Five Reasons Why Oracle Will Enter the Cloud Computing Business

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July 17, 2009 - IDC Link

By: Jean Bozman

Cloud computing is an industry-wide hot topic for discussion, building on virtualization and a modular software stack — and aimed at providing cloud services to end-users on a pay-as-you-go basis. At last fall's Oracle OpenWorld conference in San Francisco, Oracle CEO Larry Ellison said that cloud computing was not an immediate focus for the company — at least at the time — and that the definitions of cloud computing were as variable as fashions in apparel. But things have changed in the industry: the focus in cloud computing has shifted from application development, and tire-kicking, to enterprise computing and private clouds within the walls of the IT datacenter. Now, Oracle executives are mentioning cloud computing more often, including on a recent quarterly call with Wall Street analysts. Importantly, the Oracle website now includes a reference page for cloud computing. The company is speaking more often about software as a service (SaaS), with enterprise apps delivered via Internet — as components of enterprise cloud computing. Following up on some quick comments about on-demand SaaS offerings during Oracle's quarterly call with financial analysts on June 23, 2009, IDC believes that a number of factors show Oracle is wellpositioned to compete in the cloud computing market, starting with on-demand application services for use in IT private clouds, and extending into provisioning of cloud computing on behalf of service provider partners (public clouds) — or directly, as a future set of Oracle cloud services.

Here are five reasons why:

• Oracle's rich application portfolio could feed a specific cloud computing need for pay-bythe- drink application use. Oracle already supports SaaS efforts, such as Oracle on Demand. Cloud computing would take this approach one step further, by providing the infrastructure elements that support cloud-enabled provisioning of application services, and doing so in a multi-tenant context. One example: Oracle recently announced 8 new Oracle CRM on Demand offerings.

• The next wave of cloud computing will feature cloud-enabled storage services, building on the concept pioneered by Amazon Web Services' (AWS) S3 storage offering. Clearly, Oracle has already considered this type of cloud computing service, and last fall announced that Oracle DataGuard would be available to web developers building cloud-enabled archiving solutions on AWS' S3 cloud. IDC believes that the same concept could be developed more broadly, aimed at more types of end-users, in 2010.

• Oracle's pending acquisition of Sun Microsystems will bring the company a portfolio of cloud computing building blocks. These include Java, Solaris, OpenSolaris, and the Sun xVM framework for managing virtualized workloads. Sun xVM supports multiple operating systems as guests — including Sun Solaris/OpenSolaris, Microsoft Windows and Linux. All of which would complement Oracle's Linux virtualization offerings: Oracle Virtual Machine (OVM) and Oracle Enterprise Linux (OEL) for virtualized environments. Oracle's OVM is designed to optimize Oracle products' performance on virtualized IT infrastructure.

• The Cloud and High Availability (HA) will be a big theme for cloud computing, going forward, because data can be parked or archived on the cloud. Large companies such as Symantec, Microsoft and IBM have announced that products and services that will tap into this emerging, but promising, market. When customers place their replicated data on the cloud, that frees them from concerns about disaster recovery — or data recovery — at their local sites, even in the face of natural disasters and power outages taking data offline. Retrieval of that data, once it is parked in the cloud, is not instantaneous, but it will still be the basis for a business continuity process of backup/recovery and restart of applications tapping that data — with security and availability. IDC believes Oracle's wealth of software to manage Oracle data on storage devices could be leveraged to support cloud computing HA initiatives — and that kind of service could be delivered by Oracle, by enterprise IT organizations (private cloud) or by service provider partners (public cloud) supporting Oracle technology in their infrastructure. In addition, Oracle Application Grid offers a foundation for customers to deploy applications within private clouds for scale-out capacity and flexibility. •

• Ability to scale up via cloud services. The ability to scale up services, on demand, is key to the cloud now — and will be key to the enterprise cloud. The combination of Oracle and Sun technologies will make it possible to do so, on a variety of hardware/software platforms. In their initial discussion of the aims of the acquisition, Oracle talked about optimizing performance on storage or server appliances — both of which could be engines for cloud computing. Overall, IDC projects that the IT spend for cloud infrastructure will be nearly 10% of total IT infrastructure spending in 2012, compared with less than 5% in 2008; however, IDC will continue to update that future outlook as 2009 progresses.


What does all of this mean for Oracle? Following the Sun acquisition, Oracle will be able to build vertical software stacks that extend from the hardware platform itself, to the operating system (e.g., Solaris, OpenSolaris, and Oracle Enterprise Linux, which is based on Red Hat Linux), to middleware (Oracle Fusion middleware), and then to Oracle Applications and Oracle Database at the top of the stack. As the next wave of computing ramps, accelerating the use of enterprise applications in cloud infrastructure, Oracle's applications and database products will be key workloads in the cloud — no matter who provides those cloud services (IT organizations or service providers). It appears that Oracle is in the process of assembling an important inventory of cloud computing technologies for enterprise computing, although that segment of the market will take years to mature. Still, the shape, and the exact details of the future announcements surrounding Oracle's cloud offerings have yet to be put into place. As for how, where and when these technologies will get deployed into the marketplace, prior to any formal finalization of the Sun acquisition, we can only say: Stay tuned

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