Does hardware matter in the cloud? Oracle is hoping so

Does hardware matter in the cloud? Oracle is hoping so

Summary: Oracle is set to give an update on its cloud strategy. But it will have a very different take on the future of the cloud than its rivals.

TOPICS: Cloud, Hardware, Oracle

Oracle is preparing to take on Amazon, Google and Microsoft with its own infrastructure-as-a-service technology, with its hardware destined to have a significant role in the strategy.

Larry Ellison
Larry Ellison. Image: Jack Clark

Oracle chief executive Larry Ellison revealed the plan in an earnings call last week: "Our new infrastructure-as-a-service [IaaS] offering provides secure, virtualised, compute and storage services in the Oracle Cloud or — and this is very important — an identical infrastructure service installed in our customer's datacentre as an Oracle-managed private cloud."

Ellison's statement suggests Oracle wants its customers to use Oracle's software and hardware for an on-premise cloud and go to Oracle as well for its public cloud. But this is a hard trick to pull off, and one that cloud incumbents Amazon Web Services (AWS), Google and, to a lesser extent Microsoft, have all steered clear of. 

Microsoft is preparing to try something similar to this with its revamped Windows Server and System Center software, which connects to its own Windows Azure cloud, but has steered clear of hardware. 

Amazon Web Services, meanwhile, has partnered with on-premise cloud specialist Eucalyptus and released its own 'Storage Gateway' software to make it easier for businesses to move data between their kit and its cloud but, again, has stayed away from hardware. Google, finally, has steered away from the on-premise world and its Google Compute Engine and Google App Engine services are a public-only play.

In fact, the only company that comes to mind as trying a similar thing is HP, which has been producing 'CloudSystems' for a couple of years. These pieces of storage and compute connect directly to HP's OpenStack-based in-development public cloud, along with Amazon Web Services and Savvis.

Of course, none of these companies have the huge hardware business that Oracle has, following its acquisition of Sun — and a key part of Oracle's strategy will be to find a role for its high-end hardware in the cloud, which is often characterised by vast amounts of commodity hardware.

Crucial time for Oracle

Oracle's OpenWorld event, which kicks off on Sunday in San Francisco, comes at a crucial time for the company.

It is facing competition from CRM competitors like; new database technologies from companies like MongoDB; hardware rivals like SAP; and, now, from an entirely new breed of cloud companies. How Oracle navigates these waters will determine the company's chance of growing its share among younger, smaller companies.

Putting hardware at the heart of its infrastructure-as-a-service technology is one way to make hardware relevant to the cloud — in the company's most recent earnings release hardware sales dipped again and analysts suggested that the high-end 'Exa' cloud systems were failing to meet internal sales expectations. 

Oracle's gamble is whether it can demonstrate some kind of performance or cost advantage over competitors when people use an all-Oracle cloud infrastructure. It's a message that needs to come out of Oracle OpenWorld next week.

An all-Oracle stack

As yet, there is not much evidence that a 'hybrid cloud' based around the same hardware stack on both sides has much value. Yes, Oracle has tuned its 'Exa' range of systems to work well with its own software and, yes, it claims its public cloud runs on Oracle hardware. What doesn't add up is how it can claim that by using an on-premise cloud paired with an Oracle cloud companies will get better performance than if they were using a mixed stack internally and Oracle on the other side, or vice versa. 

There could be a chance that Oracle is being moved by customer demand rather than its own wider strategy

Along with this, Oracle has a historical commitment to single tenancy as the company believes this offers better security. While this may be true, if you operate a cloud model based around single tenancy, it is much more difficult to take advantage of the economies of scale that let companies like Amazon, Google and Microsoft consistently lower the price of their cloud services. 

The measure of the value of the company's new cloud proposition will be how much — or how little — performance and costs change when you go from exchanging data with Amazon to exchanging data with Oracle. 

IaaS is an unfamiliar area to Oracle. By launching a technology that sits far away from its core expertise of databases and corporate people management technologies, there could be a chance that the company is being moved by customer demand rather than its own wider strategy. 

