Broadcasting from his living room like a regular work-from-home employee, Oracle's billionaire founder Larry Ellison last week launched a major new cloud product called Oracle Dedicated Region Cloud@Customer.
Cloud@Customer is what's known as a private cloud, meaning its is a combination of software and hardware that enterprises rent per month or year that lives in the company's own data center. This is as opposed to a typical public cloud – like the market-leading Amazon Web Services — which consists of shared computers and software that lives in the cloud provider's data center.
Even market analysts who were once skeptical of Oracle's chances in the cloud market say this product could be a good opportunity for the database giant to win customers in the biggest, most lucrative as-yet-untapped cloud market: those massive so-called "workloads" that huge companies can't, or don't want to, move into the cloud.
"This is a significant and important announcement," says Lydia Leong, a distinguished vice president and analyst with Gartner covering the cloud computing market.
Leong has for years joked that Oracle's cloud has been too skimpy on necessary features to take seriously, especially when compared to market leaders Amazon Web Services or Microsoft Azure. But as of 2020, she thinks Oracle has caught up on the most important features.
"I've joked that OCI was too 'minimum to be viable.' But now they are above minimally viable," she says. "It's still is more minimal than AWS or Azure, but it has a significant majority of really essential stuff that enterprises need."
Oracle's fees for the tech begin at $500,000 a month or $6 million/year, a price point which includes the hardware, Oracle's latest autonomous database, and other software. That is a comparative bargain, Leong said. Depending on the configuration, AWS Outposts can run that much or more for a just the hardware.
"Oracle's goal here is to cut off AWS Outposts with better performance, newer technology, and a lower cost," said Ray Wang, principal analyst and founder of market research firm Constellation Research.
Not the first, but an important milestone
This isn't the first and only private data center product on the market, not even from Oracle. But what makes the Dedicated Regions version different is that it's a nearly exact replica of what Oracle is running in its own cloud, Oracle Cloud Infrastructure Generation 2 (OCI).
It will compete head-to-head with Amazon Web Services and its popular Outposts product — which at the time was a game-changer for AWS, marking its first true private cloud product. But Outposts offers a much more slimmed-down version of AWS, in the same way that Microsoft's Azure Stack private cloud hardware doesn't offer the full range of features of the full-fledged Azure platform. Google has its software-based Anthos private cloud software, as well.
The issue that these products are designed to address is the boatload of data and apps that the companies haven't yet moved to the cloud because they are constrained by any number of things, from government regulations on where data can be stored to technical issues.
So the private cloud that can capture these customers' biggest, most lucrative workloads can then capture more of the rest of their cloud needs.
That means a product like this one from Oracle can become a good on-ramp, which is coming from behind in cloud, yet already counts many of these companies as customers of its more traditional enterprise software.
"Some of the biggest workloads are sitting in these private cloud models. Oracle sees this as a way to cut-off Google and AWS while they can with newer tech," says Wang.
Is Oracle catching up?
While AWS loves to point out the hundreds of services it offers in its cloud — far more than Oracle — Leong says that most enterprises really only use maybe 20 of them.
Oracle has been slow by most standards to build out its cloud services, but Leong says that the company has done a good job with the features that it has added, and made sure that they're well-suited to the needs of large enterprises. All told, Oracle Cloud is starting to become a better all-purpose platform, suited to hosting any cloud app, not just Oracle's own apps, she believes.
That means it is finally becoming a more viable alternative to AWS, which is frequently the target of criticism from Ellison over the last several years of Oracle product announcements.
"When thinking about OCI, you almost have to ignore what Larry Ellison is shouting about on stage," she jokes. "Larry has always yelled that he wanted it to be a general-purpose provider. It's now getting to the point where it can compete with more general-purpose workloads."
But Wang points out that Oracle is still the underdog in this market. AWS and Microsoft are still far and away the leaders in the category — despite the fact that Oracle and Microsoft last year inked a big cloud partnership.
While Microsoft is now neck-in-neck with AWS in almost every measurable way, and Oracle's former long-time star engineer Thomas Kurian is CEO of competitor Google Cloud, and wracking up some big customers, time will tell if Oracle can still become a significant cloud competitor or if it will remain a niche player.
But this new product may be a good way to keep its existing customers in the fold, at least, until OCI develops even further.
"This is the next generation of cloud capabilities. A lot of data centers need modernization and this is the ability to help customers modernize their data center and take away the management pains as well," Wang says.
