As Oracle and Microsoft accelerate and expand their unprecedented multi-cloud partnership, their groundbreaking vision and execution have created entirely new market dynamics, business models, and buyer/seller roles here in the greatest growth market the world has ever known — aka the Cloud Wars.
First, a quick mention of the latest developments in that landmark partnership, and then I’ll lay out my rationale for calling what the two companies are doing “truly extraordinary.” Two key developments have come to light in the past week that underscore the rapidly expanding impact and importance of the partnership:
- As I analyzed in detail three months ago, in mid-December Oracle chairman Larry Ellison disclosed that Microsoft had ordered 20 Oracle Cloud data centers to be built within Microsoft Azure data centers so Azure customers could more easily move their Oracle databases and workloads to the Azure cloud. And a week ago, on Oracle’s March 11 Q3 earnings call, Ellison disclosed that demand for that Oracle Database@Azure offering has been so intense that Microsoft — just a few months after its original order of 20 Oracle data centers — has re-upped by ordering three more.
- And on March 14, Microsoft and Oracle disclosed that the Oracle Database@Azure service will be available in five additional regions of the world later this year, bringing the total number of targeted regions to 15.
- When Microsoft reported its fiscal-Q1 numbers in late October last year, CEO Satya Nadella was asked to outline the drivers behind Azure’s re-accelerated growth. He cited three factors, and the very first of those was the extended Oracle partnership. Check out this excerpt from my analysis called “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.”
So clearly, business customers are eagerly embracing the Oracle-Microsoft partnership and driving enormous demand for it, and the two cloud companies are aggressively building out global availability and scale as rapidly as they can.
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Transforming the Cloud Industry
But here’s why the Oracle-Microsoft partnership is even bigger than that: It obliterates the old tightly defined roles that were created in a different time to meet different needs, and opens the doors for entirely new models that cloud vendors and their partners and customers can create to drive new opportunities, growth and innovation. For example:
- While Microsoft and Oracle compete savagely in many markets, they have forged an incredibly interdependent and open partnership here to drive new value that customers have wanted for decades.
- To underpin the massive technological demands this new partnership places on both companies, Microsoft has ordered 23 Oracle cloud data centers to be built within existing Azure data centers. That type of collaboration would have seemed impossible — inconceivable, even — just a couple of years ago. And now it might well become the norm.
- As a result of ordering those 23 Oracle cloud data centers, Microsoft has now become Oracle’s largest customer. Think about that: Microsoft, which has competed for decades against Oracle, is now Oracle’s biggest customer!
- Microsoft has become in effect a booming sales partner for Oracle. Azure now represents a phenomenally successful sales channel for Oracle database services, despite the fact that Microsoft and Azure offer many competing services!
- By agreeing to offer its archrival’s services to customers, Microsoft has boosted the growth of perhaps its most-strategic product line — Azure. Per Nadella’s comments above: “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.”
Final Thought
Yes indeed, I’m sure Satya Nadella is very excited about any new development that drives great new value and loyalty from customers while also boosting Azure revenue and critical long-term growth.
Plus, if I were an executive at any other company in the Cloud Wars Top 10 — which, need I remind you, leads the greatest growth market the world has ever known — I would be taking a very long and hard look at this seemingly nutty concept of working extremely closely with my major rivals to drive new benefits and innovation and opportunities for customers.
And I think that by the end of this year, we will see several other Cloud Wars Top 10 companies follow the lead of Oracle and Microsoft — and of Larry Ellison and Satya Nadella — in jettisoning the competition-centric business models of the past and instead creating the much higher-value customer-centric business models of the future.
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