Oracle prepares for war with Amazon, adds 12 new data centers for cloud business

Oracle prepares for war with Amazon, adds 12 new data centers for cloud business
Cloud computing concept with one blue cloud
Oracle prepares for war with Amazon, adds 12 new data centers for cloud business
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Oracle is adding 12 new data center regions worldwide for its cloud business, in an effort to add availability and capacity. Oracle's data center expansion plans likely won't be enough to help it compete more fully in the cloud immediately, as it will need to ramp up spending to match its rivals.

Oracle is planning to build out 12 new data center regions for its cloud business, The Wall Street Journal reported Monday.

According to the report, two of the data centers would land in the US, and two would be in Canada, along with one in India, one in the Netherlands, one in China, one in Saudi Arabia, one in Japan, one in Singapore, one in South Korea, and one in Switzerland. The new level of capacity and availability enabled by these regions could help Oracle more readily compete with the current top cloud leaders: Amazon Web Services (AWS), Microsoft Azure, Alibaba, and Google Cloud Platform (GCP).

"As we invest, our margins will continue to expand. And with our global datacenter expansion, we are able to help customers lower IT costs, mitigate risks and compete like they never have before," Oracle CEO Mark Hurd said in a press release.

Despite Oracle's efforts, a few key challenges remain. The first is physical scale.

The Wall Street Journal reported that Oracle was planning to "quadruple" its number of data centers with this new effort. Even with that growth, it pales in comparison to AWS, which boasts 52 availability zones within 18 geographic regions around the globe. Microsoft Azure is available in 36 regions, while GCP claims 15 regions and 44 zones.

Another major challenge is cost. Oracle spent $2.04 billion in the last 12 months that ended on November 30, The Wall Street Journal reported. While that may seem like a strong showing, compare it to the three leaders in the cloud (AWS, Azure, GCP) that went for a combined $41.6 billion in capital expenditure lease deals last year, and it doesn't seem that impressive.

There's no denying Oracle's success in software, applications, and services, but that doesn't carry over into the cloud. According to Gartner data from 2016, Amazon led the pack with 44% market share, while Microsoft had 7.1%, Alibaba had 3%, and GCP had 2.3%. Oracle only had 0.3%Oracle has historically bought its competition in areas where it wanted to grow, but that might not work this time. As pointed out by TechRepublic contributing writer Matt Asay, there are no acquisition targets that could put it anywhere near the top three players in cloud. In essence, Oracle can't buy its way to success in the cloud.

All this cloud talk doesn't mean that the company is giving up on its core business. On the contrary, Oracle is making strides in advancing its work in machine learning, data analytics, and more. As such, Hurd said that he believes 90% of enterprise apps will have integrated AI by 2020, and half of enterprise data will be managed autonomously in the same time time frame.

Image: iStockphoto/NorthernStock

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