By Charles King, Pund-IT, Inc. June 24, 2015
At a live event, Oracle’s Larry Ellison announced new additions to the company’s Cloud Platform. The 24 new cloud services include, Oracle Database Cloud – Exadata, Oracle Archive Storage Cloud, Oracle Big Data Cloud, Oracle Integration Cloud, Oracle Mobile Cloud and Oracle Process Cloud.
According to the company, the Oracle Cloud Platform helps customers build new applications, extend existing ones, and easily move existing on-premises workloads to the cloud with no application changes. The services are designed to maximize end user experience and productivity; enable developers to manage and analyze data, rapidly develop, test and deploy applications; allow architects to quickly integrate across on-premises and cloud applications; and enable business users to drive rich business insights and enterprise collaboration.
According to Ellison, “Oracle sold $426M worth of business in SaaS and PaaS last quarter, a 200 percent increase over the same quarter last year. That’s an industry record. No company has ever sold that much in just one quarter. Oracle is the only company on the planet that can deliver a complete, integrated, standards-based suite of services at every layer of the cloud … (enabling) us to be much more cost-effective than our competitors. Our new Archive Storage service goes head-to-head with Amazon Glacier and it’s one-tenth their price.”
All of the new Oracle Cloud Platform services noted in the company announcement are immediately available
The pitch
Oracle makes a sky-high bet on cloud services.
Final analysis
Oracle’s relationship to cloud computing has been among the IT industry’s most curious, weighed down in large part by a 2008 Larry Ellison diatribe in which he asked, “What the hell is cloud?” I certainly feel for his feigned confusion since cloud mainly consists of applying to scale-out systems and IT environments, workload management and automation practices that have been common for decades in scale-up systems.
However honestly-intended, Ellison’s cri de coeur came at a time when technology companies of every sort were rapidly shifting their attention and efforts toward the cloud, including vendors deeply knowledgeable about and enmeshed in enterprise data center solutions and processes. As a result, Ellison’s cloud sniping made Oracle look more than a bit like a cranky Midwestern fuddy duddy rocking on his porch and criticizing passing travelers about their foolishness for heading to the California Gold Rush.
But that was then and this is now. During Oracle’s recent quarterly earning call, the company revealed that while year over year (YoY) revenues from its software as a services (SaaS) offerings grew 29% (to $416M), revenues from the company’s core software license business fell 17% YoY. Partly as a result, Oracle’s shares were beaten down in after-hours trading.
So what are we to make of the additions to Oracle’s Cloud Platform? At first glance, the new services should appeal to many of the company’s existing and dedicated customers. That’s especially the case for services that leverage popular Oracle platforms, like its Exadata solutions.
That said, there aren’t many surprises in the new portfolio. The company is obviously leveraging the cloud to promote its proprietary software and hardware offerings, but so do most of its competitors. There are also requisite nods toward currently fashionable big data, integration and mobile solutions that will take time to fully assess.
There are also some problematic points with the announcement, mainly in regard to Ellison’s financial claims and comparisons with competitors. The “record” he pointed to regarding Oracle’s cloud sales is hard to discern since, despite its 200% growth during the past quarter (to $426M), the company’s cloud revenues remain a small fraction of the those driven by established leaders like IBM ($7.7B), Microsoft ($6.3B) and Amazon ($5.0B) during their past fiscal years.
Likewise, Ellison’s claim that Oracle is “the only company on the planet that can deliver a complete, integrated, standards-based suite of services at every layer of the cloud” is, even with the kindest of intentions, rhetorical juggling on a grand scale. Finally, one might question an oddity in Oracle’s claims of “exponential growth” in cloud since, while the number of customers grew nearly 5X (from 381 to more than 1,800) during the past quarter, revenues merely doubled. In other words, that multitude of new cloud customers doesn’t seem to be buying much just yet.
These issues aside, the most intriguing point of the announcement may have been Ellison’s claims that the pricing of Oracle’s Archive Storage service is just 1/10th the cost of Amazon’s Glacier archive storage service. If that same aggressive approach extends to other Oracle Cloud services, it would mark a distinct and potentially highly disruptive sea change in the cloud marketplace.
Why so? Because most major cloud vendors are trying to operate their businesses profitably though they do so to different degrees. If Oracle extends its pricing strategy for Archive Storage to other Cloud Platform services, it would bring significant pressure to bear on competitors. Deep pocketed players like IBM and Microsoft could certainly play Oracle’s game but Amazon, which depends heavily on its AWS revenues, could be in for a rough time.
Despite the competitive bloviation in its launch announcement, Oracle’s new Cloud Platform services and solutions appear well-considered and will likely be welcomed by many of its enterprise customers. Oracle may be arriving late for the cloud game but given its heft and leadership, it would be a mistake to count the company out. Exactly how competitive Oracle will be in this space is far from clear, but it seems reasonable to say that the cloud computing market’s current leaders have acquired a serious, potentially worthy adversary.
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