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What a lot of these analysts overlook is why Oracle is trying to take on Amazon, despite being years late to the party. I believe it's a defensive move: Oracle

What a lot of these analysts overlook is why Oracle is trying to take on Amazon, despite being years late to the party. I believe it's a defensive move: Oracle is seeing long-time customers deploy new applications in AWS, and that customer starts to realize, "hey, that went pretty well, why not move more of my stuff to AWS?" Their Oracle sales rep comes calling, and suddenly a once-reliable customer needs fewer Oracle licenses than last year. Oracle therefore needs an answer to those customers transitioning to the cloud; they want their own cloud to sell. Oracle can undercut Amazon on price--even run their own cloud offerings at a loss for a while--because losing some money on their cloud is better than losing customers from their high-margin products.

toyg 10y ago
> why Oracle is trying to take on Amazon, despite being years late to the party. I believe it's a defensive move Ellison is all about the money. When "the cloud" started, he quietly bankrolled a bunch of companies spearheading the space, so he didn't have to risk his cash-cow. Once the space was proven, he's steered the whole company - and he didn't do it yesterday, he's done it about 6 years ago. You're seeing results today because Oracle is large, it takes a while to release stuff that has almost been rewritten from scratch to fit the new paradigm, and it takes even more to sell it to Oracle's very conservative userbase. If it succeeds, the subscription model will make Oracle even more money than before. However, they are effectively rewriting from scratch a large number of their products; this is why they are very limited. It will take another 5 years before they can reach feature-parity with on-premise solutions, assuming on-prem doesn't get anything new in the meantime. Performance is also pretty dismal for some cloud products at the moment.
- jdcarter 10y ago
  Oracle selling higher-end products as a service makes total sense, and I agree, the subscription model has potential to make them a good deal of money. What I'm getting at, however, is why are they so aggressively taking on Amazon in the IaaS space? That's the part which doesn't make sense on the surface--they show up late and then attempt to compete on price. Since when has Oracle competed on price? The conclusion I come to is that Amazon must be eating away at their customer base. Once a customer starts to move some of their IT into AWS, and it goes well, that puts Oracle on the defensive--not a spot they like to be in. I doubt Oracle really wants to be in the IaaS business just for the sake of IaaS. They want to focus on higher-margin services. The IaaS part must be a defensive move to keep customers away from AWS and within the Oracle ecosystem.
  - toyg 10y ago
    There's another thing that is specific to IaaS: auditability. Part and parcel of Oracle's business model is sending goons to count your servers running this or that appserver, and invariably telling you are not paying enough in licenses. A serious cloud-based architecture that can scale up and down at will (which is what you would deploy on AWS) is fundamentally non-auditable, because it can be scaled down to minimal levels when auditors land. But if you're running on Oracle's servers...
    - athrun 10y ago
      Not sure about auditability. If anything, IaaS is more auditable since everything is traceable. Additionally, AWS will provide partner ISVs with detailed reports on how customers used their products over a given billing period. That being said, this transparency might be an issue for Oracle as it limits their usual predatory sales/auditing practices.
  - heisenbit 10y ago
    They are not taking on AWS but they are talking about taking on AWS and to show that they are serious they invest some money. Since they are now a "serious" cloud player with whom one has already ties they get invited to tenders that threaten the status quo.
flinty 10y ago
Good points. I think the author of the article makes similar points to yours towards the end of the article.
thomasjudge 10y ago
But I think Oracle's "taking on" Amazon is mainly a marketing move. When you think "big cloud providers", #1 is obviously AWS, & then there's MSFT & GOOG, & then other players. Oracle is trying to elevate its offering in especially existing customers minds as a viable competitor, thus raising it's profile. It's the Avis/Hertz strategy

toyg 10y ago

> why Oracle is trying to take on Amazon, despite being years late to the party. I believe it's a defensive move Ellison is all about the money. When "the cloud" started, he quietly bankrolled a bunch of companies spearheading the space, so he didn't have to risk his cash-cow. Once the space was proven, he's steered the whole company - and he didn't do it yesterday, he's done it about 6 years ago. You're seeing results today because Oracle is large, it takes a while to release stuff that has almost been rewritten from scratch to fit the new paradigm, and it takes even more to sell it to Oracle's very conservative userbase. If it succeeds, the subscription model will make Oracle even more money than before. However, they are effectively rewriting from scratch a large number of their products; this is why they are very limited. It will take another 5 years before they can reach feature-parity with on-premise solutions, assuming on-prem doesn't get anything new in the meantime. Performance is also pretty dismal for some cloud products at the moment.

jdcarter 10y ago
Oracle selling higher-end products as a service makes total sense, and I agree, the subscription model has potential to make them a good deal of money. What I'm getting at, however, is why are they so aggressively taking on Amazon in the IaaS space? That's the part which doesn't make sense on the surface--they show up late and then attempt to compete on price. Since when has Oracle competed on price? The conclusion I come to is that Amazon must be eating away at their customer base. Once a customer starts to move some of their IT into AWS, and it goes well, that puts Oracle on the defensive--not a spot they like to be in. I doubt Oracle really wants to be in the IaaS business just for the sake of IaaS. They want to focus on higher-margin services. The IaaS part must be a defensive move to keep customers away from AWS and within the Oracle ecosystem.
- toyg 10y ago
  There's another thing that is specific to IaaS: auditability. Part and parcel of Oracle's business model is sending goons to count your servers running this or that appserver, and invariably telling you are not paying enough in licenses. A serious cloud-based architecture that can scale up and down at will (which is what you would deploy on AWS) is fundamentally non-auditable, because it can be scaled down to minimal levels when auditors land. But if you're running on Oracle's servers...
  - athrun 10y ago
    Not sure about auditability. If anything, IaaS is more auditable since everything is traceable. Additionally, AWS will provide partner ISVs with detailed reports on how customers used their products over a given billing period. That being said, this transparency might be an issue for Oracle as it limits their usual predatory sales/auditing practices.
- heisenbit 10y ago
  They are not taking on AWS but they are talking about taking on AWS and to show that they are serious they invest some money. Since they are now a "serious" cloud player with whom one has already ties they get invited to tenders that threaten the status quo.

flinty 10y ago

Good points. I think the author of the article makes similar points to yours towards the end of the article.

thomasjudge 10y ago

But I think Oracle's "taking on" Amazon is mainly a marketing move. When you think "big cloud providers", #1 is obviously AWS, & then there's MSFT & GOOG, & then other players. Oracle is trying to elevate its offering in especially existing customers minds as a viable competitor, thus raising it's profile. It's the Avis/Hertz strategy