Oracle and Cloud Computing. Funny.

The announcement by Oracle this week that they are "on the cloud" was once again quite an amusing piece of public relations. I don't know if Oracle is serious when they make these announcements or if they are secretly smiling to themselves.

Not everybody ate it up (although many did). Vinnie Mirchandani, a keen observer of the enterprise software space, wrote: "It will not reduce costs of Oracle licensing or even worse, the annual maintenance cost."

Oracle seemed to have missed one of the main points of cloud computing -- that it's an on-demand approach and that includes software licensing costs.  In case you didn't notice, Oracle is not offering pay-per-use pricing for the cloud. All they are saying is that you can use the regular perpetual, upfront, fully-paid software license on EC2. Big Whoop.

The other major problem with the Oracle announcement is that their software really isn't suitable for a cloud environment. It can't grow and shrink on-demand, it's not self-healing, it's dependent on centralized components, it's complex. It's just not right.

I discuss this in greater detail in GigaSpaces and the Economics of Cloud Computing, where I also discuss another amusing press release from Oracle. Reposting it here for your convenience:

Another interesting comparison is revealed by this amusing press release from Oracle about a start-up customer named Qtrax. Look at the stack Oracle managed to sell them to build their application. I put in brackets the price per CPU for each Oracle product from the official price list, and I quote:

"Qtrax's implementation includes Oracle Database [$17.5k to $47.5k], Oracle Real Application Clusters [$23k], Oracle Enterprise Manager [$3.5 to $20k+] and components of Oracle Fusion Middleware [?], including Oracle Application Server [$10k to $30k] and Oracle Coherence [$4k to $25k]. With this software now in place, Qtrax will have the ability to support millions of concurrent users [they better!]."

On top of these numbers (which total in the range of $58k to $145.5k per CPU¹)add a 22% annual support fee. As these are perpetual licenses, let's break the license numbers to an hourly rate by assuming 24/7 for 3 years: we get $2.20 to $5.54. Even if you decide to be generous and divide by 4 years, you get $1.65 to $4.15. Now, let's not forget that Oracle doesn't actually offer any special pricing for it's products on EC2 (i.e., an hourly rate)² so you would have to buy the licenses upfront, as Qtrax apparently did.

Comments

[vinnie mirchandani]

thanks for the mention. Our industry is littered with examples of vendors which tried to protect pricing in just their slice of the stack. So cannot blame Oracle. For now, if they help cannibalize infrastructure hw and people cost, that's a good start.

Like you I don't think it stops there...

[William Roach]

I'm not sure I agree- having an Oracle DB on demand in the cloud seems to me to be a great idea and will help shift many apps from being silo'd in-house apps to real cloud apps. I only see this as a good thing

[Geva Perry]

Let me clarify that I think that overall this Oracle move is good for cloud computing. As I said, my problem with this is that (1) it's not really a database on demand if you have to pay for it upfront, and (2) the architecture Oracle promotes is all wrong for the cloud. If you're going to use a RDBMS use MySQL or PstgreSQL. And then there other, better data management technologies for the cloud, including CouchDB, SimpleDB, BigTable, in-memory data grids and more.

[botchagalupe]

I totally agree with you. The Pay-as-you-go pricing model is one of the core components of cloud computing (IMHO).

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