Dear Andy:
Congratulations again on the very strong Q1, and particularly for the AWS growth reacceleration to 17%. Your discussion of the company’s broad efforts to ensure AWS can help customers innovate and thrive in the AI Revolution was also impressive.
Clearly, not just AWS but your entire Amazon corporation are evolving rapidly as the dynamics of the global marketplace change at a stunning pace. (And congrats also on AWS reaching a $100-billion run rate!)
In that context, I wanted to ask about a foundational issue on which you and AWS seem to be either dragging your feet or digging in your heels (or perhaps both, if that’s physically possible). And that has to do with a topic you evangelize frequently and passionately: delivering great experiences for your customers. So here’s my question: if AWS could improve the experience for many or even most of its customers by giving them multicloud access to the Oracle Database, then why haven’t you given AWS the green light to do so?
Your major rivals–Microsoft and Google Cloud–have already established very powerful precedents by forging deep partnerships with Oracle that enable Azure customers and Google Cloud customers–without ever leaving their Azure or Google Cloud environments–to evaluate, purchase, provision, deploy, and manage Oracle database services. In both cases, Microsoft and Google Cloud have transcended their parochial competitive interests by locking arms with a bitter rival to enhance the business value for their customers: less complexity, less cost, faster time to value, greater flexibility, and more.
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In fact, several weeks after Microsoft CEO Satya Nadella sat down live with Larry Ellison to announce the Oracle Database@Azure partnership, Nadella said on Microsoft’s fiscal-Q1 earnings call that the primary reason behind the larger-than-expected jump in Q1 Azure revenue was the Oracle partnership. Here’s Nadella in his own words from my Oct. 26 analysis headlined Microsoft Cloud Shocker: Oracle Major Driver Behind Blowout Q1 Numbers!:
“If you just take Azure and try to characterize where’s the growth for Azure coming from, or what’s sort of driving our Azure numbers, there are three things all happening in parallel,” Nadella said.
“For example, take cloud migrations. A good reminder of where we are in even the core cloud migration story is the new Oracle [multi-cloud] announcement. Once we announced that the Oracle databases are going to be available on Azure, we saw a bunch of unlock from new customers who have a significant Oracle estate that have not yet moved to the cloud because they needed to rendezvous with the rest of the app estate in one single cloud. And so we’re excited about that.”
Those are the words of the Microsoft CEO, not the hopes of someone from Oracle: “Once we announced that the Oracle databases are going to be available on Azure, we saw a bunch of unlock from new customers who have a significant Oracle estate that have not yet moved to the cloud….” (emphasis added).
And in the meantime, Microsoft and Oracle continue to compete savagely for cloud-infrastructure business, AI services, enterprise applications, security, analytics, cloud databases–it is not an all-or-nothing game.
Or look at Google Cloud–its database business, its data-analytics business, and its overall data-management portfolio are all booming–and despite that, Google Cloud has elected to do a sweeping multicloud partnership with Oracle to create the new Oracle Database@Google Cloud service.
If Microsoft can make it work in spite of all the competitive overlap between it and Oracle, and if Google Cloud can do the same, then what reason can you and AWS possibly have for not providing the same benefits to AWS customers?
Sure, doing such a thing might, on a personal basis, be utterly galling. And sure, Larry Ellison has said plenty of unflattering things about AWS–your creation–in very public forums.
And in the same vein, there’s no denying that while AWS revenue is 5X bigger than Oracle’s cloud business, the Oracle Cloud Infrastructure (OCI) business is growing at an astonishing rate and is capturing some business that, only a year or two ago, might almost certainly have gone to AWS.
So you have plenty of personal reasons to resist such a partnership.
But do you and AWS have good business reasons to spurn Oracle’s multicloud advances, particularly in light of the words from Microsoft’s Nadella cited above regarding how the Microsoft partnership with Oracle triggered immediate and very significant revenue benfits for Microsoft? Take one more look at what Nadella–just several weeks after he and Ellison sat together and announced in a YouTube video how they are going to change the world–said on Microsoft’s fiscal-Q1 earnings call in late October about the impact of the multicloud partnership with Oracle: “Once we announced that the Oracle databases are going to be available on Azure, we saw a bunch of unlock from new customers who have a significant Oracle estate that have not yet moved to the cloud….”
In closing, Andy, I want to cite a comment you made on the April 30 Amazon Q1 earnings call citing some key reasons for why customers choose AWS: “And with the broadest functionality by a fair bit, deepest partner ecosystem, and strong security and operational performance, AWS continues to be their strong partner of choice.”
That part about “deepest partner ecosystem” will face a great deal of scrutiny by customers when they see that both Microsoft and Google Cloud have been willing to set aside competitive realities to deliver greater value to those customers–but that AWS has not.
All the best,
Bob
