Cloud puts an end to Oracle’s rivalry with Microsoft and Salesforce.com

by Sohini Bagchi    Jun 26, 2013

cloud partnership

Longstanding rivals can turn pals anytime, especially in the world of business. The recent buzz is about Oracle that has teamed up with Microsoft and Salesforce.com to strengthen its cloud computing services for its customers.

As far as the alliance with Microsoft is concerned, the two industry leaders had given each other tough competition for the past many years. But the companies are facing growing pressure from rivals such as Amazon and VMWare, and also several smaller companies who are selling robust cloud offerings at much cheaper rates.

As per the announcement, the Microsoft Windows Azure cloud-computing service will run Oracle’s database software, Java programming tools and application-connecting middleware. Just one day after announcing the deal with Microsoft, Oracle on Tuesday announced its partnership with Salesforce.com, another of its major rivals. The two companies have signed a nine-year agreement under which Salesforce.com will make a significant investment in Oracle products for its cloud computing platform.

Bonding in the Cloud

Despite long standing rivalry, the two organizations have long collaborated out of the public eye to meet customers’ needs, believes Microsoft Chief Executive Steve Ballmer as he states at a press conference, “In the world of cloud computing, I think behind-the-scenes collaboration is not enough. People wanted more from us and you’ve got to do that kind of partnership actively, not passively.”

In the world of cloud computing, I think behind-the-scenes collaboration is not enough. People wanted more from us and you’ve got to do that kind of partnership actively, not passively
-Steve Ballmer, Chief Executive, Microsoft

Analysts believe at this point of time, this partnership is strategic. For Oracle it’s about reshaping its cloud portfolio in its basket as it shifts focus to subscription-based online software. Microsoft is also seeking newer sources of revenue from online services, with the steep fall in the demand for personal computers.

Ballmer further said in a statement: “It’s about time, and we’re really glad to have the chance to work in this much newer and more constructive way with Oracle. The partnership has an immediate benefit to customers of every size and shape.

According to many, Microsoft and Oracle’s collaboration would attract customers looking for more technical compatibility between products. As Mark Hurd, Oracle Co-President explains that Oracle will support versions of its database and Java software that customers run through the online Azure service, while using Microsoft’s Hyper-V virtualization software. This will allow the servers run more efficiently.

Analysts project that the partnership will enable customers to use database and middleware at a time when businesses are moving more of their software to cloud-computing services. At present Oracle controls nearly 50 percent of the database market, compared with 20 percent for Microsoft and 18 percent for IBM, as per an IDC report. From that perspective, the partnership will help Microsoft strengthen its infrastructure as a service (IaaS) market through Azure, whose key competitor is Amazon Web Services. IaaS is said to be the fastest-growing part of the cloud market, according to Gartner Inc., which estimates sales in the market segment to surge by an average of 38 percent annually to $30.6 billion by 2017, from $6.17 billion last year.

James Staten, an analyst at Forrester Research quoted in his blog: “This deal gives Microsoft clear competitive advantages against two of its top rivals. It bolsters Microsoft’s efforts to compete with VMware Inc. (VMW), the market leader in virtualization software, and gives Windows Azure near-equal position against Amazon Web Services in the cloud platform wars.”

Likewise, Oracle will make its open-source version of the Linux operating system available through Azure.

False cloud floats into roach motel

The second announcement on Oracle’s partnership with Salesforce.com surprised many in the industry, considering, at the OpenWorld conference two years ago, Larry Ellison condemned Salesforce’s cloud platform as a “roach motel” in October 2011, Benioff’s labeling of Oracle’s on-premise tech as a “false cloud” a year prior to that.

Larry and I both agree that Salesforce.com and Oracle need to integrate our clouds.
-Marc Benioff, CEO Salesforce

The tone has changed as the stalwarts sound ‘happy’. “When customers choose cloud applications they expect rapid low-cost implementations; they also expect application integrations to work right out of the box — even when the applications are from different vendors,” Ellison said at the press conference. “That’s why Marc and I believe it’s important that our two companies work together to make it happen.”

 “Larry and I both agree that Salesforce.com and Oracle need to integrate our clouds,” adds Marc Benioff Salesforce chief at the conference.

Though the Oracle statement said Salesforce would be running its main services on Oracle hardware and software, surprisingly, there was no mention of Heroku – a platform cloud that Salesforce owns and which runs exclusively on Amazon Web Services’s mega infrastructure cloud.

The overall treaty scenario also highlights how Oracle has been forced to partner to retain relevance in a fast-moving cloud world, says analysts. After all, many believe Cloud is becoming the ‘game changer’ in the industry!