Oracle And Microsoft Need Each Other To Take On Amazon

Oracle CEO Larry Ellison has been described in many ways—among them are cavalier, elitist, patronizing and pretentious. But one thing he’s never been accused of is not being smart.

A basic law of business declares: “When the markets change, change is necessary by all players in that market.” Ellison has been irked for several years about smaller-time subscription cloud computing services gnawing away at many of Oracle’s on-site hardware and software businesses, so he’s doing the smart thing and changing Oracle’s approach.

It’s a classically simple concept: If you can’t beat them, join them, because then you become one of “them.”

Joining cloud forces

As predicted, Microsoft and Oracle—longtime competitors on the database and enterprise app fronts—revealed on 24 June that they will be connecting their products and services in ways they never had before. Specifically, Microsoft has endowed its Windows Azure cloud-computing service with the ability to run Oracle’s enterprise database, middleware layers and Java and Linux tools.

For its part, Oracle will support all software sold through Azure and also will make its version of enterprise Linux available through Azure. This could not have been possible only a few months ago; Oracle launched its own cloud services in June 2012 that compete directly against Azure and Amazon Web Services (AWS), the world’s No. 1 cloud service providing platform.

Microsoft CEO Steve Ballmer and Oracle co-president Mark Hurd made the announcement in a statement to the press prior to a conference call with analysts and journalists.

“Now our customers will be able to take advantage of the flexibility our unique hybrid cloud solutions offer for their Oracle applications, middleware and databases, just like they have been able to do on Windows Server for years,” Ballmer said on the conference call.

But can they beat Amazon?

Oracle has the powerful enterprise hardware — servers, storage and switches — and the parallel database (Oracle Database 12c) to run 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 before, 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.

Market research firm IDC reported earlier this year that Oracle owned 45 percent of the $28.2 billion worldwide database market in 2012, with No. 2 IBM at 20 percent and Microsoft at 18 percent. At one time, Oracle owned more than 60 percent of the enterprises database market.

On the Microsoft side, Azure is outflanked big time in the cloud services market by AWS, which owns more than 60 percent of the infrastructure-as-a-service (IaaS) market.

Gartner research projects sales in the IaaS segment to grow by nearly 40 percent annually to $30.6 billion in the next four years. The IaaS segment brought in $6.17 billion in 2012, Gartner said.

These new services are being finalized now and will become available in the next 30 days.

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Originally published on eWeek.