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Oracle cloud infrastructure play caps a month of big moves in cloud

Several new Oracle cloud infrastructure services are available, as the company looks to compete with AWS and meet customers' every need in the cloud.

Oracle fleshed out its cloud infrastructure plans in preparation for the mission-critical applications enterprises are expected to migrate to the cloud in the years ahead.

Oracle launched a bevy of cloud infrastructure features this week for elastic compute, file and archive storage, software-defined networking, big data and containers as a service. The features are, in many ways, a response to recent moves by Amazon to lure in core enterprise applications, as well as help clarify how Oracle plans to differentiate from the public cloud frontrunner with a strategy to compete at every layer of the cloud stack.

Oracle's plan is to seed its cloud with its databases and hardware to make it the best place to run Oracle workloads, said Dave Bartoletti, principal analyst with Forrester Research Inc., in Cambridge, Mass. It's still primarily a message for Oracle customers, but the company is aggressively looking beyond its base, too, he added.

"They're late to that game and they're not anywhere near the scale of Amazon or Azure, but they're reporting revenue for that business," Bartoletti said. "They're being honest and upfront that it's not huge yet, but it's growing."

Oracle said it plans to compete with Amazon's pricing. For example, archive storage in Oracle costs $0.001 per gigabyte per month, as compared to Amazon Web Services, which charges $0.007 per gigabyte.

But for Oracle, cloud infrastructure is more ancillary, said Colm Keegan, senior analyst, Enterprise Strategy Group Inc., a consultancy firm in Milford, Mass. Still, offering it is important, as the company looks to offer a seamless hybrid approach that takes away some of the complexity of running and managing workloads in the public cloud.

"They're coming at it from 'We're going to provide a true end-to-end service,'" Keegan said.

Oracle is probably a sleeper in the cloud space -- one with plenty of upside that has started to gain traction, Keegan said.

Cloud strategies come into focus

The Oracle cloud infrastructure updates come as some of the biggest legacy vendors start to shift or cement their strategies around cloud. HP recently said it plans to shut down its public cloud and get out of the hyperscale game, instead refocusing on OpenStack private cloud and hybrid uses. Dell made a splash with its plans to acquire EMC at the same time that its major cloud asset, VMware, was brought into Virtustream. IBM, meanwhile, buttressed its existing SoftLayer public cloud with OpenStack on-premises private cloud Bluemix Local.

Consensus amongst analysts is that Amazon, Microsoft and Google are the frontrunners in public cloud, and all operate at "hyperscale." With Salesforce also in the mix at the other end of the stack, the question becomes which company fills in that next tier in the next three to four years, Bartoletti said.

"Everyone thinks that fifth spot is open," Bartoletti said. "HP is not taking it; Rackspace isn't and CenturyLink doesn't have the scale, so is it IBM or Oracle, or is it Dell/EMC/VMware?"

Oracle faces pressure similar to IBM, as it transitions from the higher margins of on-premises hardware and software sales to the cheaper unit prices in cloud, with a goal to grow the cloud business fast enough to staunch the losses in legacy product sales. It's unclear how well it can succeed at that transition, but the new offerings are a positive step, Bartoletti said.

"They're not hedging their bets, or pretending or paying lip service to this stuff," Bartoletti said. "They really are building out data centers and equipment to play in the [infrastructure as a service] space."

Top to bottom cloud

It remains to be seen if Oracle can compete at all three levels of the public cloud, with IBM and Microsoft being the only other vendors really angling for the trifecta. And while Oracle hit back at Amazon Web Services with its product releases, executives saved their vendor-specific comments primarily for Microsoft, which it sees now as its primary competition, and for IBM and SAP, which were dismissed as nonfactors in cloud.

Oracle has done well by moving at a measured pace with its large enterprise customers, as they grow more comfortable with the public cloud, but it's also shown promise with bringing in new customers, said Robert Mahowald, program vice president at IDC in Framingham, Mass. As noted by Oracle, it has 1,350 customers for its software as a service offerings, and the majority of those are net new, at least on the applications side.

"Having only 35% of customers being in that [previous customer] bucket means they're selling very aggressively to new users," Mahowald said.

Platform as a service (PaaS) is Oracle's most compelling proposition, analysts said. It's the layer where customers want to extend and enhance their existing Oracle middleware.

The strategy is to have customers move product, employee and customer data to the cloud platform, and Oracle has made the service so it's not just for developers, Mahowald said. Oracle is offering tools around collaboration and building reports, use analytics and performing analytics, which opens the door to selling more licenses to meet the demands throughout a business.

"They think PaaS should be democratic for all kinds of activities and not just hardcore developers," Mahowald said.

Trevor Jones is a news writer with TechTarget's data center and virtualization media group. Contact him at [email protected]

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