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July 6, 2017updated 10 Jul 2017 5:03pm

Oracle’s cloud delusion: Marketing hype or a genuine contender?

Oracle's marketing machine has been pushing hard for a couple of years, but is there any substance to Big Red's 'market leading' claims.

By James Nunns

Oracle, the newly found poster child for cloud computing success, has found itself in the limelight over the past few weeks due to successful financial results.

It’s clear that the former legacy enterprise IT vendor, which still has its revenues dominated by ‘old world’ technology, has won over financial markets analysts, if not technology analysts.

Oracle is great at the marketing game, anyone unaware of the actual size of the leading public cloud vendors would assume that Big Red must surely be the leader, or at worst second place.

Read more: Do you trust your cloud provider? Veeam hopes that you don’t

The reality is that Oracle is a long way behind in terms of adoption, maturity of product, and a raft of other issues that separate it from the likes of Amazon Web Services, Microsoft Azure, and even Google Cloud.

Although Gartner said recently in its most recent IaaS Magic Quadrant that Oracle’s second generation cloud offering has a “well-designed hyperscale cloud architecture, and a thoughtful selection of current and future features,” there’s still concerns regarding a lack of an operational track record.

Despite this, Oracle is talking a good game and there’s definitely a big . The company’s co-CEO Mark Hurd recently said during an interview with Recode that the enterprise market is a relatively untapped resources.

The co-CEO definitely has a point – spending on public and private clouds is increasing.

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IDC’s Worldwide Cloud IT Infrastructure Market Forecast from 2015- 2021 suggests that over the five-year forecast, spending on off-premises cloud IT infrastructure will reach $45.7bn in 2021, public cloud data centres will account for 79.8% of this, while spending on off-premises private cloud infrastructure will grow at a rate of 11.3%.

Maarten van Montfoort, Vice President Northwest Europe at COMPAREX, said: “IDC’s figures highlight the continued shift towards cloud, with worldwide outlay on non-cloud IT infrastructure set to fall 4.7% this year, and public cloud infrastructure accounting for the majority of overall IT spend. As more and more organisations look to integrate cloud services to reduce costs and increase flexibility, there will be no ‘one size fits all’ model, so they must ask some key questions.

Read more: Cloud Wars: AWS dominates as IBM & Oracle struggle with IaaS

“For example; can legacy, business-critical applications – not built with cloud in mind – be re-architected for the cloud, or should they stay on premise? Would a new SaaS product better fit their needs? In addition, does the IT department have the required skills in-house to support successful migration. Each cloud journey will be different – and these are all important considerations if organisations are to maximise the ROI of cloud.”

Oracle was late to the cloud game, whether it admits it or not, but IT spending it continuing to shift to the cloud and will do for the foreseeable future, so the company has plenty of opportunity to catch up with the market leaders.

Although there’s plenty of potential from Big Red, customers shouldn’t be swept along by the marketing machine.

Sales are growing cloud sales up by 58% from the previous year to $1.36bn, but the company only has a revenue run rate of around $4bn for its cloud services, not only is this well shy of the likes of AWS with a $14bn revenue run rate, it’s also well shy of the $25.6bn the company made from its hardware business.

Larry Ellison.

This isn’t to write off the work that Oracle has done, it’s come a long way from Larry Ellison saying: “We’ll make cloud computing announcements because, you know, if orange is the new pink, we’ll make orange blouses. I mean, I’m not gonna fight this thing … well, maybe we’ll do an ad. Uh, I don’t understand what we would do differently in the light of cloud computing, other than market … you know, change the wording on some of our ads.”

A $200bn market valuation off the back of continued cloud success, and more marketing than you can shake a stick at, have certainly put Big Red into the picture when it comes to talking about leading cloud vendors, but Oracle’s still got a lot to do to actually become a true leader.

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