As Microsoft reported that cloud revenue for the quarter was up a stunning 24% to $31.8 billion, CEO Satya Nadella disclosed that partner/rival Oracle was a major factor in his company’s blowout fiscal-Q1 performance as customers boosted spending on Azure in order to gain multi-cloud access to the Oracle Database.
Just six weeks ago, Nadella and Oracle chairman Larry Ellison announced an extremely customer-centric multi-cloud breakthrough called Oracle Database@Azure that allows Microsoft Azure customers to have full and complete access to the Oracle Database directly via Azure — you can read all about that in my analysis called “How Larry Ellison and Satya Nadella Have Rocked the Tech Industry.”
In a video conversation about the new service, the two iconic leaders spoke enthusiastically about the advantages their mutual customers can gain as a result of Microsoft and Oracle agreeing to do the technological — as well as philosophical — work of taking “multi-cloud” from a feel-good buzzword to a real-world feature.
But as bullish as Ellison and Nadella were doing their conversation — which, by the way, marked Ellison’s first trip ever to the Microsoft campus — I doubt if even Nadella expected to see financial results from the extended partnership reveal themselves within a matter of weeks.
But that’s exactly what Nadella said on Microsoft’s fiscal-Q1 earnings call earlier this week. Here’s the relevant excerpt, which came in response to a question about what was behind the reacceleration of Azure growth.
“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.”
Yeah, and I’ll bet they’re more than just “excited”! The announcement was made Sept. 14, and Microsoft’s fiscal first quarter ended Sept. 30 — so that “bunch of unlock from new customers” began to take place in significant volume in about 16 days!
Plus, customers from a wide range of industries — including some that have been very cautious in their moves the cloud — are being inspired by the Oracle/Microsoft multi-cloud partnership to make the jump, Nadella said.
“In some sense, even the financial-services sector, for example, is a good place where there’s a lot of Oracle that still needs to move to the cloud.”
Final Thought
If anyone doubts that the pace of change in our artificial-intelligence- (AI-) disrupted world is accelerating beyond anything we’ve seen, the strikingly sudden financial impact of the Oracle/Microsoft deal offers compelling and convincing evidence.
And that breakthrough alliance also shows what can happen when the leaders of influential and world-shaping companies set aside short-term taboos and drive truly transformative change by cutting sharply against not only tradition but also that dangerous killer of innovation: conventional wisdom.
So congratulations to Microsoft for not only a remarkably strong quarter but also for reaping the fruits of its bold and potentially risky agreement with Oracle.
And to the other leaders of Cloud Wars Top 10 companies, there’s a great lesson for you in this surprise news from Microsoft.
Gain insight into the way Bob Evans builds and updates the Cloud Wars Top 10 ranking, as well as how C-suite executives use the list to inform strategic cloud purchase decisions. That’s available exclusively through the Acceleration Economy Cloud Wars Top 10 Course.
