Why Oracle Plans Private Data Centers for Large Customers

eWEEK INSIDE ANALYSIS: Larry Ellison tells analysts that Oracle’s cloud computing business could exceed the size of rival Amazon Web Services if a great majority of its users switch from running its database on their own computers to running on Oracle’s Cloud Infrastructure (OCI).

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Oracle plans to build private data centers for large customers as part of a bid to speed upgrades to its flagship database software and jog overall growth, chairman and chief technology officer Larry Ellison told financial analysts at a meeting following its recent OpenWorld conference.

Ellison said Oracle’s cloud computing business could exceed the size of rival Amazon Web Services if a great majority of its users switch from running its database on their own computers to running on Oracle’s Cloud Infrastructure (OCI). The world’s top supplier of database management software has been undertaking a multi-year transition to cloud computing.

Go here to see a list of eWEEK stories about Oracle's journey to the cloud.

“We think the size of the opportunities are just monumental,” Ellison told financial analysts at a meeting in San Francisco Sept. 19. “How big is Oracle if we hold onto our database franchise? Think of all the applications built on the Oracle database. If all that moves to the cloud and we get it, how big are we? Do you think we’re bigger than Amazon?” His comments followed presentations by CEO Safra Catz and other executives.

Oracle competes with Amazon Web Services, Microsoft and Google in the business of selling computing and storage capacity as services customers can tap online. Its rivals include SAP, Salesforce.com and Workday in the market for business applications that run customers’ finance, HR, sales and other operations.

Oracle has been emphasizing its ability to provide customers with programs that manage their daily operations, database software that supplies those systems with information, and the online computing infrastructure on which to run them. That market is expected to grow to nearly $50 billion next year, an increase of about 26% year-over-year.

At OpenWorld, Oracle introduced security features for its Cloud Infrastructure, a free online database service with computing power and storage aimed at developers, and an operating system called Autonomous Linux that can update itself without downtime. “We are the only infrastructure company that has enterprise applications,” Ellison said. “We believe that suites win.”

In addition to suites, Oracle believes its category defining autonomous database will accelerate its ascent in the cloud market. Oracle’s chairman told OpenWorld attendees the company expects to add 1,000 new customers for the Autonomous Database in the current quarter that ends in November, adding to what it has said are more than 2,000 paying customers for the software.

Oracle signed up 3,700 new companies to test the database during the first quarter that ended in August and had signed up 5,000 testers during the fiscal fourth quarter that ended in May.

That’s important as more customers move database workloads to the cloud. Oracle controlled 40.5% of the $36.5 billion relational database market last year, according to the IDC "Worldwide Relational Database Management Systems Software Market Shares, 2018" report. Microsoft was second with 26.6%, followed by IBM with 11.8%. But only 14% of database sales, or about $5.1 billion, were for public cloud computing services, according to IDC, meaning there’s still a large portion of the market yet to move their databases to the cloud.

It’s that portion that Ellison says he wants to capture. Oracle plans to have 36 global data centers on which to run its cloud software by the end of next year, including a new one this month in Mumbai, executives said. The company is extending an interoperability agreement with Microsoft that lets customers mix and match cloud software from the companies to the European market.

VMware and Oracle announced a deal in September that lets businesses move virtualized computing tasks from VMware servers to Oracle’s Cloud Infrastructure. This is unprecedented in the two companies' 20-year-long history of competitiveness.

The number of data centers Oracle cites doesn’t include Oracle Cloud Infrastructure that the company plans to build on a custom basis for some of its largest customers.

“They can stay in their data center” and Oracle will ship hardware to the customers’ sites and configure it for them, Ellison said. “That’s another avenue of growth.”

Aaron Ricadela, a contributor to eWEEK, is a director of strategic communications at Oracle in Frankfurt, Germany. Previously he was a journalist in New York, San Francisco and Frankfurt covering the technology industry for BusinessWeek, Bloomberg News and InformationWeek.