Oracle takes cloud market share from Amazon

Oracle takes cloud market share

A few months ago, in September, Oracle launched a new range of cloud services and proclaimed the end of Amazon’s dominance in the market. 

And judging by the latest results released by the company mainly known as a database provider, it is making good on its pledge to challenge Amazon.

Oracle this week released figures showing that its cloud business has increased significantly, although the growth was in large part due to its acquisition of NetSuite for $9.3 billion in August, 2016.

Larry Ellison, chairman of Oracle, was quoted in MarketWatch as saying: “SaaS [software as a service] and PaaS [platform as a service] grew 85 per cent this quarter. But soon, infrastructure as a service will become Oracle’s largest cloud business.”

Some of the highlights from Oracle’s quarterly earnings report, released on Wednesday, include:

  • total revenue from cloud services reached $1.2 billion;
  • this represents an increase of 62 per cent;
  • a growing portion of its overall $9.3 billion revenue was coming from cloud business; and
  • infrastructure as a service revenue reached $178 million in this quarter.

While the number may please Oracle’s investors, the company is still way behind Amazon in the cloud market.

Amazon is utterly dominant in cloud even now, with more than 30 per cent of the total cloud infrastructure market, according to Synergy research Group, which lumps in Oracle as one of the “next 20”, much further down its list.

But Amazon’s market share may be being chipped away slowly as more and more enterprises learn about the benefits of cloud and come into the market.

Amazon is often said to have invented the cloud market, and having built it, is seeing more and more providers coming in and playing the same game.

Now Amazon, nor indeed the other significantly large cloud providers – such as Microsoft, IBM, Google, Oracle and so on – are having to contend with smaller, more nimble companies which are tapping into infrastructure such as Apache Hadoop, Apache Spark and others to offer cloud services.

Cloud started as a service offered by hypermassive companies with too much computing power at their disposal, some of which they could hire out to outside clients – which is more or less how Amazon and possibly Google started.

But now, with increasing numbers of developers connecting with open source computing frameworks such as Spark, Hadoop and others, the cloud market is likely to fragment much more.

Although, having said that, it may be that the market will consist of several large players – the tech titans, if you will – and the rest of the market will be made up of hundreds of smaller providers.

But the overall size of the cloud market would seem to suggest that even a small provider can make a tidy profit, especially as enterprises start using more than one cloud service, which seems to be a trend, according to Richard Munro, CTO of VMware cloud services, EMEA.

Munro is currently giving a number of speeches at Cloud Expo Europe under the title of Reality-based IT Strategies to Accelerate Transformation, and seems to suggest that even individual teams within the same company could end up using different cloud services.

“The main aim of IT is to help people, the IT consumer, to do their jobs when and how they want to, and to help businesses and organisations securely achieve their objectives,” says Munro.

“People should not fight against concepts like ‘IT as a Service’, ‘Cloud’ and ‘DevOps’ and treat the cloud as someone’s else’s job, as they are, when managed and supported, essential and very helpful.”

“Cloud transformation is a journey, and any journey begins with where you start. Business owners should be looking at whether they can practically extend and leverage their existing investments instead of ripping everything up and starting again for each new cloud service – particularly when it comes to topics like cost, security, and operating models.”

Munro says there is no one cloud to rule all, and recommends embracing this world of multiple clouds.

“To get the best out of multiple clouds, I believe in a concept called ‘Pioneers, Settlers and Town Planners’.

“In this respect, you need to allow the pioneers to innovate, wherever they see fit, in a safe way – to see which cloud solution works. The settlers then make that innovation sustainable, secure and compliant, while the town planners then manage the services in an ongoing manner.”