When did Oracle go public?

Oracle share: why the database giant relies on the cloud

The US software company Oracle recently suffered a setback after co-boss Mark Hurd passed away at the age of 62. The former HP boss had been in a management position at Oracle together with Safra Catz since September 2014. Catz and Oracle founder Larry Ellison have been running the database specialist since the previous month.

Oracle has been struggling with growth weakness for some time as more and more companies are relocating work processes to the cloud. Oracle still has a large market share in relational databases, but new cloud databases from Amazon and MongoDB are putting Oracle under pressure.

The Oracle share increased by 15% over a 1-year perspective, but no comparison to the development of MongoDB, whose shares rose by over 75% due to the strong growth.

Why Oracle is now relying everything on the cloud

It is therefore not surprising that Oracle is now reacting and taking flight forward. To strengthen its cloud infrastructure business, Oracle plans to hire 2,000 employees worldwide.

The bottom line is that 20 new cloud data centers are to be built by the end of 2020 in order to better serve customers on site. The new cloud centers will then increase Oracle's presence to a total of 36 regions. With this move, Oracle wants to improve its position in the US $ 40 billion market for cloud computing and data storage.

Oracle can be replaced

Databases are important, today almost every large application needs such a solution in order to be able to access important data. While Oracle was difficult to attack in the on-premise age (databases ran on local computers), this has changed dramatically with the cloud age.

The best example is the online retailer Amazon. The consumer division (Amazon Prime, Alexa, Kindle, Audible etc.) switched off the last Oracle database a few days ago after decades. Instead, Amazon relies on its own cloud database, which uses the infrastructure of its subsidiary Amazon Web Services (AWS).

Result of the change: After integrating 7,500 Oracle databases on various AWS databases, Amazon was able to reduce database costs by more than 60%. The delay times (latencies) of applications have been reduced by 40% and can therefore be accessed more quickly.

At the same time, the change has resulted in the excess staff in connection with the administration of databases (administrators) being reduced by up to 70%.

This was implemented using database services such as Amazon DynamoDB, Amazon Aurora, Amazon RDS and Amazon RedShift. The online retailer also offers these products to other companies, making it a serious competitor to Oracle.

Conclusion: Oracle is only the second choice among cloud stocks

The figures for the last August quarter show once again that Oracle continues to have growth problems. While total sales only grew by 1% to US $ 9.2 billion, the cloud business, including support revenues, rose by just 4% to US $ 6.8 billion.

Other cloud specialists such as Microsoft, Amazon and direct competitors such as MongoDB are growing significantly faster than Oracle. The investment offensive announced by Oracle in the data cloud is supposed to come late. The same applies to the standardization of the Oracle Cloud products. The next few years will show whether Oracle can assert itself in the database market.

Investors are likely to fare better in the long term with more innovative cloud specialists like Amazon and Microsoft. For speculatively oriented investors with the courage to take risks, the MongoDB share is also worth a closer look.

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