"What I'm seeing is that increasingly vendors in one area of cloud are offering other types of service as a complement," David Bradshaw, a research manager for software and services at IDC, says. "Their customers are asking for it."

Topics: Cloud, Hardware, Oracle

Jack Clark

About Jack Clark

Currently a reporter for ZDNet UK, I previously worked as a technology researcher and reporter for a London-based news agency.

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  • SAP

    "hardware rivals like SAP". I did not know that SAP supplied hardware !
    • Via HANA

      Hey Capiti,
      Thanks for commenting. I class SAP as a hardware rival as they develop the fundamental tech behind the SAP HANA in-memory database platform which is sold in appliance form by most of the major OEMs.
      Thanks for commenting
      Jack Clark
      • Hana is software not hardware-SAP is a software vendor!

        SAP is a software developer and doesn’t sell any hardware including appliances and calling them a hardware rival is wrong. SAP Hana competes with a very small portion of Oracle's business, which is Oracles times ten in memory database.
        When you combine SAP Hana and one of its OEM HW vendors, then the combination can be called an appliance, but it isn't SAP selling the appliance, it’s the HW vendors.

    Jack, nice sharing again.

    First the CLOUD (side) needs not a GUI or personalized attachment to say a Windows or Oracle database or application. We like to say DATA IS DATA.

    The end user is the GUI customer. Data representation for the end user in the form of a GUI is their personal choice, and they can have it delivered and represented anyway they desire.

    The most important part of the Cloud equation will be how much will it cost and end user to say RUN PAYROLL in the CLOUD.

    To AMAZON, the first there, might have been the Biggest Mistake Amazon ever made, 'next to the same day delivery service' they are starting. AMAZON profit margin last checked was 0.69%.

    That was 0.69%.

    That ain't a business, that is a farce. If they lose money in their same day delievry business, look for their market value to possibly tank. Because they will be in a defecit margin.

    Finally, the CLOUD is really, really just getting started.

    THE REAL CLOUD is maybe 5-10 years away. Hype is about a decade ahead of reality according to my HypevRealityMeter. It makes a nice dashboard.
  • Jack

    I thought HP had a "huge hardware business" !
    • HP does... however

      Focus of this article was on Oracle and the explicit importance they're placing upon single stack hybrid cloud. HP, from my experience, has a much more multi-vendor approach, so it didn't seem fitting to mention it. Also, Oracle gained its hardware business fairly recently and so hardware isn't its core competence, so it is in a very different position to HP. Thanks for commenting!
      Jack Clark
      • Full HP infrastructure stack

        Just to clarify, although HP is by nature open we can provide the full converged infrastructure stack and are no. 1 or 2 in each area in terms of sales and analyst technology ratings. Besides this point there are also inherent benefits in using a complete HP infrastructure stack with customers benefiting from enhanced automation and support. Nice post by the way.
  • Overpriced

    As nearly as I can see, Oracle is overpriced in everything. It's wonderful to have Postgresql that can do just about everything the Oracle database can do and some things better -- with even a direct replacement in some cases. Ellison has gone and bought one of the Hawaiian Islands on the technology originally designed and built by IBM.

    Here's more hype and Oracle is hoping to make more gobs of obscene money.

    Here's the thing: If you can get it cheaper elsewhere and it works for you, don't bother with Oracle.
    • Overpriced? You get what you pay for!

