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October 18, 2022
In fact, one of its announcements, unveiled Tuesday, puts those hyperscalers on notice, challenging them to “respond and do the same,” Sid Nag, vice president of cloud services and technologies at Gartner Research, told Channel Futures.
That announcement? Oracle Alloy.
Gartner’s Sid Nag
“This could be a game-changer,” Nag said.
Before we dive into Oracle’s big cloud news this week, it’s appropriate to take a step back for context. After all, Oracle, while still small compared to the Big Three, is creeping up in terms of cloud market share. In its fiscal quarter that ended May 31, Oracle Cloud reported a 19% increase in revenue comprising infrastructure and platform as a service.
“I am thrilled about the strong growth we have seen across our entire portfolio of cloud applications and infrastructure,” Oracle CEO Safra Catz said in July.
To be sure, under Catz’s guidance, Oracle continues to move away from its legacy hardware and software roots. Part of that progress comes via public cloud services and infrastructure. (This includes transitioning on-premises database and application users to the cloud for that more lucrative recurring revenue stream.) In fact, even though Oracle’s cloud growth “has a lot of catching up to do to get to the level of its competitors,” as Futurum Research’s Daniel Newman and Todd Weiss put it, industry observers seem to agree: Oracle Cloud is well on its way to increasing its market share and revenue.
That’s not to say that Oracle Cloud stands to overtake the Big Three any time soon, or ever. The 45-year-old Oracle was not “born in the cloud.” Plus, its $900 million in cloud revenue has a long way to go to rival that of AWS’ nearly $20 billion. Instead of going all in on head-to-head competition with the hyperscalers, at least in the near future, Oracle looks best positioned to deliver cloud services and infrastructure alongside them.
Consider that Oracle Cloud already teams with AWS and Azure to make some offerings available and easier to deploy. This “coopetition” has turned into the norm throughout the tech sector, especially given the rise of the much-touted “ecosystem” mindset. Of interest, though, is that Oracle Cloud and Google Cloud do not – so far – partner. They actively try to take customers away from one another. Yet, there is speculation the two will announce a partnership deal at this week’s Oracle CloudWorld in Las Vegas.
Teaming up with fellow vendors makes sound financial sense. It opens a provider to more potential users. With Oracle, in particular, such strategies are paying off, even as the company strives to go up against the entrenched Big Three.
“The market can see this growth happening and is beginning to realize that this company isn’t playing,” Futurum Research’s analysts said. “The continued challenges it will pose to the incumbents will be interesting to watch.”
Interesting indeed. Keep reading.
Recall the quick nod to Oracle Alloy — and that Gartner’s Nag called it a “game-changer.” That’s not an overstatement. Alloy gives big channel partners – large managed service providers and system integrators, namely – the resources to become white-label cloud providers. On top of that, the platform adheres to persnickety sovereignty and governance requirements in regions including Europe. There, for example, the government mandates that only citizens can staff data centers. Oracle Alloy supports that.
Oracle Cloud’s Leo Leung
“It’s the amount of independence we’re providing,” Leo Leung, vice president of products and strategy at Oracle Cloud, told Channel Futures.
Don’t conflate Oracle Alloy with the company’s Dedicated Regions initiative. That differs because Oracle acts as the managed service provider.
With Oracle Alloy, on the other hand, partners run and staff their own data centers, only calling on Oracle if “significant” technology problems arise, Leung said. Outside of that happening, partners get the hardware and software they need to provision their own cloud services.
Oracle Alloy also comes with a services portal that has billing and invoicing tools, and customer relationship management. All of this can integrate into partners’ existing systems. From there, partners set their own rates and manage all the operations, meeting sovereignty specs along the way.
Given how business and the world are changing, now presented the right time for Oracle to launch Alloy, Leung said.
“There are so many countries and governments and industries that are not necessarily well served by the Chinese and U.S. providers,” Leung said.
The answer is for channel partners to act as cloud service providers in their own geographies.
“This is a huge opportunity,” Leung said.
