minutes ago
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Now imagine the switch is going to cost you $100M in downtime and change consultants, if it succeeds at all, and your new provider will up the price in a few years time anyway.
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PunchyHamster
48 minutes ago
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Then just don't migrate to MS SQL but to Postgres
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0cf8612b2e1e
44 minutes ago
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Big enterprise businesses want support contracts for someone to blame. Yes, you can find Postgres support, but switching to a different devil is the far more common option.
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Invictus0
34 minutes ago
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"just"
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jt2190
1 hour ago
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Why would any Enterprise Software vendor leave $10M on the table?
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arjie
41 minutes ago
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Just not that straightforward in practice. You have all of these product lines that people are building that you're hoping will grow the business. They all depend on your backend stuff that's just an implementation detail. You have to somehow convince everyone across the org to stall their product development to perform a "migrate to Postgres" thing? It's not going to be easy.

There was a recent big company that posted on Twitter about "shutting down our last Oracle server" and that was the last thing in a multi-year process or something like that.

Coordination is sometimes harder than the technology itself.

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esafak
51 minutes ago
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Because vendors are not fungible in the eyes of the buyer.
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boringg
1 hour ago
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Lack of capability, mismanagement, misinformation to name a few
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bdangubic
43 minutes ago
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I read very similar comments … 10-15 years ago
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mbesto
36 minutes ago
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Oracle's growth and value is in SaaS apps (NetSuite) and their cloud offering, not DB licensing. The economic impact of enterprises moving off Oracle DB is massively overstated here.
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websiteapi
1 hour ago
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Sources for any of these claims?
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moralestapia
1 hour ago
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>In business since 1977.

>Market cap of half a trillion.

>Somehow they're "in trouble".

Mega LMAO.

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SvenL
54 minutes ago
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There are enough examples which one might mention here: Nokia, MySpace, Yahoo, Kodac, AOL, Blockbuster, toys‘r‘us … all ones big. Yes, oracle might not vanish, but it definitely needs some change.
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moralestapia
48 minutes ago
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???

None of those were in business since 1977 (w/ the exception of Nokia, which I would argue is still a successful company today. I wouldn't put it on that list).

None of those were ever valued (even close to) half a trillion, even adjusting for inflation.

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wrathofmonads
5 minutes ago
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Oracle’s massive bet on OpenAI might be financially risky, but its investments in AI farms could accelerate Java’s evolution for AI. While Python dominates training, inference is where the money is. Projects like OpenJDK Babylon hint at a future where the JVM becomes a serious player in AI inference.

https://openjdk.org/projects/babylon/articles/auto-diff

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deepriverfish
1 hour ago
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I've never heard good things about Oracle, I don't understand how people keep using their products.
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0cf8612b2e1e
38 minutes ago
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It is legacy decisions going back decades. Thirty years ago, you did not have a wealth of database alternatives. You picked Oracle and built the business around it. More and more business processes accumulate around the data store, all using some proprietary Oracle extensions. Eventually, the thought of disentangling the dependency is so daunting you are locked in forever until an existential risk materializes.
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grandiego
19 minutes ago
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In my experience, it is from technical management in medium/big companies you'll listen some good things about Oracle as a database product (regardless of its actual merits), like stability, scalability, compliance checks, and other "enterprisy" features (like database encryption). Also, it is offered as a default database option for many enterprise applications from their vendors. While many people points to Postgresql as "the alternative", in many places outside USA its commercial support is not available, or too limited. Other commercial alternatives (like MSSQL) have the (more or less) the same bad reputation regarding licensing costs.
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redox99
43 minutes ago
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Oracle Cloud has really good price and many locations. That's why I use it.
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knallfrosch
1 hour ago
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Then it's probably business requirements.

Single-sign on, in-person support, certificated software, offering training courses to onboard people, undeletable logs, help with upgrading major versions..

All from a single vendor so you can pick up the phone, yell "fix it" and go on with your day.

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cyanydeez
2 minutes ago
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>go on with your day

Unless they decide to ~~extort~~audit you.

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rachr
1 hour ago
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It seems fitting. They destroyed Sun, destroyed Java, destroyed any developer or customer goodwill...and now they are destroying themselves.
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orochimaaru
1 hour ago
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Java is one thing they did right. Most enterprises are looking to move away from Oracle. I think there will be niche cases where rewrites don’t make sense. But for one of the big telecom providers I work for - the decision was made in 2020 to move off of Oracle. It’s not a flash cut but we’ve significantly reduced reliance. There are some critical apps that are still on it, but those are capped in maintenance mode until their replacements are ready.
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vips7L
1 hour ago
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Java is in the best shape it's ever been in. Jdk development and performance are through the roof and the developer experiences gets better with every release.
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davey48016
1 hour ago
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Java's in great shape now, but the period between when Oracle bought Sun (~2010) and about 2017 wasn't great, and there was a lot of concern about Java's future. I think most people who moved away from Java then haven't looked back.
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vips7L
43 minutes ago
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I believe that is mostly due to Sun's stagnation and lack of funding. Oracle released Java 7 in 2011 and Java 8 in 2014, which is arguably the start of modernizing Java.
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0cf8612b2e1e
35 minutes ago
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I assumed it was Kotlin and/or Android. Oracle otherwise seemed fine to treat Java like IE6. It was only as alternatives (rise of Go, Rust, Clojure, etc) increasingly made the language look bad that really started to push development.
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jeffbee
1 hour ago
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The idea that Java has been destroyed is pretty wild. I don't see how that belief could survive contact with the real world.
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bigmutant
23 minutes ago
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Pretty common attitude from folks who have never worked in one of the BigTech companies where Java rules (Amazon being a prime example). Since they never encounter Java in the "SF-style Startup" world, they assume that it must be dead. Meanwhile hundreds-of-thousands of Engineers deal with hundreds-of-millions (billions?) of lines of Java every day
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collingreen
1 hour ago
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My assumption is the poster wants to imply Oracle destroyed the good will and interest for people to start new Java projects after the licensing changes and subsequent shakedown. Java clearly still runs all over the place and will for a while (although plenty of people trying to keep java but get away from oracle).
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manphone
1 hour ago
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The Java goodwill is mostly gone and I see zero new orgs trying it so while Java is still alive and well the mindshare has definitely been squandered given the capability that Java has.
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stronglikedan
1 hour ago
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new orgs chase the shiny new things. nothing new there
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dangus
1 hour ago
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And then those new orgs become established orgs and some old orgs decline.

