Why Oracle Could Be a Dark Horse in the Cloud Wars


Oracle isn’t the first name that comes to mind when considering the top players in the hyper-scale infrastructure- and platform-as-a-service markets. It isn’t even the second, or the third. But a set of recent announcements from its OpenWorld conference show a path forward for the company to become a dark horse in these critical markets. It will depend on its relationship with enterprises and investments in key new technology. Here’s how that could work. 

An existing customer base that’s still beginning migration

Oracle’s existing customer base is one of its single biggest advantages in the cloud market. By and large, those companies have significant, mission-critical workloads based on Oracle Database (Oracle DB) that haven’t moved to the cloud yet. However, migration remains a priority for those companies, which means Oracle has an opportunity to push those workloads to its cloud. 

The company has a number of tools at its disposal to encourage that migration. Last year, Oracle changed the licensing terms for its database, effectively doubling the cost of running Oracle DB on Amazon Web Services (AWS) by redefining how it counted processor cores. This may motivate cost-sensitive enterprises to move their databases headed to the cloud into Oracle’s infrastructure rather than another provider’s. 

The company’s second-generation cloud infrastructure is designed to provide a high-quality environment that allows enterprises to run Oracle workloads in a way that successfully addresses many of their concerns about security, availability and performance. 

Most of Oracle’s existing on-prem customers are early in their cloud transformations, which means the company still has an opportunity to capture new business from its existing base. The close relationship the company has with those customers through its sales organization means it has a significant opportunity to push its cloud services and be a part of the conversation around digital transformation. 

Next-generation infrastructure

Oracle’s second-generation cloud infrastructure was built by a team of veterans from AWS and Microsoft Azure who were armed with lessons learned after building some of the first public clouds. What sets Oracle’s environment apart is its focus on high-performance computing and the availability of bare-metal compute. Essentially, customers can get access to an entire bare-metal server with a high-speed network connection at a reasonable price. 

At OpenWorld this year, the company announced the availability of Bare Metal RDMA networking, which provides customers with a 100Gbps connection between different bare metal instances. This opens up a new universe of high-performance computing applications that previously could not have moved to the cloud at all. 

Having first-mover advantage here gives Oracle an opportunity to bring net-new customer workloads to its services. And landing those customers could open up opportunities for future expansion. 

Forward-thinking tool support

Oracle has embraced the latest in cloud-native development through its tooling support for cutting-edge technologies like functions-as-a-service serverless computing, managed Kubernetes for container orchestration, hosted blockchain and other capabilities. 

That means companies interested in pursuing the latest and greatest tech will be able to find support for it in Oracle’s cloud, something that’s important for ensuring the platform can support greenfield applications as well as legacy workloads. Companies that migrate their old stuff to OCI, then, will be able to expand their usage of the services to drive modern application development. 

The biggest hurdles ahead

Given its existing customer base, Oracle won’t have a problem surviving in the cloud market as a significant player, especially in regards to serving enterprise customers. But to thrive, it must overcome a crisis of customer trust. Oracle built its past business on how much its customers need its products to run their business. And there are plenty of horror stories about how the company has aimed to extract additional value from its existing customers through shifting terms, add-on products and heavy lock-in. Customers that have already been burned by Oracle are not likely to consider very seriously how they can spend more money there. 

Oracle will have to turn over a new leaf to combat this perception – a campaign that may take a long time.

In a similar vein, Oracle will have to partner with other vendors to drive business outcomes for its shared customers. We’re in a world in which enterprises are increasingly interested in deploying workloads in a multi-cloud manner to ensure they get the best service. They do not want to be locked in to a particular vendor. 

I had hoped to see more evidence of a partnership push at OpenWorld this year, but the show was — as usual — focused on how great it is when companies invest all-in with the Oracle ecosystem. It’s important for the company to show it’s serious about meeting enterprises where they are and, more importantly, where they’re going in the future.

To be sure, Oracle will need to push against its traditional way of working and overcome some institutional inertia. That change will require more heavy lifting than any technical or architectural transformation it may face. 

Oracle’s existing advancements in the cloud show it is interested in walking down that path, but getting there will be a matter of follow-through. And Oracle has to move fast — none of the other providers in the space are sitting still.