Oracle’s public cloud momentum

Oracle reports its PaaS and IaaS revenue together, which makes understanding its IaaS growth difficult. FY16 to FY17 revenue increased from $0.9bn to $1.4bn, equivalent to 60% YoY growth. The company claims to have added 14,000 IaaS and PaaS customers to OCI since its inception, almost all of them existing customers of its licensed software. Oracle’s overall revenue in 2016 was $37bn, so IaaS and PaaS still represent a small slice of the pie.

The report has, of course, more detail on the portfolio, e.g.:

A challenge Oracle faced from the beginning was its tardiness to the market. Sure, it could copy and perhaps improve upon existing public cloud offerings, but it would have to do it faster than the rest of the market. AWS, for example, has over 70 services, so there is a lot of ground to cover. Over the past year, Oracle has released 50 services and features – starting from bare-metal compute and storage, the company has added virtual machines, databases, database clustering, load balancers, audit capability, compliance, monitoring, logging, authentication and new images. From a single datacenter in Phoenix, it has expanded to Ashburn, Virginia, and Frankfurt; it is targeting London for early 2018 and APAC further down the line. It has also released and open-sourced a new serverless capability called Fn and a Docker-native platform called Fn Flow for composing serverless applications. The company hopes to distinguish its serverless offering by making it cloud-agnostic, although Java is first among equals in terms of supported languages. Oracle realizes that its capability isn’t as broad as AWS’s, but its rate of development shows it can achieve a lot in a short amount of time.


In 451 Research’s Voice of the Enterprise: Hosting & Cloud Managed Services, Organizational Dynamics 2017 report, 44% of 515 respondents stated that they would pay a premium for an enhanced SLA on performance/uptime; 34% stated that they would pay a premium for enhanced customer support. The median premium for these enhancements was about 20%. Buyers see value in services way beyond just the basics. The challenge for Oracle is convincing customers that it offers the best capability for the best price – there are others in the market with stronger credentials and reputations. stronger credentials and reputations.

Source: Oracle stays the course on IaaS

When to go private cloud

As represented with the star in the map above, according to CPI data, at labor efficiency of 1,000 VMs per engineer and 66% utilization, these enterprises are poised to beat public cloud on price regardless of whether they use a commercial orchestration software package, an OpenStack distribution or the OpenStack source.

And, on IaaS pricing:

But price still does matter: In a 451 Research custom study commissioned by Microsoft earlier this year, the biggest reason to change primary provider was price, cited by 34% of respondents. Consumers don’t necessarily want the cheapest cloud service, but they don’t want to feel ripped off. If there is a cheaper option elsewhere, it appears end users will take it into consideration.

Announcements on price cuts gather attention, and are a great publicity and discussion tool for service providers. We think cloud prices will continue to come down through 2017, and may spread beyond virtual machines into object storage, and perhaps even databases – virtual machines came down 7% globally in 2015, but the cost of our small application only came down 2.4%. The fact that margins are still healthy suggests providers aren’t sacrificing huge amounts of gross margin to give such cuts. If they are, it might be a few nickels and dimes here and there, but it’s more likely that they are reducing costs through better procurement and management. If we are in a cloud price war, we’ve yet to see it really get off the ground.

And, see more commentary on the topic of IaaS pricing.

Source: Cloud gross margins: The price war has yet to really kick off

Oracle launches a new IaaS, checks out

Lydia has a great overview of the newest Oracle run at IaaS:

The next-gen cloud currently consists of an SDN (capable of both Layer 2 and Layer 3 networking, which is a differentiator), block storage, object storage, and bare-metal servers (thus the initial moniker, “Oracle Bare Metal Cloud”). Virtual machines (VMs) are coming later this year, with containers to follow early next year. Based on a detailed engineering briefing that Oracle provided to myself and my colleagues, I would say that smart and scalable choices seem to have been made throughout. However, I would characterize this early offering as minimum viable product; it is the foundation of a future competitive offering, rather than a competitive offering today.

She goes on the characterize it as bare-metal and point out that composting of price is not how this market works: you compete on capability. That seems to march Oracle’s core belief system.

Source: Oracle’s next-gen cloud IaaS offering

IaaS “won” by AWS & Azure – Highlights from the IaaS Magic Quadrant

This year’s IaaS magic quadrant is out. You can get a free re-print thanks to, I believe, Amazon. Here’s some highlights from my “notebook”:

  • Ducy created an animated gif of the past 6 quadrants.
  • AWS and MSFT have won: “This phase of the market has been ‘won.’ The market consolidated dramatically over the course of 2015. Just two providers — AWS and Microsoft Azure — account for almost all of the IaaS-related infrastructure consumption in cloud IaaS, and their dominance is even more thorough if their PaaS-related infrastructure consumption is included as well.”
  • “We expect the overall competitive environment will not change significantly until 2018 at earliest, and new entrants to the market will have minimal impact before that time.”
  • Buyers, choose wisely. Two clouds dominate, there’s lots of fragmentation, so clouds come and go. This pushes people more towards the market-leaders because they seem more stable, despite there being many competing options. E.g., HP shutting down it’s cloud
  • “Public cloud IaaS provides adequate security for most workloads.”
  • If not already lean in IT, IaaS will save money – “The less efficient your organization, the more likely you are to save money by using a cloud provider, especially if you take advantage of this opportunity to streamline and automate your operations.”
  • Criteria of note: must be top 10 by global market-share, data centers at least 250 miles apart, pretty real IaaS capabilities (self-service, technical profiles, etc.)
  • PaaS and IaaS getting closer: “Most customers who adopt the infrastructure resources within a cloud IaaS offering will also adopt associated management services, such as monitoring, and are highly likely to adopt PaaS-level capabilities, such as database as a service, over time.” More: “This market is wholly separate and distinct from cloud SaaS, but is increasingly entangled with the PaaS market.” Also: “The next phase of the market has not yet emerged. It is likely that the next phase of this market will even more tightly integrate IaaS and PaaS capabilities, including an expanded use of container technologies and automated operations management.”
  • There is no cloud portability: “Cloud IaaS is not a commoditized service, and even providers with very similar offerings and underlying technologies often have sufficiently different implementations that there is a material difference in availability, performance, security and service features.” (There are ways to deal with this up at the PaaS layer.)
  • Bonus: FedRAMP ain’t cheap: “costs ~$3.5m, takes ~18 months”

For more: we discussed all of this more on this week’s Software Defined Talk:

And, thanks to Matt Ray for scrounging the original link up for our show notes.

FedRAMP costs ~$3.5m, takes ~18 months

Because FedRAMP is the expected standard in this market, but acquiring an ATO is a difficult, expensive and lengthy process, the number of federal IaaS providers is limited. Our discussions with vendors that have completed the process suggest an average of 18 months and $3.5 million to go through the process. This has led to increasing dissatisfaction with the FedRAMP Program Management Office, particularly for small providers, and it is working on streamlining the process as a result. Because the FedRAMP certification process is lengthy, providers may be in the process of certification.

As they used to say “a lot of effort went into making this effortless.”

Source: Gartner Reprint

Public IaaS sort of a big deal – $16.5bn in 2015

Some new market sizing for public IaaS is out from Gartner. $16.5bn in 2015, out of a $3.5t pie of global IT spend.


For the first time this year growth of public cloud IaaS workloads outpaced that of on-premises workloads. One in 10 CIOs surveyed by Gartner say they have adopted a cloud-first strategy, while 83% consider IaaS a viable option to use