"Amazon's lead is over.”
It’s the sort of outrageous statement that Larry Ellison has become famous for - direct, dismissive and downright arrogant, all wrapped into one.
As the Oracle chairman and CTO stood on stage at the Moscone Center in San Francisco - kicking off OpenWorld 2016 - he once again went for the jugular, in a bid to cut his industry rivals down to size.
“Amazon is going to have serious competition going forward,” he claimed. “And we're very proud of our second generation of Infrastructure as a Service.
“We're going to be focusing on it and aggressively featuring it not only during Oracle OpenWorld but for the remainder of this fiscal year and next fiscal year and the year after that.”
In showcasing innovations across the vendor’s integrated cloud computing platform, Ellison introduced Oracle Database 12c Release 2, as well as more than 20 new Oracle Cloud Platform and Application services.
“We have more SaaS applications by a huge margin than any other cloud services provider,” Ellison claimed.
“We have HCM suite, CRM Suite, Customer Experience Suite plus lots and lots of industry suites as well. And we're constantly, constantly adding to our footprint.”
Specific to Amazon Web Services - the outright industry leader in the public cloud, Ellison was naturally equally as boastful.
"Our new second-generation data centres offer twice as many cores as Amazon, twice as much memory as Amazon, four times as much storage as Amazon, and more than 10 times the I/O capacity of Amazon,” he claimed.
“But you have to be willing to pay less. If you're not willing to pay less, you can't place the order. Oracle competes at all three levels of the cloud, all three tiers of the cloud.”
Yet Ellison may have bitten off more cloud than he could chew this time around, in his pursuit of an outright industry leader.
With Amazon Web Services (AWS) aware of its growing competition base within the IaaS market, as Microsoft edges ever closer, Ellison’s assessment of the industry stands at odds against his rivals.
But in touting the cheap, fast public cloud line, Ellison has entered a price war with two vendors seemingly keen to compete on value.
As explained by Microsoft executive vice president of cloud and enterprise, Scott Guthrie, to GeekWire this week, “we’re not seeing press releases saying ‘We’re cutting 10% across the board” - that kind of craziness seems to have slowed down.”
Speaking at a Deutsche Bank conference, Redmond’s cloud chief stated “for the most part, we (Azure and AWS) aren’t competing on price”, seriously contradicting the motives of Ellison and Oracle in hammering home dollar value.
Guthrie said value consists of “the higher level services, the features, the performance and the ability to differentiate or deliver true innovations in a way that isn’t possible on prem(ises).”
For Oracle represents merely the latest vendor seeking to displace AWS, and then Microsoft, with its own IaaS offering, as it bids to take a large chunk of an expanding market.
As reported by ARN, enterprise IT executives expect 60 per cent of workloads to run in the cloud by 2018, as organisations reassess business models amidst accelerating adoption levels.
Consequently, the opportunity is clear for Oracle to make serious inroads into a blossoming market but to issue a serious reality check, they remain a distant, distant player in an increasingly crowded market.
While Gartner Magic Quadrants don’t always get the reseller blood vessels pumping with excitement, for Ellison and his team, Oracle doesn’t even get close to recognition, such is the vendor’s minuscule market share.
“AWS is now a mature provider, yet it remains an agile, innovative thought leader with a broad impact across a range of IT markets,” Gartner analyst, Lydia Leong, said.
“It has the richest array of IaaS and PaaS capabilities. It provides the deepest capabilities for governing a large number of users and resources. It continues to rapidly expand its service offerings and to offer higher-level solutions.”
In retaining a multiyear competitive advantage over all its competitors, Leong said AWS acts as the “common reference point” for competitive benchmarking across the industry.
“Although AWS will not be the ideal fit for every need, it has become the "safe choice" in this market, appealing to customers who desire the broadest range of capabilities and long-term market leadership,” Leong added.
Leong’s assessment of AWS’ reputation within the cloud market aligns with that of IT departments across the world, who remain unlikely to test the water with new a provider such as Oracle.
As InfoWorld cloud expert, David Linthicum, put it; “The familiar brand may get IT to take a meeting, but at the end of the day, IT shops are conservative and usually stick with the established providers for a given space. That's AWS in the case of IaaS, followed by Google and Microsoft.”
Despite some media pundits in the industry providing Ellison with the headline he craved, what cannot be argued is the vendor’s all-out assault on all things AWS, as displayed this week at Oracle OpenWorld.
“It’s already clear that those priorities include shifting Oracle’s competitive efforts against AWS into overdrive by presenting what it sees as a superior technical and operational IaaS alternative to AWS,” Ovum practice leader of IT Services, John Madden, said.
As explained by Madden, the first indications came during the recent Q1 earnings call with financial analysts, when Ellison - who acknowledged that AWS is a “formidable competitor” - talked about the vendor’s new bare metal IaaS services that allow a customer to lift-and-shift their entire existing infrastructure “without any changes.”
“Oracle’s investments in IaaS, including virtualizing network resources, were also highlighted as an alternative to AWS during a Cloud Platform Analyst Summit as part of the first day of Open World,” Madden added.
“Oracle’s IaaS offerings will be under a large spotlight throughout Open World, as Oracle shows what it sees as the synergies and advantages of linking Oracle IaaS with its PaaS and SaaS - and tries to convince customers that AWS, Microsoft and Google are not the only IaaS players in town.”
To Ellison’s credit, in designing its next generation IaaS proposition, including bare metal cloud services, Oracle has rethought its proposition literally from the ground up.
Over the last two years it has been running an under the radar (or “skunkworks”) team in Seattle, involving many of the engineers and thought leaders that built the AWS cloud and also worked on Microsoft Azure.
“The team has taken advantage of the latest technology and cloud architecture to design a high-scale modern cloud, with security, SLAs and governance at its heart,” Ovum chief research officer, Tim Jennings, added.
“One of the key principles of the new architecture has been to move virtualisation to the network layer, with each tenant having a virtual private (layer 3) overlay network.
“This provides the customer with the cleanest possible bare-metal service, and allows complete choice over the stack that sits on top, right down to the hypervisor layer, in effect delivering a complete software-defined data centre.”
Whilst Oracle has first and foremost designed the service to meet the long-term needs of its large installed customer base, Jennings said the efficiency of the new physical infrastructure on which it is built, makes it cost effective for some large cloud workloads that might currently be running on AWS, Azure or Google.
“But there is still plenty of work required to roll all of this out, including the transition of its existing data centres to the new infrastructure, and the migration of customer workloads from the old to the new, all of which will have to be done step by step,” he cautioned.
“Once complete though, the new service will be well placed to help customers “lift and shift” their existing workloads to the cloud, which represents a sizeable opportunity for Oracle.”
But while a sizeable opportunity is clear, is it a case of too little, too late for Oracle in the cloud?
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