Consider the possibilities. Oracle Cloud resides in 22 countries spanning five continents, and its data center region presence …
… keeps growing (more on that in a bit).
“We believe this is the first offering like this,” Leung said.
Gartner’s Nag agreed.
“It is a huge go-to-market strategy shift,” he said. And, he added, Oracle Alloy will “put pressure on other hyperscalers.”
In terms of the channel, Oracle Alloy should carry a lot of appeal. (The real question will lie in how many partners, and what types, can reasonably take advantage of the package.)
“[Partners] get to offer their own branded cloud-based service with ‘OCI inside,’ so to speak,” Nag said. “They can also layer on their own services — consulting, planning, design, implementation, migration, app modernization, support services, etc. It’s a win-win for both parties.”
But here’s the rub. Oracle Alloy cannot be deployed by just any entity. Its complexity calls for experience, savvy and size.
“It remains to be seen how many GSIs and MSPs will step up to take this on,” Nag said. “It is definitely not for the faint of heart nor is it for a ragtag boutique/small GSI/MSP.”
In theory, Oracle Alloy changes the hyperscaler game, Gartner’s Nag said. Again, though, that’s all on paper.
“The devil will be in the details and for the partners to pick up the gauntlet,” Nag said.
Oracle Alloy comes into limited availability as of this week. It will turn the corner into full general availability in early 2023.
Oracle’s Clay Magouyrk
“Giving our partners and customers more choice has long been a primary focus for OCI,” said Clay Magouyrk, executive vice president of Oracle Cloud Infrastructure. “We’re going one step further by providing our partners with the option to become cloud providers so that they can build new services faster and address specific market and regulatory requirements. As cloud providers, our partners have more control over the customer experience for their targeted customer or industry, including where the workloads reside and how their cloud is operated.”
Oracle Alloy wouldn’t be so possible if Oracle didn’t have a strong footprint that it continues to expand.
To that point, the company is on a roll.
Over the last year, Oracle has launched 10 public cloud regions. This week, it said it will add six more. Look for Oracle to light up its fourth commercial U.S. region in Chicago. Oracle also will go live in the Republic of Serbia — its first data center in that country and, frankly, the first of any hyperscaler.
Oracle is entering Colombia for the first time, too. Furthermore, it’s standing up its second regions in Chile, Mexico and Saudi Arabia.
Finally, Oracle Cloud will add two public sovereign regions, one in Germany and one in Spain.
The announcements from Oracle Cloud keep coming. In addition to the Alloy and data center region news, Oracle Cloud is doing more with Nvidia. The companies are teaming up to tackle artificial intelligence projects. While the effort falls somewhat outside of the channel’s purview, Leung said MSPs can “look forward to more integrated, simpler tools to use when it comes to AI services and data science services.”
Nvidia’s Pat Lee
Similarly, here’s what Pat Lee, head of strategic partnerships at Nvidia, had to say to Channel Futures about the partnership’s benefits for the channel: “As more enterprises are taking a cloud-first approach to running and scaling applications, the expanded Oracle and Nvidia partnership provides more opportunities for channel partners to solve business challenges with accelerated computing and AI.”
Thousands of people are attending Oracle CloudWorld this week in Las Vegas. And Oracle, of course, is going to put on its best face. Yet, keep in mind that the cloud computing sector is facing some economic headwinds. Oracle itself is laying off a little more than 200 more workers, this after its last round of cuts in August. Salesforce joins that fray, too, and, it, like AWS and Google Cloud, remains under a hiring freeze.
All of that is to say that even as cloud providers, including Oracle, tout new innovations, they, like so many of their peers, are fighting inflation, supply chain problems and staffing shortages. In response, they are tightening budgets and shedding or delaying bringing on workers. (Even Facebook parent Meta is instituting a hiring freeze for the first time in the company’s history.)
The hope, of course, is that partners don’t experience trickle-down effects with their account managers and help desk support. However, it would behoove partners to keep an eye on the internal goings-on of their go-to cloud vendors, flashy news announcements notwithstanding.
Contributing Editor, Channel Futures
Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.
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