It’s not even really a “chase,” it’s a question of “if I’m building something new, what am I choosing?”

Eventually that momentum can turn into the old thing being worth actively removing.

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jeffbee
1 hour ago
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Java is one of the giants and there are tons of existing and new projects that use it. Hotspot is the choice for high performance programs. Approaching its performance even with C++ requires a dedicated team of experts. Look at QuestDB, or Netflix, as current examples of projects choosing Java.

The languages that get a lot of airtime on HN like Rust, Go, and OCaml are way down in a tier of languages that get a lot of blog posts but enjoy relatively little traction in reality.

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haberman
19 minutes ago
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> Hotspot is the choice for high performance programs. Approaching its performance even with C++ requires a dedicated team of experts.

It's very surprising to hear you say this, as it's so contrary to my experience.

From the smallest programs (Computer Language Benchmarks Game) to pretty big programs (web browsers), from low-level programs (OS kernels) to high-level programs (GUI Applications), from short-lived programs (command-line utilities) to long-lived programs (database servers), it's hard to think of a single segment where even average Java programs will out-perform average C, C++, or Rust programs.

I hadn't heard of QuestDB before, but it sounds like it's written in zero-GC Java using manual memory management. That's pretty unusual for Java, and would require a team of experts to pull off, I'd think. It also sounds like it drops to C++ and Rust for performance-critical tasks.

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ecshafer
1 hour ago
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The fact of the matter is that you read through a lot of these start up blogs on how they scaled X technology to some amazing number like 1000 users a day or whatever. But your average Java Spring app on Postgres is doing some far heavier workloads.
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dangus
1 hour ago
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The languages that get a lot of airtime on HN are the ones the young people will just use by default.

Hotspot is the current choice for high performance programs, but is Rust lower performance in some way or are the only downsides related to its younger age?

It’s perhaps useful look at what languages brand new projects are being started with rather than just looking at what languages large established companies like Netflix are choosing.

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jeffbee
49 minutes ago
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Rust is not inherently slower but then again neither are C and C++, but in practice all of those tend to be less efficient than realistic Java systems. Rust is displacing C in contexts where Rust's less than amazing performance are not noticeable in contrast to C's also-not-amazing level of performance. And I also think there is a cognitive bias under which a developer will reach for Rust to supplant a legacy C program, because that developer reflexively dislikes managed language runtimes.
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kakacik
51 minutes ago
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Depends where you are, in startup world definitely yes. Elsewhere, not so much.

Companies couldn't care less about the underlying platform or language, they want reliability, stability and tons of easy to find people who can work with it from Day1. Java delivers all that, and will keep delivering for upcoming decades. Big businesses and big money love this (or hate the least out of IT stacks).

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snarf21
33 minutes ago
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To be fair, Oracle acquired Java (via Sun) specifically so they could sue Google for billions. They may not have killed Java but it wasn't altruism.
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wiseowise
57 minutes ago
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Destroyed Java? What are you even on, lol? Oracle resurrected Java.
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swarnie
1 hour ago
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I still have Java on just over 1k enterprise devices, its dead?
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voakbasda
1 hour ago
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More like a zombie. It is still shuffling along, but the life left it long ago.
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vkou
1 hour ago
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Java's not gone anywhere, but it's been years since I've interviewed anyone who has made it their language of choice. Developer sentiment for it isn't exactly great.

A decade ago, a good ~80% of applicants chose to use it or C#.

I personally don't have any issues with working with it, but nobody's learning it outside of work.

On the other hand, it is quite easy to learn, so there's that going for it.

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PeterStuer
13 minutes ago
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EU contracts for SAP over Oracle would be so much easier if SAP would wean themselves of US cloud dependency.
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chickensong
33 minutes ago
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This particular flavor of schadenfreude is scrumptious.
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antoniuschan99
1 hour ago
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Will be interesting. Also the Paramount Skydance takeover bid is still pending. Paramount is ~15 billion market cap and the deal for Warner is ~77 billion.
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cmiles8
1 hour ago
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Oracle bet the farm on AI, and that’s starting to look like a really bad idea. Commentary about delaying new data center buildouts for AI is freaking out the markets today that the bubble burst is stating. Credit default swap values are also now heavily leaning towards a bunch of AI investments going bust.
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paulpauper
33 minutes ago
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This is such fake news. Oracle was paid $300 billion by Open Ai to develop server infrastructure, not that it's betting $300 billion on Open AI. The headline gets it 180 degrees backwards. That is why Oracle stock surged so much a few months ago. Oracle stock is still up 15% this year.
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1970-01-01
1 hour ago
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Tip: Ask your AI to design their DCs so that they can be easily converted into low income apartments. When you hear the bubble popping sound, it just means you're ready to pivot into the rental business.
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