Mark Hurd, one of Oracle’s two co-CEOs, recently told an audience in Boston that the company he leads does not have to spend tens of billions of dollars on data centers annually to catch up to the three largest cloud providers. Ten billion dollars is roughly what Amazon, Microsoft, and Google have each been investing in infrastructure annually to support their cloud services. Oracle spent about $1.7 billion last year.
According to Fortune, Hurd’s message was essentially that if you have more powerful hardware, you need fewer data centers:
“If I have two-times faster computers, I don’t need as many data centers. If I can speed up the database, maybe I need one fourth as may data centers. I can go on and on about how tech drives this.”
First, Oracle’s reputation as a force in data center hardware innovation has long since faded. It gained that reputation when it acquired Sun Microsystems, but that deal took place seven years ago. Oracle’s server market share is nowhere near that of the top five suppliers. In fact, its overall hardware revenue has been falling, and the company has been making deep staffing cuts to its hardware units.
Second, if Oracle knows something about cloud hardware design top cloud providers don’t, why would it hire the people who built those cloud platforms to build its own? Last October, around the time the company launched the first availability region of its new cloud platform, Deepak Patil, Oracle’s VP of development, boasted in an interview with Data Center Knowledge that he was “surrounded by several hundred people who came from Amazon, Microsoft, Google,” whom Oracle had recruited to build the platform. Patil himself joined Oracle last year after 15 years at Microsoft, the last 10 of which he spent in senior engineering roles for data center and cloud infrastructure.
James Hamilton, VP and distinguished engineer at Amazon, one of the top technical minds behind the sprawling AWS data center empire, called Hurd’s bluff in a blog post Tuesday:
“I don’t believe that Oracle has, or will ever get, servers 2x faster than the big three cloud providers. I also would argue that ‘speeding up the database’ isn’t something Oracle is uniquely positioned to offer. All major cloud providers have deep database investments but, ignoring that, extraordinary database performance won’t change most of the factors that force successful cloud providers to offer a large multi-national data center footprint to serve the world.”
The thing is, designing hardware for global hyper-scale clouds is not the same as designing hardware for enterprise data centers. Infrastructure engineers at Google learned this the hard way, and so did the teams at Facebook, Microsoft, and Amazon. It appears that the people building Oracle’s cloud infrastructure are also aware of this, since many of them are the same people.
The cloud giants also seem to have learned that $10 billion a year is about what the ticket to the top cloud provider club costs nowadays. But Hurd needed an at least plausible-sounding answer to an uncomfortable question from a reporter in front of an audience.
Is Oracle prepared to spend big on cloud infrastructure to really compete? Hurd appears to be reluctant to make that commitment, at least in public.