It’s been a busy couple of weeks for the folks at Oracle. Earnings, a major cloud partnership announcement with Microsoft Azure and then the Oracle CloudWorld event in Las Vegas, which was loaded with more announcements that put an emphasis on artificial intelligence (AI) offerings in infrastructure, development tools and applications.

In reality, it’s been a busy couple of years for Oracle. It seems the company is continuously making news with the launch of a new service or cloud partnership. As an analyst, it’s sometimes hard to keep up with all this activity. This is what a company in a constant state of motion looks like. In this piece, I will give some of my thoughts and insights on what’s been happening with Oracle over the last couple of weeks.

Earnings – cloud is looking strong

While Oracle’s Q1 2024 earnings (announced earlier in September) fell slightly short of expectations, overall revenue was still up 9% year-over-year (YoY). The company’s cloud services and license support saw a 13% YoY growth, beating expectations. Finally, its infrastructure-as-a-service (IaaS) business saw robust 66% YoY growth.

Here’s my take on Oracle’s quarter. The company has been aggressive in driving its growth. It might even be overly aggressive. However, there is strong growth driven by customer demand where the company is placing its bets for the future—in the cloud. In terms of market share, Oracle Cloud Infrastructure (OCI) is playing catch-up with the likes of AWS, Microsoft Azure, Google Cloud Platform and IBM. However, in other areas such as sovereign cloud innovations and cloud on premises offerings, the company is leading. The growth is there, and the company is pulling the right levers to accelerate the adoption of its services with customers like Uber and TIM Brasil through competitive pricing, unique services and novel partnerships that are setting the pace for other cloud service providers to follow.

Oracle banks on databases

According to Microsoft CEO Satya Nadella, 95% of the Fortune 500 use Microsoft Azure. This should surprise nobody, given that Microsoft technology and tools have been the backbone of the enterprise datacenter for the past 30 years or so.

While that Microsoft number is impressive, consider this: 98% of the Fortune 100 use Oracle Database, according to the company. And, of course, Oracle is the leader in the database management systems (DBMS) with its Oracle Database and MySQL offerings. Again, this should come as no surprise. I first worked with Oracle Database about 25 years ago (on Oracle 8). I am amazed at how relevant this technology continues to be so many years later, as the company has released Oracle Database 23c earlier this year.

While Oracle Database can be deployed on commodity hardware in an enterprise datacenter, its performance is considerably better when deployed on Oracle’s database machine, Exadata. This is an infrastructure product that has been specifically designed to deliver the absolute best performance for Oracle Database. When an enterprise organization consumes the majority of Oracle Database services in OCI, they deploy on Exadata servers.

Oracle Database@Azure is a big deal

The great enterprise migration to the cloud will continue for the foreseeable future as more and more data is moved from on-prem. If you need proof of how important this is to Oracle, take another look at the numbers I shared on Oracle’s cloud growth. To build on this, Oracle and Microsoft partnered a couple years ago to create a dedicated and secure high-speed interconnect between Azure and OCI to accommodate some of the use cases associated with the cloud. This removes friction for organizations that have data stored in Oracle Database on OCI and run applications in Azure. Application calls and data flow back and forth with low latency and no egress fees.

The companies have taken things a step further in their latest partnership. With Oracle Database@Azure, Oracle is bringing its cloud to Microsoft, literally. The Oracle Database environment in OCI will be stood up in Azure regions, allowing joint customers (again, about 95% of the Fortune 500) to deploy all of their apps and data in one cloud without compromising on performance, scale or security.

This is more than just some simple exercise of dropping Oracle Exadata, Oracle databases and OCI into an Azure datacenter. Utilizing, monitoring and managing that Oracle environment is all done from a customer’s Azure console. Billing is also centralized, with one bill for all consumption. The two companies have gone a long way to make sure that true multicloud is delivered to their shared customers without compromise. And consider the customer benefits of this: even for something as “simple” as billing, think about the cost savings for ingress and egress a customer organization will reap by having apps and databases in the same cloud.

I see a few different areas where this partnership is likely to find success. Perhaps the most compelling use case is for those companies looking to go that last mile in their digital transformation by migrating mission-critical apps to the cloud. To be able to locate data, apps and analytics tools all in one cloud makes that migration frictionless from an operational perspective while it’s also uncompromising on the performance and security front.

This partnership between Oracle and Microsoft could be a seminal moment in the evolution of cloud services. While every company talks about multicloud, this is the very definition of what customers want: simplicity, security, performance and cost savings.

News out of Oracle CloudWorld

Oracle plays in many spaces—applications, tools, the cloud (SaaS, IaaS, PaaS) and of course databases. As such, last week’s CloudWorld event was chock-full of press releases and news. It’s too much for any one analyst to track so, I’m going to focus on an area that has been of particular interest to me: MySQL HeatWave. (And keep an eye out for coverage from my Moor Insights & Strategy colleague Robert Kramer, who will cover all of the CloudWorld news on Oracle Database 23c.)

MySQL HeatWave is a service that has impressed me since Oracle first released it in late 2020 (you can read my latest coverage of it here). In the latest update, the company introduced a vector store, generative AI capabilities, enhancements to MySQL Autopilot, accelerated JSON queries, HeatWave Lakehouse availability on AWS and more.

The vector store (currently in preview) enables customers to get more accurate and relevant results from large language models (LLMs) in generative AI. Using the HeatWave vector store, a company can have its data provide context to questions posed to an LLM. If you are a large company that can invest hundreds of thousands of dollars in developing your own private LLM, this may seem like a redundant feature. However, if you don’t have all that budget at your fingertips, or you simply want to do things more cost-effectively, the vector store in HeatWave is a pretty incredible feature. By the way, this capability is provided at no additional cost—it’s built into HeatWave along with analytics, machine learning, automated management and lakehouse capabilities.

Another new capability of HeatWave relates to its Autopilot functionality. Autopilot helps manage a MySQL environment through automation. A lot of the time-consuming tasks DBAs must do to make sure their database environments run efficiently? Autopilot takes those tasks off their plates by performing them with the help of machine learning.

With the latest update, Autopilot now also helps database professionals by suggesting secondary indexes that should be created or dropped, with an explanation as to why and estimation of the impact of the add or drop on performance and storage.

These features should resonate with DBAs and other database professionals. Autopilot indexing is an example of the MySQL team’s real-world goodness, automating some of the more tedious and time-consuming tasks that prevent database professionals from focusing on higher-value projects.

In addition to these updates, the MySQL team has improved the performance of JSON document queries. This capability makes HeatWave’s JSON support far more performant for users, showing up to a 144x increase in performance for large joins. While I have yet to perform queries on JSON documents in HeatWave, the performance numbers touted by the MySQL team make this tool considerably more usable to companies of all sizes.

Closing thoughts

I’ve previously written about the “new” Oracle and how this company is so vastly different from the company I interacted with when I was buying Oracle 8 and writing in SQL*Plus and PL/SQL. While the company still realizes a healthy revenue stream from its traditional database business, the cloud is its new frontier.

I don’t expect things to slow down for Oracle. The company has kept up this frenetic pace for some time, churning out new products and services on what seems like a weekly basis. MySQL HeatWave is a prime example of Oracle’s innovation flywheel and has already seen strong adoption. I suspect its new capabilities will only drive greater adoption.

On the Oracle Database@Azure front, I expect a fast ramp for this service. The joint offering delivers capability that nearly every enterprise can benefit from, with a value that is so easy to quantify. I’ll be sure to report on developments on this front as the company reports its momentum in the market.


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