Oracle IaaS Highlights
- Retains ownership of systems installed on the customers premises
- Allows 25% of cores to be switched – and paid for – on and off
- Benefits include having the system integrated with other kit behind the customer’s firewall
- This is an Op Ex model, with monthly charges over a 3-year period
- This is more like traditional leasing than IaaS
- It will help increase the proportion of its revenues from software and services
We attended a Web conference this evening given by Mark Hurd, Juan Laiza and Javier Cabrerizo of Oracle to introduce its new IaaS offering. You’ll want to learn more about its approach.
What Is Oracle Introducing?
Oracle claims to be unique in offering an IaaS solution including Capacity on Demand features (CoD). Its new solution includes:
- Oracle systems – including Exadata, Exalogic Elastic Cloud, Sparc SuperCluster, Exalytics In-Memory Machine and Oracle Sun ZFS Storage – deployed in the customers premises
- A reserve of 25% of server cores which can be enabled by the user at peak times on a Capacity on Demand basis
- An Op Ex model for the customer with systems owned by Oracle
- A 3-year contract with monthly payments at the end of which the system returns to Oracle
Software licenses have to be purchased before the systems are implemented, with the company claiming that many customers will already have them (in some cases as part of SAP deals).
This is different from Oracle’s public Cloud offerings where the systems are located in its own premises. From a security point of view the new systems will be behind the customers firewall and encryption keys will never need to leave the data centre. Other benefits include the ability for integration with existing data centre kit. If a user wants to increase the overall system size – from say a ½ to a full-sized rack – he or she can purchase a 3-year license for the extra kit and extend the contract for the original one.
Making Money From Services And Software
Oracle claims that the customer reduce software costs by purchasing incremental licenses when switching on the new cores – OK if you’re planning to keep them on I guess, but not if you want to use the additional power at peak times in the year – as in its Retail example on the call.
Integral to the IaaS offering are Oracle’s Platinum and PlatinumPlus services – the latter unique to these platforms and involving a monthly analysis of performance and security issues. Customers will also have to pay for Oracle services to install the system.
Some Conclusions –This Looks Like Leasing, Not Really IaaS
It was good to hear from Mark Hurd, latterly leader of HP of course, but this is not a revolutionary approach – a number of vendors went as far as offering ‘on/off capacity upgrade on demand’ systems at the beginning of the millennium – a similar time of poor demand and over-production.
It is always useful to offer users choices in how they deploy and pay for systems, but for us the monthly charges under Oracle’s retained hardware ownership make this a traditional leasing or rental agreement, rather than a revolutionary new type of IaaS offer.
We believe relatively few users will benefit from buying software incrementally when enabling extra capacity, specifically because many of them have excess licences already.
We suspect that the utility pricing incorporated with the switching on and off of the reserve cores will be relatively insignificant in comparison with the monthly service charges.
Oracle’s systems are well integrated, making it easier to move to this kind of model and it has the ability to offer deeper services than many of its competitors. Overall this is another step in growing its software and service (rather than servers and storage) revenues (see Figure 1).