Does Oracle have a shot in the IaaS cloud market versus Amazon and Microsoft?

Larry Ellison

Oracle is making a big push in the IaaS cloud market, some wonder if its too little too late


Less than a week after Hewlett-Packard unceremoniously withdrew from the IaaS public cloud market, another legacy IT stalwart has jumped in.

In a grandiose display at the company’s OpenWorld conference in San Francisco, Oracle executives, led by czar/Chairman Larry Ellison made an ambitious, weeklong pitch for the company’s cloud. It stretches across all types of cloud options - from private on-premises IaaS systems, to an elastically scalable public cloud, plus a suite of SaaS and application development PaaS components.

There’s just one question: Is Oracle offering too little too late to complete with the likes of Amazon Web Services and Microsoft Azure in IaaS?

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From an IaaS perspective, the big headline from OpenWorld is the release of the company’s public cloud named Oracle Elastic Compute Cloud. It represents the culmination of a years-long journey and investment.

After once decrying “the cloud” the company has since gone all-in on the cloud. The effort began with Oracle offering its popular Exalogic Databases on-demand for customers. In the past few years Oracle has made significant investments in SaaS vendors – from buying talent management SaaS Taleo for $1.9 billion in 2012, to purchasing RightNow Technologies, a CRM for $1.5 billion a year earlier.

Oracle went on an aggressive push to acquire talent too. Perhaps most notably, last year Oracle hired former Google cloudster Peter Magnusson as the company’s senior vice president overseeing its public cloud efforts. The idea was to build out an IaaS offering that would serve as the infrastructure base to host all of these SaaS products, and eventually offer that IaaS as an on-demand service for customers.

This week those plans become public. The company introduced a compute (dedicated and elastic options) and storage service (archival and file), as well as a new Container Cloud, plus new VPN and Cloud Connect networking options.

The transition from DBaaS to SaaS to IaaS has been done out of necessity, analysts say. Amazon Web Services has grown into a $7 billion-plus annual revenue vendor focusing almost solely on IaaS. At its re:Invent conference, AWS Senior Vice President Andy Jassy practically mocked Oracle for its aggressive sales tactics and lock-in licensing. AWS is aiming directly at Oracle in its products too, releasing a database migration tool that will automatically replicate an Oracle or any other database into an AWS equivalent one. Aurora is AWS’s MySQL cloud database, which it says is now the fastest growing product in AWS history.

“From a purely competitive standpoint they need to halt customers from moving to a public cloud IaaS provider such as AWS, Azure and others,” wrote Gartner cloud analyst Sid Nag. “AWS (and others) are adding and continue to add new features, capabilities and toolsets for customers to migrate Oracle’s products, for example databases, on to AWS.” This summer Oracle’s profits slid 24%, thanks to cloud competitors. Oracle had to stem the tide.

Oracle isn’t at a complete disadvantage though. “Oracle has one thing that AWS doesn’t,” explains 451 Research Group’s Carl Brooks. “And that’s the attention of enterprises. If they can offer an on-demand public cloud, they’re hoping they can win back some of that business.” Oracle’s IaaS offerings are not merely as complete as AWS’s portfolio – but Brooks says they could be good enough to sway “fence-sitters” who are current Oracle customers from jumping ship to Amazon.

AWS may not even be Oracle’s biggest competitor in the IaaS cloud market. Given Oracle’s range of cloud products, from IaaS to SaaS and PaaS, the product portfolio it most resembles is that of Microsoft, Brooks adds.

screen shot 2015 10 28 at 4.52.15 pm Oracle

Chairman Larry Ellison introduces the Oracle Cloud Appliance for IaaS and PaaS at OpenWorld this week 

Flying somewhat under the radar at OpenWorld was the announcement of an Oracle Cloud appliance for IaaS and PaaS. It’s an integrated hardware/software bundle that Oracle envisions will be the basis of a company’s private cloud. Ellison said the key is that it runs the same management software as Oracle’s public cloud, allowing a like-to-like public/private cloud. Microsoft offers a similar offering with its Azure Stack, which runs the same Auzre management software that its public cloud relies on.

Not everyone’s convinced Oracle’s public cloud is a panacea. “They’re way behind in the IaaS market,” says IDC analyst Larry Carvalho, who believes Oracle would be better off focusing on platform as a service capabilities, allowing customers to extend their existing Oracle workloads and applications into hosted, SaaS offerings. Oracle’s PaaS is a strength for the company, he believes. But even there the company has limited functionality, specializing in allowing developers to write Java apps but not yet embracing other development languages like Ruby.

With HP just getting out of the public cloud market, it could seem like curious timing for Oracle to get right in. Jillian Freeman, an analyst at Technology Business Research, says it’s not that simplistic though. HP is fundamentally an infrastructure vendor; selling public cloud cannibalizes its hardware sales. Oralce is a software vendor, who may be late to the market, but has a competitive reason to be in it. “Oracle has a strong enterprise brand name and a powerful sales and marketing team,” she notes. “I don’t necessarily think it’s too late if they have a high quality, scaleable product for comparable costs.”

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