The Azure Tinge of Microsoft and Oracle's Cloud Ambitions
Technology vendor partnerships come in two general flavors: 1) strategically transformative relationships that aim to develop and deliver something essentially new; and 2) tactically accretive relationships that strengthen the partners' individual efforts.
The first sort typically occurs between companies whose products have little competitive overlap. A good example is Intel's relationships with various server vendors, including Dell, HP, IBM and Oracle, all of which have profited significantly both from the continuing growth in x86-based server sales and from Intel's ongoing innovations in server silicon.
This isn't to say that relationships such as these are entirely free of competitive tensions. IBM and Oracle both put a great deal of money and energy into their own proprietary CPU/system solutions, but those platforms are different enough from most of their Intel-based solutions to tamp down potential discordance.
How can you tell when a given partnership falls into the latter bin? The first sign is whether the deal somehow defuses a previously thorny relationship. That's usually evident if the new partners spout homilies about "coopetition" as in, "We have often competed in the past and will continue to do so in future but are now pursuing a greater vision together."
Translation: While we have buried the hatchet -- and not in any visible body part -- to further our common business goals today, cranial and other contusions are not beyond the realm of possibility in the future.
Overall, the new Azure and Hyper-V partnership between Microsoft and Oracle falls easily into the tactically accretive category. Initial news of the deal -- dropped unsubtly by Larry Ellison in Oracle's recent quarterly earnings call -- was controversial enough, especially given the companies' contentious past dealings, that some industry watchers assumed a major announcement was coming, probably around Oracle's cloud-friendly 12C Database solution.
That wasn't precisely how things shook out, but it doesn't detract from the significance of what the pair is actually doing. In essence, Oracle will approve, certify and support its Java, Database and WebLogic Server software for Microsoft's Windows Server Hyper-V virtualization environments and Azure cloud platform, and will also make its homegrown Linux distro available to Azure customers. Microsoft, in turn, will make Oracle's software available to its Azure customers.
How is this significant? Mainly because both Microsoft and Oracle appear to be giving ground in software battlefields long soaked with one another's blood. Why they would do so is the bigger question. Both companies appear to suffer from what might be called "acute delusional supremacy," a common ailment among vendors that assume their domination of one market naturally translates into resounding success in others.
In Microsoft's case, the company's unquestioned leadership as the leading x86 server OS vendor has not been mirrored in either virtualization or public cloud domains. Yes, it is gaining ground in both areas, but to progress in the former, it had to freely include its Hyper-V technology in Windows Server -- and it still remains a distant second to market leader VMware.
Despite significant investment, Azure is still far behind Amazon, and the recent announcement that Microsoft will match AWS' aggressive price points suggests it is having trouble selling Azure on its own merits.
Oracle's situation is somewhat similar. It is and probably will remain the industry's leading enterprise database vendor for some time to come, but other efforts appear to be paying back more slowly than hoped for or expected -- especially in cloud services and Linux.
In the former case, the company claims more than 5,000 customers are using the Oracle Cloud platform, but that's a minuscule number compared to Amazon, Google and Azure. Launched in 2007, Oracle Linux has achieved a position in the enterprise Linux market that is reportedly a small fraction of leading vendor Red Hat's share.
So, will this new partnership deliver the goods Microsoft and Oracle hope it will? In limited ways, certainly. It's absolutely true that having the market's leading database vendor on board gives Microsoft's Azure significantly more enterprise cred than it had before. It also puts Microsoft on par with Amazon, which inked a similar agreement with Oracle in September 2010.
Having Oracle's formal support in place for Hyper-V may also help Microsoft position its solutions against VMware -- which has had a similar arrangement with Oracle since 2009 -- but likely won't be enough to dislodge many of the enterprises dedicated to VMware solutions.
On Oracle's side, the impact of the deal seems less dramatic, though it will help ensure that the company's solutions capture benefits related to Azure's growth and maturation, and could also expose Oracle to new midmarket customer opportunities.
As tactically accretive partnerships go, Microsoft and Oracle should do pretty well. If that's the case, perhaps the hatchet will remain benignly buried and the companies will find entirely new ways to work together. In a market where rapid evolution is impacting relationships of every sort, maintaining a sunny outlook and playing nice may be the surest way to success and perhaps even survival in the cloud.