Oracle, Microsoft Ready to Link Their Fortunes in the Cloud

NEWS ANALYSIS:  As newer, cheaper cloud-based solutions continue to pour into the enterprise space, old-line software vendors such as Oracle and Microsoft have to get creative.

In times of distress, companies facing trouble often lock arms in a mutual effort to help themselves recover from body blows received in the marketplace.

Microsoft has been a party to this a few times in the past, most famously with Apple in 1996 and again with Nokia in 2011.

Seventeen years ago, struggling pre-iPhone and -iPad Apple was in danger of being sold to Sun Microsystems for $6 per share before Steve Jobs returned as CEO and obtained a $150 million investment from Bill Gates to keep the company afloat. That gave Jobs enough leverage to come out with the iMac, and IT history was changed forever.

Microsoft also is helping to keep Nokia—once the world's No. 1 mobile handset maker—in business by partnering on Windows Phone 8. The jury is still out on that deal, however, as sales have not been as high as projected.

Announcement Will Be Made at Build Conference

On June 24, Microsoft will do it again, announcing at its Build 2013 conference that it is hooking up with Oracle in a sector that stands to benefit both of them big time: the cloud.

Oracle has the powerful enterprise hardware—servers, storage and switches—and the parallel database (Oracle Database 12c) to run Microsoft's Azure cloud management systems, Windows 8 apps—and even the competing SQL Server database, if need be. Oracle has long interoperated with Windows Server System, .NET and Microsoft Office.

It's a cooperative effort that would never have been conceived just a few years ago. However, as newer, cloud-based solutions continue to pour into the enterprise space, old-line software vendors such as Oracle and Microsoft—not to mention Hewlett-Packard, IBM and Dell—have to get creative. Whereas once they were sworn enemies in the sales battlefields, now they are looking for ways to combine their talents and fight to retain market share against a boatload of newcomers from all over the globe.

Oracle CEO and co-founder Larry Ellison told analysts on the company's June 20 earnings call that Oracle will reveal technology partnerships with "the largest and most important SaaS [software as a service] companies and infrastructure companies in the cloud, who will be committing to Oracle technology for years to come."

Marketplace Foes Become Allies

Ellison mentioned companies such as Microsoft, and NetSuite—all considered Oracle enemies in some businesses—but he didn't offer any more details.

A large number of SaaS providers, including well-established brands such as NetSuite and Salesforce, have built their businesses on Oracle's and Microsoft's databases. Naturally, they can be expected to upgrade to whatever new version comes up, so a co-opetitive deal with Oracle in these situations makes sense. It's the cloud-based products these SaaS companies provide that Oracle wants to defeat in the marketplace.

Microsoft's SQL Server 2014 database, which figures largely into this new deal, will have a preview available in July, and the full production version will be available for purchase in early 2014.

Oracle 12c DB: Foundation for a New Cloud?

Ellison said on the earnings call that Oracle expects its newest database to be the "foundation of a modern cloud" thanks to its multi-tenancy capability at the database layer. Having that functionality at that level enables a system to avoid multi-tenancy using virtual machines, which not only affect performance but also can become the origin of security problems.

Oracle co-President Mark Hurd, Microsoft CEO Steve Ballmer and Satya Nadella, Microsoft's president for the server and tools business, are set to address the press teleconference on Monday at 1 p.m. PDT. Microsoft hosts its developer conference in San Francisco next week.

This new co-opetition between Oracle and Microsoft could turn out to be a textbook case of how to survive—or how to fail—in a business world that is now very different from a generation ago, thanks to the Internet.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 15 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...