Oracle Is Expanding the Oracle Cloud with Gen2 Services and New Hires

October 26, 2019

Oracle Is Expanding the Oracle Cloud with Gen2 Services and New Hires

By Jean S. Bozman

Oracle plans to tap more revenue from the next wave of migration of mission-critical workloads from enterprise data centers to the hybrid cloud and to multi-cloud infrastructure. The $40 billion software firm is looking to cloud technologies — and the cloud subscription business model – for its next wave of revenue and growth.

To gain market share in the CSP space, Oracle is positioning its Oracle Cloud Infrastructure (OCI) services, deployed and managed in the Oracle Gen 2 Cloud, as supporting workloads at the same levels of availability, reliability and security as Oracle’s software for on-premises infrastructure. Oracle’s goal is to focus on enterprise workloads, while continuing to support general-purpose cloud.

Oracle cites the autonomous and self-tuning characteristics of its Oracle Gen 2 Cloud as key to attracting more enterprise customers who are entrusting mission-critical workloads to a CSP. The Oracle Gen 2 capabilities were designed to reduce hands-on management time by IT staffers, reducing enterprise customers’ operational costs.


Building the Oracle Gen 2 Cloud

Cloud subscriptions are already a major component of Oracle’s revenue, with 40,000 cloud customers, as reported in Oracle’s quarterly financial calls. To grow its CSP presence, Oracle is accelerating its investment in cloud, expanding from 16 Oracle Cloud data centers to 36 data centers by next year. Oracle is hiring 2,000 personnel to reach that goal by next year. Most of the new hires will be software engineers, with many of them working on software containers and orchestration.

Oracle said it will take responsibility for operating and managing the databases and applications running on the Oracle Gen 2 Cloud, leveraging built-in automation capabilities This places the responsibility of developing, deploying, and tuning software, and maintaining six nines of uptime, to Oracle employees.

In an era when cloud migrations are bringing more enterprise applications to the cloud, Oracle has been steadily building its global network of cloud data centers. In all, the Oracle Cloud has 16 regional data centers worldwide, providing services to more than 40,000 customer companies. Clearly, Oracle plans to gain more market share and mindshare in the rapidly expanding CSP services marketplace, where it competes with AWS, Microsoft Azure, Google Cloud Platform and IBM Cloud, among others. Recognizing that large customers often have multi-cloud deployments, Oracle is evolving a co-opetition model, allowing it to partner with other CSPs.

To grow its worldwide presence, Oracle plans to have 36 Oracle Cloud data centers by the year 2021, rivaling the data-center count for AWS. Some of the new data centers will support mirrored images for data replication and data backup/restore, while others will bring Oracle Cloud to more regions worldwide.

The Oracle Gen 2 Cloud data centers are outfitted with scalable Oracle Exadata systems, built with Intel x86 processors, Oracle Linux and flash storage, to support and manage enterprise workloads. In addition, a newly revamped, second-generation Oracle cloud-at-customer service brings Oracle Cloud services to customers’ data centers, if customer policies regarding security or regulatory compliance requires data to remain on-site.


A Focus on Differentiating the Oracle Cloud

Two years ago, I wrote that cloud migration would be a top priority for Oracle, as it transforms its own business for a cloud-services era. At the same time, it needs to reach new customers, across the 20+ industries it supports with its applications and databases, as in this 2017 article I wrote:

For Oracle, it will be important to extend its reach to new audiences beyond the Oracle installed base, emphasizing its enterprise-centric delivery for business databases and business applications with Oracle Cloud. We expect Oracle to continue its outreach to new cloud-services customers, through Oracle CloudWorld events, Oracle OpenWorld and through direct and partner sales efforts, throughout 2017.”

Now, two years on, as the Oracle Cloud has grown in its worldwide cloud presence, the task of differentiation is front-and-center for Oracle and its top executives. Although Oracle knows we are entering a multi-cloud world, Oracle is presenting the case for choosing the Oracle Gen 2 Cloud for the enterprise workloads that need the highest levels of availability, reliability and security.

Oracle seeks to tap more of the revenue from large enterprise customers planning cloud migrations of mission-critical transactional workloads and analytics workloads that have, until now, remained in customers’ on-premises data centers.

For many of Oracle’s longtime customers, the new IT model is clear: migrate apps and data to the Oracle Integrated Cloud (OIC), where Oracle runs applications and databases and analytics on its own technology. One driver for migration to the Oracle Cloud: Oracle manages the databases and applications, with a consistent methodology, whether delivered from Oracle’s cloud data centers, or via Oracle Cloud at Customer on the customer’s premises.

It is Oracle Chairman Larry Ellison’s intention to differentiate from Amazon Web Services (AWS), the largest CSP worldwide. Ellison said Oracle plans to provide the Oracle Cloud’s Gen 2 Oracle Cloud Infrastructure (OCI) services in all the regions worldwide that access AWS – which he positioned as Oracle Cloud’s primary competitor. In addition, an Oracle cloud-at-customer service brings Oracle Cloud services to customers’ data centers, if customer policies regarding security or regulatory compliance requires data to remain on-site.


