Microsoft Oracle Partnership: Rivals Join Hands to Face AWS

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Rajneesh De, Consulting Editor, APAC News Network

Imagine a global scenario tomorrow where India and Pakistan forget their age old bitter rivalries and join hands together to face their common enemy. Or extend this scenario to other geographical hotspots like Russia-Ukraine, North Korea-South Korea, China-Taiwan and the likes. We can easily imagine the brouhaha it will cause in the global diplomatic world and the changes it would lead in the dynamics of global geopolitics.

Foes Turned Friends in the Corporate World

Sometimes even the corporate world conjures up similar scenarios and their repercussions often are as dramatic as the diplomatic instances. The recent partnership between traditional competitors and often bitter Microsoft and Oracle on the cloud computing front is one such instance and not surprisingly it has created quite a uproar in the industry.

Like in the diplomatic world, any partnership between foes turned friends even in the corporate sector is often inspired by the motive to face up to a common competitor, albeit one who poses a threat to both. In the current instance, the partnership between Microsoft and Oracle is targeted to stand up to the growing clout and market domination of Amazon Web Services (AWS).

While this must be one of the recent novelties of the corporate tech world, the agreement bears similarities to partnerships beyond the tech world where longtime competitors often cosy up to each other up to take on industry disruptors especially in the automotive sector.

For example, Honda announced a $2.75 billion investment in GM’s self-driving car unit in a partnership that would help the pair take on competition from companies like Uber and Google that have been developing their own autonomous vehicle technology. Then BMW and Daimler inked a $1 billion deal to develop driverless vehicles and pay-per-use cars together. Ford and Volkswagen have long been rumored to sign a similar partnership.

Microsoft & Oracle Join Hands to Take on AWS

AWS has dominated the growing cloud computing business, but this new partnership between industry rivals Microsoft and Oracle (something unimagined till a few years back) aims to unseat it. Microsoft and Oracle, traditional competitors in the cloud business, announced this deal to link their cloud computing services. Microsoft Azure and Oracle Cloud will now be connected over a high-speed, direct network, allowing clients to upload and store data on both clouds and run business operations software programs on whichever cloud best supports them.

AWS is the clear leader in the global cloud business, controlling more than 30% of the market with Microsoft Azure having the second-largest share of the market at around 15%. IBM Cloud and Google Cloud round out the four leading cloud providers with smaller ones like Oracle having grown at a slower pace recently as the top four strengthen their hold on the market. The partnership idea is not just to add up their combined market shares. The fact that Microsoft and Oracle dominate the enterprise application platforms worldwide is leading to the hope that this clout can also be transferred to the cloud computing environment and challenge AWS hegemony.

Oracle and Microsoft believe their new partnership will improve the experience for enterprise customers and take advantage of a growing desire by organizations to use multiple cloud platforms simultaneously. That could better position the two erstwhile to take on AWS for key big business and government clients from a more level playing field.

Working Dynamics of the Partnership

As a result of this expanded partnership, enterprise customers will have the choice to deploy their Azure services with their fully managed Oracle Database services all within a single datacenter, including support for Oracle Exadata Database services, Oracle Autonomous Database services, and Oracle Real Application Clusters (RAC). Oracle and Microsoft have also developed a joint support model to provide rapid response and resolution for mission-critical workloads.

Additionally, Oracle and Microsoft have significantly simplified the purchasing and contracting process. Customers will be able to purchase Oracle Database@Azure through Azure Marketplace, leveraging their existing Azure agreements. They will also be able to use their existing Oracle Database license benefits including Bring Your Own License and the Oracle Support Rewards program.

Oracle will operate and manage these OCI services directly within Microsoft’s datacenters globally, beginning with regions in North America and Europe.

No wonder therefore that the senior management of both partners are enthusiastic. “We have a real opportunity to help organizations bring their mission-critical applications to the cloud so they can transform every part of their business with this next generation of AI,” said Satya Nadella, Chairman and CEO, Microsoft. “Our expanded partnership with Oracle will make Microsoft Azure the only other cloud provider to run Oracle’s database services and help our customers unlock a new wave of cloud-powered innovation.”