      Your name is misleading.. Regarding your comment "As nearly as I can see, Oracle is overpriced in everything"- you might need some glasses. Oracle DB hasn’t become the #1 DB in the world for nothing, with more marketshare than the next 3 databases combined. If you compare Oracle to its closest competitors like IBM and HP, Oracle actually has better pricing than its competitors because it’s the only company that can sell the entire stack from apps to disk. No need to sell other companies products and customers don't need to deal with the integration headaches.
  • Cloud Hype, Cloud Hype,

    Everybody seems too enamored with the cloud. What is the essential difference between having all your data and computing done in a central location today, compared how it was done 40 to 50 years ago in the old mainframe days? The quantity of data and the length of the wires (fiber these days) has changed, but otherwise the model is identical. When something happened to the wires or the mainframe, hundreds of people were twiddling their thumbs sitting at their dumb terminals. Nowadays, when something happens to the Internet connection or the data center, thousands or even millions of people are idled, sitting in front of their useless PCs, which are merely being used as nothing more than slightly smarter terminals. That is why Larry Ellison as “the network is the computer” is still dead in the water. We had the Internet connection go out twice this week and its hiccups quite frequently in between. The cloud may have its uses, but don't depend on it for your work or business.
    • valid points but. ...

      It's not a question about all or nothing. The benefits of cloud are undeniable. What's important is for each customer to get the right mix of cloud integrated with their traditional IT environment and perhaps most importantly managed as one!
    • Quite correct

      Arminw, you are totally correct. The cloud offers little except relibility problems, increased costs for data bandwidth, vendor lock-in, plus the fact that your data is in the hands of a third party where it is available to them as well as hackers and about any government agency that wants to come along as ask for it.

      Keep your data and processing in-house where you have total control over it.
  • ))

    I agree with some of the other comments in here..Oracle is overpriced, there is really no other way to put it. In terms of a cloud sharing, I recommend you guys check out 4sync, they offer 15gb of free storage.
  • Actually, Ellison has got it backwards...

    Hardware is being commoditized in the cloud since it offers very little differentiation in terms of costs or services to be supplied. Even storage is going this way with Server 2012 and SMB3 with RDMA support that has performance equivalence of Fiber Channel.

    Ellison's days of charging and arm and a leg for expensive hardware and more expensive maintenance agreements are over. I foresee Oracle's business shrinking at least 50% over the next 5-10 years.
  • I see omdguy having financial woes in next 5-10 yrs with poor analysis

    Hardware being commoditized? you must be joking? Sounds like what Dell used to say at Apples business 5 years ago. Now look at where Dell is compared to Apple! The beauty of Oracles business model is that they have massive market share across a lot of its software, especially its database, and regardless of where the cloud exists, hardware will still be in demand to run it and the areas where Oracle will add value, is in optimizing and engineering that hardware to work best with its software. So while others will continue to suffer at integrating and optimizing all that HW and SW complexity, Oracles model of selling complete end to end Engineered system "iphones" for the datacenter, will continue to make inroads just like the Mainframe had done 50+ years ago and Apple is doing today with its "i" products.
    • Sorry, but....

      Facts are facts, and those companies building large cloud datacenters are going with commodity solutions (I am a cloud architect and have firsthand experience). Take a look at what Microsoft and Facebook are doing (2 of the largest cloud providers on the planet)

      Oracle has a HUGE uphill battle trying to convince people that the Capex for their solutions is more beneficial than what others are doing. ODM's are leading the charge to cloud hardware, not the OEM's since they have too much overhead and can't compete on features and price.

      Comparing building of datacenters to that of an iPhone is absurd other than the fact both are efforts to lock customers into their ecosystems for life.
  • The big sofware companies should build their own hardware

    Apple does. Seems like that is working for them.

    The issue might be that there are only so many compentent hardware desingeners, manufactures etc. Then again maybe the software vendors are all obsolete.

    As mr postgresql pointed out, a lot of what people pay for can be done for free. Well, with not much imagination all of it. Does anyone think windows is better than linux for the average workstation? Not childerns play but work? Blah blah we still use the kings foot and work with base 64, base 5280, and base 12 as well as base 4 for liquids and heat is offset by 32 for who knows what reason, to measure with so yeah intrenched stupid is hard to over come but maybe when the population is more than 50% hispanic, ten years or so, metric will finally become default and thank god for that. Same idea with linux.
  • cloud

    just coming to understand cloud
    gil trudeau