Oracle, Microsoft Buddy Up to Grab Once-Disparaged Cloud Revenue

By Eric Lundquist  |  Posted 2013-06-24
Cloud partners

Oracle, Microsoft Buddy Up to Grab Once-Disparaged Cloud Revenue

Cross out Amazon and write in Microsoft, and you will get the gist of the recent Oracle/Microsoft announcement: "Together, Amazon and Oracle provide businesses with a scalable, reliable and cost-effective business application platform."

That statement, from the Amazon Web Services Website, talks about all the benefits of shifting your Oracle applications to the Amazon cloud and even offers an a la carte pricing menu for Oracle relational database services and a free trial program.

Price menus and free trials may be common in restaurants and mall food courts, but not in the enterprise technology space. If there was ever an indication of how much cloud computing has upset the staid and very profitable business of selling software to enterprises, the Microsoft and Oracle announcement that essentially stated "we used to fight it out but we are buddies now," was the most recent and vivid proof.

A June 24 teleconference featuring Microsoft CEO Steve Ballmer, Oracle President Mark Hurd and Satya Nadella, president of Microsoft's Server & Tools Business, highlighted a range of services and applications designed to mesh Oracle's software with Microsoft's Azure cloud services.

Wait a second. Doesn't Microsoft sell SQL Server, which was recently upgraded to a more cloud-friendly SQL Server 14?  And didn't Microsoft's promotional material for this new edition include this swipe at Oracle: "Factoring in slightly higher average salaries for Oracle DBAs, the annual cost for administration comes out to $1,605 per year per database for SQL Server and $7,385 per year per Oracle Database; a 460 percent difference?"

And doesn't Oracle offer its own versions of public cloud, private cloud and on-premise platforms? In Oracle's own words these platforms deliver, "the broadest selection of enterprise-grade cloud solutions, including software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS)." Yes, this is all true, but times are indeed changing.

The basics of the Oracle and Microsoft partnership (as described in the press release), included the ability to run, "Oracle software on Windows Server Hyper-V and in Windows Azure. Customers will be able to deploy Oracle software—including Java, Oracle Database and Oracle WebLogic Server—on Windows Server Hyper-V or in Windows Azure and receive full support from Oracle.

Microsoft will also offer Java, Oracle Database and Oracle WebLogic Server to Windows Azure customers, and Oracle will make Oracle Linux available to Windows Azure customers.

The agreement for licensing Oracle's software in the Microsoft Azure cloud is identical to the agreement for licensing in the Amazon cloud, according to Oracle's corporate pricing guidelines outlined on its Website. The guidelines require customers to count each virtual core as equal to a physical core for pricing purposes.

Oracle, Microsoft Buddy Up to Grab Once-Disparaged Cloud

Here's what is at play here from my point of view. Oracle has seen essentially flat revenues for the past two quarters and after initially denying that the cloud would be a big deal, the company is trying to make up for lost traction.

Microsoft is a big boat, but the boat has turned to embrace cloud computing with the same fervor it found for the Internet after missing that big new thing back in the 1990s. While it is true that the embrace of cloud computing in the enterprise is still in the early revenue stages for these companies, that does not mean that CIOs and technology managers are not now deciding which cloud architectures will become the fundamental infrastructures for their companies.

 Traditional vendors are rushing to be seen as cloud supporters.  Meanwhile, the stalwart cloud computing companies and startups are scoffing at the older vendors contending that companies that made their living selling software in boxes and living large on service revenues cannot suddenly become cloud players. Instead, they contend that customers who were once locked into proprietary boxes are determined not to get trapped again.

 Customers who were once too reluctant to embrace the cloud as those cloud capabilities did not have the security, privacy and compliance features required are now finding their traditional vendors championing the cloud as just the place to run their businesses. The Microsoft/Oracle agreement may be the latest and biggest example of enemies becoming cloud friends. It remains to be seen how long they remain friends, but this game has a long way to play yet.

 Eric Lundquist is a technology analyst at Ziff Brothers Investments, a private investment firm. Lundquist, who was editor in chief at eWEEK (previously PC WEEK) from 1996-2008 authored this article for eWEEK to share his thoughts on technology, products and services. No investment advice is offered in this article. All duties are disclaimed. Lundquist works separately for a private investment firm, which may at any time invest in companies whose products are discussed in this article and no disclosure of securities transactions will be made.

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