 New Products and Services

At Oracle OpenWorld, Oracle announced that it is expanding its range of services, including the Oracle Autonomous Database (OAD) as delivered on the Oracle Cloud, the Oracle Analytics Cloud, more developer tools – and a new digital voice assistant leveraging AI that allows customers to access data and applications. Oracle also offers an on-premises version of the Oracle Gen 2 Cloud (Gen 2 Cloud at Customer) to large enterprises that don’t want to move vital data off-site for security and governmental compliance reasons.

In support of Oracle’s cloud strategy, and Oracle Cloud services, the company highlighted these new announcements at Oracle OpenWorld:

  • Oracle Autonomous Database (OAD) for Public Cloud. New features were added to the OAD, many of them aimed at reducing or eliminating management tasks traditionally performed by database administrators.
  • Oracle Autonomous Linux. The Oracle Cloud is running on Oracle Autonomous Linux, an implementation of the Linux Foundation’s worldwide Linux distribution with additional features engineered by Oracle. Among these are Dtrace, and Zones, which originated with the Solaris Unix operating system, that have been embedded in Oracle Linux for several years.
  • Support for VMware Cloud Foundation (VCF) on Oracle Cloud. VMware and Oracle jointly announced a partnership around VCF, bringing the ability to lift-and-shift VMware deployments onto the Oracle Cloud, without change.
  • Oracle Data Analytics Cloud. Oracle is leveraging AI/ML software that analyzes data stored on the Oracle Gen 2 Cloud – and to do so more quickly that would be possible with traditional analytics software.
  • Partnerships with Microsoft Azure and VMware. These partnerships are new to Oracle, and they underscore the momentum for multi-cloud deployments in enterprises. Historically, Oracle positioned Microsoft and VMware as Oracle competitors in the on-premises world, but this partnership model with both companies is emerging as enterprises accelerate migration of applications and databases onto cloud platforms.
  • Oracle Digital Assistant. The voice-activated Oracle Digital Assistant allows customers to access data via voice commands. This approach builds on customer familiarity with other digital assistants, such as Amazon’s Alexa, Apple’s Siri and Google’s Google Assistant.


Positioning against AWS, Partnering with Microsoft and VMware

Oracle Chairman and CTO Larry Ellison positioned Oracle’s Gen 2 cloud services most strongly against Amazon Web Services (AWS), the largest cloud service provider (CSP) with the widest customer base, which has about $28 Billion in cloud-based annual revenue, and $7 billion in quarterly revenue.

The positioning against AWS was expected, and was in-line with Oracle’s history of positioning against its major competitors, such as IBM in the systems space, and Microsoft in the database and applications spaces. However, using balance sheets and financial reports to compare Oracle revenues with those of AWS is difficult. Oracle, a $40 billion company, reports its Oracle Cloud services and on-premises licenses together, at a combined $6.8 Billion per fiscal quarter.

Historically, Oracle has been known for positioning its products and services against those of its leading competitors, which historically have included IBM and SAP. But the dynamics of multi-cloud are changing that calculus. Multi-cloud deployments take place when enterprise customers select multiple providers for portions of their cloud migration and ongoing cloud services.

Oracle’s agreement with Microsoft provides high-speed links between Oracle Cloud and Microsoft Azure data centers, supporting data transfers and end-to-end applications. This is a pragmatic agreement, as companies in some industry sectors, such as Pharma, already have separate relationships with Microsoft Azure.

In a separate announcement, Oracle’s agreement with VMware supports the re-hosting of VMware VMs on the Oracle Cloud, without change. The agreement gives Oracle additional access to VMware’s large installed base of enterprise customers. In turn, VMware is gaining another CSP for its multi-cloud strategy. Using VMware Cloud Foundation (VCF), VMware customers can move their entire VMware environment, or part of it, to the Oracle Cloud, while continuing to manage their VMware software.


Key Takeaways

Oracle is fulfilling its strategy of doubling down on cloud services for enterprises – and on cloud migrations as they accelerate into hybrid cloud and multi-cloud deployments. Understanding that the dynamics of competition are changing, Oracle is increasing its investment in cloud services, and is growing its revenues from Oracle Cloud subscriptions worldwide. The new hires for Oracle Cloud are clearly intended to expand Oracle Cloud’s share in the CSP marketplace in the coming year, adding new differentiating features to attract more new customers.

All of this demonstrates Oracle’s seriousness about increasing its customer base for its Oracle Cloud services worldwide – growing its network of Oracle Cloud data centers and creating more software that will differentiate its cloud services for automated management of enterprise workloads. The decision to hire 2,000 more software engineers shows that the company is determined to make a substantial investment in the future of the Oracle Cloud.




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About Jean Bozman

Jean is a senior industry analyst focusing her research on server technology, storage technology, database software and the emerging market for Software Defined Infrastructure (SDI).