“Most customers already use multiple clouds,” said Larry Ellison, Oracle Chairman and CTO. “Microsoft and Oracle have been working together to make it easy for those customers to seamlessly connect Azure Services with the very latest Oracle Database technology. By collocating Oracle Exadata hardware in Azure datacenters, customers will experience the best possible database and network performance. We are proud to partner with Microsoft to deliver this best-in-class capability to customers.”

Both Microsoft and Oracle are Gainers

The deal also includes some other perks for large enterprise clients like a single sign-on for services from both companies as well as prompt tech services support from either company. Giving customers access to the top selling points of both cloud platforms at once will be a plus for both Microsoft and Oracle.

Microsoft’s Azure is the #2 public cloud vendor in the world and Oracle is the clear #1 database vendor with a strong #2 position in enterprise applications. Many analysts believe the two clouds would complement each other well and over time could turn out be a strong competitor to AWS.

While taking on AWS head on seems to be a strong motivation, there is also the incentive for wach of Microsoft and Oracle to look at individual gains. The agreement might just help Oracle in particular to improve its standing against AWS. Oracle with a relatively smaller stake in the cloud market has historically been resistant to partnerships. But it may have realized now the necessity of an ally in the fight against bigger players in the industry.

While Microsoft apparently does not need Oracle to pose strong competition for AWS, the deal nevertheless may help Microsoft grow Azure Premium Services, its higher-margin cloud product business. This can become another great channel to sell Azure Premium Services to the Oracle customer base.

Microsoft had made a significant cloud bet at the outset. When all other established database management software vendors simply hosted their on-premises tech in their cloud, Microsoft decided to start over and build their tech cloud-first. This initially cost them as the platforms were not entirely equal and cloud migration often required re-architecture. But the long term strategy was sound and strong and now that on-premises and cloud architecture has dovetailed, Microsoft offers the superior platform for enterprises.

Of course this platform is tightly coupled with AI and machine learning that permits cloud-based and cloud-connected workloads access to superior data intelligence capabilities at lower costs and through more common skill sets.

The two are coming together to create a cloud-based version of a relationship that Oracle, on the other hand, has built on-premises for a long time. Oracle has often been the default enterprise database of choice and now it moves to the cloud and brings its Autonomous Database with it.

Oracle wants to make it easier now for its enterprise customers using Microsoft’s business intelligence and AI services to work with Oracle. This is an admission on Oracle’s part that it is better to get half a loaf of enterprise services than none as they build out Oracle Cloud and start making a serious enterprise push.

Positive Responses from Enterprise Customers

The enterprise customers too have evinced interest and excitement at the partnership and hope to gain from a best of both worlds. “Today’s announcement displays how industry leaders Microsoft and Oracle are putting their customers’ interests first and providing a collaborative solution that enables organizations like Fidelity to deliver best-in-class experiences for our customers and meet the substantial compliance and regulatory requirements with minimal downtime,” said Mihir Shah, enterprise head of data, Fidelity Investments.

“Data is the lifeblood of any business, and the cloud is the best way to analyze it so that insights become actionable,” said Magesh Bagavathi, senior vice president and global chief technology officer, PepsiCo. “As one of the largest food and beverage companies in the world with a market value of over $200 billion, the ability to run our mission-critical systems and associated data in the cloud with Oracle Database@Azure gives us a scaled strategic advantage across our global operations.”

“We are looking to our technology partners to support Vodafone’s strategic focus on customers, simplicity and growth across Europe and Africa,” said Scott Petty, Chief Technology Officer, Vodafone. “This new offering from Oracle and Microsoft does that by enabling us to deliver innovative and differentiated digital services faster and more cost effectively to our customers.”

“As we continue to bring our business applications to the cloud, cloud partnerships have the potential to help the entire industry maintain better security, compliance, and performance, helping to accelerate the development of new technology products, solutions, and services that enhance customer experience and help achieve better financial outcomes,” said Santhosh Keshavan, executive vice president and chief information officer, Voya Financial, Inc.