AWS And Oracle Brace For Price War

Oracle may be small fish compared to AWS when it comes to the overall cloud market share, but the company is a database titan. One that is gearing up for a price war with Amazon.

Some numbers, first.

AWS had $4.6 billion to report in revenue last quarter, while Oracle had a total of $1.5 billion in total cloud revenue, most of which came from its SaaS sales. Its IaaS and PaaS revenue figures came in shy of just $400 million.

Oracle knows that it will probably never be as big as AWS in overall cloud, but what it can’t afford to lose is its database customers.

Amazon only had 2.3% of the database market to its name in 2016, compared to over 40% for Oracle.

And the only way the latter can compete with the cloud leader and retain its customers is by pricing its services lower than AWS. Offering better products, of course, but at distinctly more affordable price points for its enterprise customers.

Lo and behold, that’s exactly what Oracle seems to be doing right now.

Oracle announced its new autonomous database cloud in October, and this solution is powered by the next generation of Oracle Database. It makes use of machine learning to automatically tune, patch, update and maintain databases — basically eliminating costs and lowering costs.

But on top of that, the company has promised 99.95% uptime, compared to similar services on AWS.

Larry Ellison has made it crystal clear that it wants to take the fight to Amazon on the price front, throwing around figures of 20 cents on the dollar. And this is not just marketing fluff, as Oracle is allowing customers to lock in these savings in writing.

The promise of 80% savings in Amazon bills, along with new versions of the autonomous database aimed at tasks other than data warehousing that are expected to launch in 2018 could well be the start of a wider database price war.

Oracle clearly wants to lure customers away from AWS, and if it is truly able to deliver what it assures, then similar price cuts from Amazon, Microsoft and Google are to be expected.

All these companies offer various cloud database products, and this next year looks like it will open up another front in this highly competitive and dynamic field.