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Microsoft, Oracle Partner to Challenge AWS in the Public Cloud

The alliance will enable customers to move workloads between Azure and Oracle Cloud infrastructures.

Jeffrey Burt

June 5, 2019

7 Min Read
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Microsoft and Oracle, longtime enterprise software rivals, are teaming up in the cloud to expand the services they can offer enterprises and to bolster their positions in a cloud services market dominated by Amazon Web Services.

Officials with both companies on Wednesday announced an alliance that will enable customers of each to migrate and run their mission-critical workloads on the others’ cloud environments. Through the partnership, enterprises running such Microsoft Azure services like Analytics and AI can connect them to Oracle Cloud services, including Autonomous Database. The goal is to create a single place for companies that want to leverage cloud services and applications for their businesses.

Scott Guthrie, executive vice president of Microsoft’s Cloud and AI (Artificial Intelligence) division, noted that more than 95% of Fortune 500 companies use Azure, and that “with Oracle’s enterprise expertise, this alliance is a natural choice for us as we help our joint customers accelerate the migration of enterprise applications and databases to the public cloud.”

The partnership comes at a time when enterprises are moving more workloads and data into the public cloud and are adopting strategies in which they are using more than one public cloud service provider. Gartner analysts are forecasting that the global public cloud services market will grow from approximately $182 billion in 2018 to more than $214 billion this year, a jump of almost 18%.. In addition, according to Flexera’s RightScale cloud report, 84% of enterprise have a multicloud strategy.

In this fast-growing market that is quickly evolving, AWS continues to be the dominant player with more than 35% share, followed by Azure, Google Cloud and IBM Cloud, according to Synergy Research Group analysts. Oracle, which was famously late to the cloud and has been working to catch up, is seen as a strong niche provider, according to the analysts.

The Azure-Oracle Cloud alliance is designed to close the gap with AWS, according to Paul Teich, principal analyst with Liftr Cloud Insights.

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Liftr Cloud Insights’ Paul Teich

“The reason both of these clouds are talking to them is that AWS has active high-profile programs in place to win customers from both,” Teich told Channel Futures. “This is clearly an ‘enemy of my enemy is my friend’ situation. Microsoft and Oracle are looking at their alliance as a force multiplier against a common, much larger foe.”

There are multiple drivers behind the partnership. Enterprises can run their Oracle software in the Oracle Cloud Infrastructure (OCI) Gen 2 and Microsoft software in Azure, Teich said. Microsoft needed to have SLA assurance for its customers, “so look at this as Microsoft’s tacit approval of OCI Gen 2’s ability to deliver enterprise apps with enterprise SLAs and support. I think that Oracle hopes customers will get used to using Oracle apps in place on OCI, and as customers get comfortable with OCI then they’ll push more apps into OCI in the long run.”

The deal also means more Azure visibility among Oracle’s database customer base, particularly at a time when database options are growing, the analyst said.

“If Microsoft can leverage Oracle to focus enterprise customers on enterprise-class database solutions and divert the discussion from shiny new open-source alternatives, it will also help Microsoft’s database products,” Teich said.

The deal gives Oracle customers a much-needed option when it comes to the cloud, says Patrick Moorhead, principal analyst with Moor Insights and Strategy.

“Oracle gets to reduce a fair customer objection that its infrastructure was expensive, didn’t scale wide enough and couldn’t keep up technologically,” Moorhead told Channel Futures. “Customers who bought into Oracle apps or database can run their apps on Azure. Microsoft now gets customer access to Oracle database and applications customers who want to scale to the public cloud.”

Given that “Azure is by far the more powerful player in the cloud, this potentially allows Oracle to …

… hold on to customers that otherwise might go to Azure or AWS exclusively,” Rob Enderle, principal analyst with The Enderle Group, told Channel Futures.

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Pund-IT’s Charles King

Charles King, principal analyst with Pund-IT, told Channel Futures that most Oracle customers already are using Microsoft productivity solutions alongside Oracle applications, adding that “enabling those who prefer Azure to more effectively leverage the platform is likely to enhance their commitment to Oracle. Oracle Cloud may not grow substantially because of the deal but it’s still an Oracle win.”

King also noted that the cloud has brought other fierce competitors together, such as the agreement between Microsoft and VMware to support VMware workloads on Azure. Microsoft also has partnered with other enterprise software vendors, including SAP.

“More broadly, these deals reflect a clear point about cloud computing — that customers aren’t interested in homogeneous, single-vendor clouds and cloud services,” he said. “Vendors can either get with the program or put their customer relationships at risk.”

Oracle’s shift to the cloud reportedly has caused some upheaval at the company, including hundreds of layoffs as the company looks to bolster its cloud capabilities. Chairman and CTO Larry Ellison has said Oracle’s cloud applications and infrastructure businesses will be key to the company’s future.

The partnership with Azure could help. The companies will use direct network connectivity and identity interoperability to ensure that workload migrations between the cloud environments are seamless. Not only will it mean interoperability for Oracle applications running on OCI and Microsoft software on Azure, but also the ability to run applications like JD Edwards EnterpriseOne, E-Business Suite, PeopleSoft, Oracle Retail and Hyperion on Azure, along with Oracle Autonomous Database running on the Exadata infrastructure in Oracle Cloud.

The direct interconnect is initially available between Azure U.S. East and Oracle’s Ashburn (Virginia) data center, with more regions being added in the future. There will be unified identity and access management through a single sign-on and automated user provisioning and a collaborative support model from both companies.

The direct interconnect is a key part of the alliance, Liftr’s Teich said.

“The direct link between the two clouds is about service assurance and low latency,” he said. “The link is implemented using Azure ExpressRoute and Oracle FastConnect — products that were already tested and in place. Migrating apps between the two clouds with a direct link gives large IT customers a service that looks like it’s …

… coming from one cloud. Without the direct link, the software compatibility is an OK story, but it’s not a compelling alternative.”

Sean Roberts, senior vice president and general manager of public cloud services at Ensono (No. 4 on the 2018 MSP 501), a hybrid cloud service provider whose partner list includes both Microsoft and Oracle, told Channel Futures that Oracle needs the partnership. Few customers have put all of their workloads into Oracle Cloud, but many have existing investments in Oracle they couldn’t move to other public clouds because of technical or licensing restrictions.

“If Oracle is to be relevant in the public cloud world, it cannot compete head to head with the hyperscalers and needs to carve out its niche,” Roberts said. “This announcement is recognition by Oracle that unless it solves this problem, customers will actively start removing Oracle from their estate.”

He said the channel “has struggled to help Oracle customers unlock the true value of Azure and have had to recommend hybrid cloud solutions or more expensive refactoring routes, neither of which fully deliver the benefits of public cloud. This alliance removes those blockers and enables the channel to offer customers more elegant solutions that meet their needs.”

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