• December 20, 2014

Microsoft joins Oracle in cloud-computing pact

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Posted: Thursday, June 27, 2013 4:30 am

SAN FRANCISCO — Microsoft’s cloud-computing service will offer Oracle’s database and Java tools as an option as the companies cast aside a longstanding rivalry to attract businesses moving their software online.

Microsoft will offer businesses using its Windows Azure service the ability to run Oracle’s widely used database software, application-connecting middleware and Java programming tools, Microsoft CEO Steve Ballmer and Oracle co-President Mark Hurd said Monday during a conference call to unveil the alliance. Customers are demanding that more of the companies’ products work in tandem as they create Web services that incorporate offerings from both, the executives said.

“It’s about time, and we’re really glad to have the chance to work in this much newer and more constructive way with Oracle,” Ballmer said. “The partnership has an immediate benefit to customers of every size and shape.”

Both companies face competition from nimbler rivals delivering computing power over the Internet, including Google, Amazon.com and Salesforce.com. Microsoft is seeking new sources of revenue from online services as demand for personal computers slumps, and Oracle is shifting its focus to business software sold through online subscriptions rather than installed on customers’ own computer servers.

The collaboration would lure customers seeking more technical compatibility between Microsoft and Oracle products. Oracle plans to support versions of its software that customers run through the online Azure service, and when using Microsoft’s Hyper-V virtualization software, which lets servers run more efficiently, Hurd said. Oracle also will let customers use their current software licenses on Azure, he said.

Oracle’s database, which will be upgraded later this year as a new version called 12c, competes with Microsoft’s own SQL Server. Companies using Microsoft’s Azure cloud service, which lets companies build and run programs online, will be able to put information into Oracle’s database.

The alliance with Microsoft lets Oracle offer its customers the option of sticking with its database and middleware at a time when businesses are moving more of their software to cloud-computing services. Oracle reported on June 20 that fiscal fourth-quarter software license and subscription sales grew just 1 percent, less than analysts had projected.

Oracle controlled 45 percent of the $28.2 billion worldwide database market in 2012, compared with 20 percent for Microsoft and 18 percent for IBM, according to IDC.

Azure’s main competitor is Amazon Web Services, in a growing area called infrastructure as a service, which lets companies rent computing power, storage and database software via the Internet. That’s the fastest-growing part of the cloud market, according to Gartner Inc., which estimates sales in the market segment to surge by an average of 38 percent annually to $30.6 billion by 2017, from $6.17 billion last year. Microsoft, which said in April that revenue from Azure and related software sales topped $1 billion annually, has pledged to match Amazon Web Services’ prices.

“This deal gives Microsoft clear competitive advantages against two of its top rivals,” James Staten, an analyst at Forrester Research, said in a blog post. It bolsters Microsoft’s efforts to compete with VMware, the market leader in virtualization software, and “gives Windows Azure near-equal position against Amazon Web Services in the cloud platform wars,” he said.

Oracle also will make its version of the open-source Linux operating system available through Azure.

“The cloud is the tipping point that made this happen,” Hurd said. “This made a lot of sense for both of us.”

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