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Oracle Changes Licensing Rules for Authorized Cloud Environments

February 09, 2017




The cloud first focus Larry Ellison announced for his company at the 2016 Oracle OpenWorld conference was eventually going to increase the friction with Amazon Web Services (News - Alert) (AWS), which was going to be applied to its applications, middleware and flagship database server. He went on to say the goal for Oracle was to be one of the largest cloud infrastructure service providers in the market. One way of doing this might be by making it more expensive for AWS, and the change Oracle (News - Alert) recently announced to the licensing agreement will essentially double the cost.

The move by Oracle is based on how it will start counting each AWS virtual CPU (vCPU) for licensing purposes. The old licensing agreement saw AWS's virtual CPUs as a single thread of a core that runs two threads, which meant each vCPU only counted as half a core. In the new cloud software licensing policy, the AWS vCPU will be treated as a full core if hyperthreading is not enabled.

What this means for someone that is renting two AWS vCPUs is they will be paying full price for both, which will double the price and of course also double the number of Oracle licenses required to run in AWS.

According to the licensing agreement, an Authorized Cloud Environment, customers are required to count as follows:

Amazon Elastic Compute Cloud (EC2) and Amazon Relational Database Service (RDS) - count two vCPUs as equivalent to one Oracle Processor (News - Alert) license if hyper-threading is enabled, and one vCPU as equivalent to one Oracle Processor license if hyper-threading is not enabled.

Microsoft Azure Platform (collectively, the ‘Authorized Cloud Environments’) – count one Azure CPU Core as equivalent to one Oracle Processor license.

As the clear leader and largest public cloud infrastructure provider, it will take a lot of effort for Oracle to catch up with AWS. Microsoft (News - Alert) and Google are making headway, but they are still far behind at second and third position respectively. Even though Oracle does have resources, it will be a long time before it threatens AWS, and before it does that, it first has to surpass the second and third place positions.

According to Al Gillen, an analyst at IDC (News - Alert), “Oracle has a pretty substantial build-out ahead to compete with Microsoft and Amazon on the global scale in which those companies operate. That does not mean that they cannot compete in some geos effectively in the near term. The company thinks it can disrupt incumbents on the basis of price. That's great, although basic IaaS without any value-add is ultimately a race to $0. I think it is important to be in that market segment to be seen as serious and competitive.”

At the conference, Ellison said his company's modern architecture, where there is no single point of failure, second generation data centers that offer twice as many cores and memory as AWS, four times more storage and more than 10 times the I/O capacity at a lower cost, will in part be the reasons for Oracle to move past AWS.

If you’d like to hear more insights from Oracle, stop by  ITEXPO, happening this week in Fort Lauderdale, FL. There, Oracle’s director of product marketing, Brian Kracik, will take part in a panel titled “How Network Function Virtualization (NFV) is Reshaping Managed Services in the 21st Century” today at 1 p.m.




Edited by Alicia Young
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