Oracle brings its database infrastructure to Microsoft Azure

Days after Oracle missed Q1 2023 revenue expectations and gave a downbeat rest-of-year outlook, sending its share price to suffer the worst one-day performance in 21 years, the cloud provider announced a team-up with Microsoft to co-locate a portion of its infrastructure in the Azure cloud.

The unusual new offering, called Oracle Database@Azure (with an at symbol for emphasis, presumably), gives customers access to Oracle database services running on Oracle hardware and deployed in Azure data centers.

Oracle says that Oracle Database@Azure is designed to marry Oracle's database product with the "security, flexibility and best-in-class services" of Azure, including Azure services co-developed with Microsoft's close AI collaborator, OpenAI.

"We're very excited to partner with Microsoft to actually take Oracle hardware and Oracle software -- and all the Oracle database hardware that we use in the Oracle Cloud, and all the database software using the Oracle Cloud -- and literally, physically move it into Azure data centers," Oracle CEO Larry Ellison said during a press briefing with Microsoft CEO Satya Nadella this afternoon. "This will be like co-locating the hardware and the software right in the Azure data center."

The details of the new offering remain vague. But in a press release, Oracle said that Oracle Database@Azure will provide "more options" for Oracle customers to move their databases to the cloud, including a "fully integrated" new experience for deploying, managing and using Oracle database instances within Azure.

At launch, Oracle Database@Azure will support a range of Oracle's existing database services, including Oracle Exadata Database services, Oracle Autonomous Database services and Oracle Real Application Clusters, and come with a "joint support" guarantee from Oracle and Microsoft to offer resolution for any mission-critical workloads.

Customers will be able to purchase Oracle Database@Azure through Azure Marketplace and use existing Oracle Database license benefits. Oracle will operate and manage its services directly within Microsoft’s data centers globally, beginning with regions in North America and Europe.

"A lot of enterprise applications that have Oracle Database probably have some front-end middleware [hosted elsewhere], even at Microsoft," Nadella said. "We listened to customers, and customers said, 'We want this option in addition to everything that you're doing.' I think this will fundamentally accelerate the migration to the cloud."

That's a rosy prediction, considering the extent to which Oracle's database market share has eroded over the past few years despite the company's notorious lock-in tactics. The number of database software options has exploded, and a plethora of companies have successfully built subscription businesses around managing popular open source database solutions like PostgreSQL, MongoDB and MySQL for their customers.

According to Gartner, Oracle's share of the database market declined from 36.1% in 2017 to just 20.6% in 2021 as Oracle spent billions upon billions on infrastructure.

Certainly, Oracle's feeling the pressure. In April, the company made its database software free for developers to test run, a move aimed a fostering goodwill with the database engineering community. Perhaps Oracle Database@Azure will shore up its customer base, as well -- or at least cause longtime clients to think twice before jumping ship.

With the loss of big customers like AWS and Salesforce in recent years, though, it won't be so easy for Oracle to reverse its fortunes -- Azure partnership or no.