Flash back to just about two months ago. Larry Ellison, Oracle’s CEO, walked on stage on the first evening of Oracle OpenWorld 2010 and unveiled the Exadata server. It was about three times the size of his speaking podium.

“This is the cloud,” Ellison said. “You can have it for a million bucks.”

Not really. According to a number of heavy players in the cloud computing space, Oracle, a new player in the computer-hardware world thanks to its acquisition of Sun Microsystems, is going about promoting cloud computing the wrong way — because it doesn’t “exist in a box.”

A panel consisting of Marc Benioff, CEO of customer resource management provider Salesforce, Paul Maritz, CEO of virtualization software provider VMWare, and Andy Jassy, senior vice president of Web services with Amazon.com, slammed Oracle for its focus on promoting cloud computing as a product — not as a service — at the Web 2.0 Summit conference in San Francisco today.

And Oracle’s strategy has a lot of that has to do with Ellison, Benioff said. He likened the sometimes-bombastic Ellison to Ken Olson, the man who said there would be no reason for any individual to own a personal computer. Oracle is still trapped in a reality where cloud computing is provided as some kind of a product — in the form of a server or a high-powered computer — and not as a service, he said.

Cloud computing has exploded in popularity because it gives any developer an insane amount of computing firepower without having to sink a ton of money into building a personal cluster of servers. Instead, application developers can simply tap into a number of servers run by companies like Amazon and Rackspace to handle all the back-end computing.

And cloud computing has grown so popular is because it is so easy to access it. Jassy called it the democratization of the cloud. He said developers are no longer constrained by having to pick up their own equipment or being “locked in” with a company to develop their software. Instead, they can take their ideas to whichever cloud computing provider offers them the best deal.

“What cloud computing is to me is this sacred thing of being able to run things as a service,” Benioff said. “I think it’s post-traumatic stress disorder from Microsoft and how they used to control things, but we have to abandon the points of control metaphor — no one controls the cloud.”

Benioff called on Dropbox’s Drew Houston, a graduate of the Massachusetts Institute of Technology, as a prime example of how successful the democratization of the cloud has been. Houston was able to create a truly disruptive service — the ability to share files and download them to computers effortlessly — thanks to the power of cloud computing.

The panelists called on each other — and other cloud computing providers — to abandon the thought of cloud computing as some kind of a product and look to it as a service they can provide developers to help augment their own cloud offerings. Cloud computing providers have to focus on creating attractive applications for developers and other potential customers on top of managing data efficiently and offering a powerful development suite.

“This is becoming mainstream, the shift is happening whether we want it to or not,” Benioff said. “And the role of Ken Olson, this time around, is being played by Larry Ellison.”