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Oracle Universal Credits another shot directed at AWS

From 'Bring Your Own License' to Universal Credits, are the recent changes Oracle made to its cloud pricing model enough to compete with AWS?

Oracle continues to do everything it can to compete with Amazon Web Services, but the question remains whether...

IT pros will take the bait.

This week, the company introduced Oracle Universal Credits for cloud consumption to allow customers under one contract to spend on a pay-as-you-go, monthly or yearly basis. Oracle claims its software license agreement (SLA) will guarantee Oracle databases can run on Oracle Cloud for 50% less than on Amazon Web Services (AWS). Oracle Universal Credits can be used for infrastructure as a service and platform as a service (PaaS) across Oracle Cloud services, such as Oracle Cloud and Oracle Cloud at Customer. Customers are allowed to switch across services at any time.

Oracle also introduced a "Bring Your Own License" program for customers to use their own existing licenses for PaaS.

Oracle Universal Credits is something that piques the interest of at least one current Oracle Cloud customer.

"Universal Credits are a great program for budgeting and controlling speed, while still providing great flexibility," said Nikunj Mehta, founder and CEO of Falkonry Inc., a Sunnyvale, Calif., startup that provides artificial intelligence for operational intelligence. "Oracle's move toward pricing innovation parallels T-Mobile's business model disruption and has the real potential of shaking up the industry."

But it won't be easy for Oracle to sustain, analysts said.

"The SLA guaranteeing that Oracle databases are cheaper than AWS by 50% is a big commitment," said Jean Atelsek, analyst with 451 Research. "As AWS continues to cut its prices, it'll effectively squeeze Oracle to cut its pricing."

Few would argue that Oracle licensing methods could use some clarification. In February of this year, Oracle effectively doubled its licensing requirements for customers that run its software on other cloud platforms, such as AWS and Azure.

While Oracle continues to make strategic moves aimed at AWS, the licensing model could also signify a way for the company to bridge its on-premises and cloud business closer together in an easier transition from legacy products into the cloud.

"It's about time Oracle figured out those of us with on-premises licenses were not going to just abandon our perpetual license and jump to the cloud," said Brian Peasland, an Oracle database administrator and TechTarget contributor, about Oracle Universal Credits. "Oracle licensing is not cheap, and it is a long-term investment. It's nice to know we can leverage that investment to help move to the cloud." 

Oracle autonomous database details emerge

The company has also provided more details on its autonomous database, which also aims to lower overall cloud costs. The automated database will be based on machine learning, and Oracle said it guarantees 99.995% uptime, which amounts to less than 30 minutes of planned downtime per year.

Automated operations for databases are an important part of Oracle's effort to become a full-fledged cloud provider, both for customers looking to move work to the cloud and for providers such as Oracle that must efficiently take over day-to-day administration work from customers.

Success on the cloud is crucial to Oracle. It is, in the estimation of IDC analyst Carl Olofson, an issue of "survival."

"The big picture for Oracle is to lead the customer to the cloud," Olofson said, while cautioning that the move to cloud for most organizations is "still in its early days."

The biggest challenge for Oracle going forward with its new licensing scheme is to convince customers it truly is simplifying how they pay.

"[Oracle] is notorious for complex licensing structures. ... A lot of customers [and ex-customers] are very wary when it comes to Oracle licensing," said Bob Sheldon, an analyst and TechTarget contributor. "Oracle could have an uphill battle convincing them that the company can be trusted."

A notable feature missing from Oracle this week revolves around hybrid, Sheldon said, who noted that the new Oracle licensing structure on paper could stand to be a "boon to hybrid implementations."

At next month's Oracle OpenWorld event, the company is expected to provide details on Oracle 18, or 2018 -- not Oracle 12.2.0.3. As recently reported, it will change the cadence of release cycles and a version-numbering scheme that had become a bit creaky.

In July, Oracle added its SaaS offering to its Oracle Cloud at Customer portfolio. Built on Oracle Database Exadata Cloud, Oracle Integration Cloud, Identity Services and more, this package is seen as a way to prepare Oracle customers for the flight to cloud.

Senior News Writer Jack Vaughan also contributed to this report.

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What else does Oracle need to do to compete with AWS?
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I wonder if changing the cadence of releases is going to undermine its business model.

Faster release cycles will incentivise customers to increase test automation to keep up with the release cycles. In turn, this will a/ reduce the risk/cost of running on stranded hardware and other infrastructure, but b/ reduce Oracle's lock-in, and c/ increase Oracle's support costs - unless it forces customers to upgrade more frequently, see a/ and b/
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