Preface added 20 November 2020: This post received a lot more attention than I expected. I must reiterate that it is not in any way an endorsement. Indeed, sparkly pink unicorns are, by their nature, fanciful. Caution must be exercised, as sparkly pink glitter can conceal deficiencies in the equine body.
Digging into my archive of past predictions… In a research note on the convergence of public and private cloud, published almost exactly eight years ago in July 2012, I predicted that the cloud IaaS market would eventually deliver a service that delivered a full public cloud experience as if it were private cloud — at the customer’s choice of data center, in a fully single-tenant fashion.
Since that time, there have been many attempts to introduce public-cloud-consistent private cloud offerings. Gartner now has a term, “distributed cloud”, to refer to the on-premises and edge services delivered by public cloud providers. AWS Outposts deliver, as a service, a subset of AWS’s incredibly rich product porfolio. Azure Stack (now Azure Stack Hub) delivers, as software, a set of “Azure-consistent” capabilities (meaning you can transfer your scripts, tooling, conceptual models, etc., but it only supports a core set of mostly infrastructure capabilities). Various cloud MSPs, notably Avanade, will deliver Azure Stack as a managed service. And folks like IBM and Google want you to take their container platform software to facilitate a hybrid IT model.
But no one has previously delivered what I think is what customers really want:
- Location of the customer’s choice
- Single-tenant; no other customer shares the hardware/service; data guaranteed to stay within the environment
- Isolated control plane and private self-service interfaces (portal, API endpoints); no tethering or dependence on the public cloud control plane, or Internet exposure of the self-service interfaces
- Delivered as a service with the same pricing model as the public cloud services; not significantly more expensive than public cloud as long as minimum commitment is met
- All of the provider’s services (IaaS+PaaS), identical to the way that they are exposed in the provider’s public cloud regions
Why do customers want that? Because customers like everything the public cloud has to offer — all the things, IaaS and PaaS — but there are still plenty of customers who want it on-premises and dedicated to them. They might need it somewhere that public cloud regions generally don’t live and may never live (small countries, small cities, edge locations, etc.), they might have regulatory requirements they believe they can only meet through isolation, they may have security (even “national security”) requirements that demand isolation, or they may have concerns about the potential to be cut off from the rest of the world (as the result of sanctions, for instance). And because when customers describe what they want, they inevitably ask for sparkly pink unicorns, they also want all that to be as cheap as a multi-tenant solution.
And now it’s here, and given that it’s 2020… the sparkly pink unicorn comes from Oracle. Specifically, the world now has Oracle Dedicated Regions Cloud @ Customer. (Which I’m going to shorthand as OCI-DR, even though you can buy Oracle SaaS hosted on this infrastructure) OCI’s region model, unlike its competitors, has always been all-services-in-all-regions, so the OCI-DR model continues that consistency.
In an OCI-DR deal, the customer basically provides colo (either their own data center or a third party colo) to Oracle, and Oracle delivers the same SLAs as it does in OCI public cloud. The commit is very modest — it’s $6 million a year, for a 3-year minimum, per OCI-DR Availability Zone (a region can have multiple AZs, and you can also buy multiple regions). There are plenty of cloud customers that easily meet that threshold. (The typical deal size we see for AWS contracts at Gartner is in the $5 to $15 million/year range, on 3+ year commitments.) And the pricing model and actual price for OCI-DR services is identical to OCI’s public regions.
The one common pink sparkly desire that OCI doesn’t meet is the ability to use your own hardware, which can help customers address capex vs. opex desires, may have perceived cost advantages, and may address secure supply chain requirements. OCI-DR uses some Oracle custom hardware, and the hardware is bundled as part of the service.
I predict that this will raise OCI’s profile as an alternative to the big hyperscalers, among enterprise customers and even among digital-native customers. Prior to today’s announcement, I’d already talked to Gartner clients who had been seriously engaged in sales discussions on OCI-DR; Oracle has quietly been actively engaged in selling this for some time. Oracle has made significant strides (surprisingly so) in expanding OCI’s capabilities over this last year, so when they say “all services” that’s now a pretty significant portfolio — likely enough for more customers to give OCI a serious look and decide whether access to private regions is worth dealing with the drawbacks (OCI’s more limited ecosystem and third-party tool support probably first and foremost).
As always, I’m happy to talk to Gartner clients who are interested in a deeper discussion. We’ve recently finished our Solution Scorecards (an in-depth assessment of 270 IaaS+PaaS capabilities), including our new assessment of OCI. The scores are summarized in a publicly-reprinted document. The full scorecard has been published, and the publicly-available summary says, “OCI’s overall solution score is 62 out of 100, making it a scenario-specific option for technical professionals responsible for cloud production deployments.”
Oracle has made multiple previous attempts to enter the cloud IaaS market — most recently (early this year), with the Oracle Compute Cloud. At Oracle OpenWorld this week, however, Oracle announced a brand-new cloud IaaS offering. Oracle hasn’t officially given this a real brand yet, so for the purposes of this blog post, I’ll call it their next-gen cloud.
News of this project leaked last year. Oracle has paid richly to hire an “A” team, so to speak — former long-time senior AWS engineers lead the project, and they’ve recruited heavily from all three hyperscale clud providers in Seattle (AWS, Microsoft Azure, Google Cloud Platform). These are credible product and engineering people who, in my opinion, understand what they need to build and the enormous challenges ahead of them.
The next-gen cloud currently consists of an SDN (capable of both Layer 2 and Layer 3 networking, which is a differentiator), block storage, object storage, and bare-metal servers (thus the initial moniker, “Oracle Bare Metal Cloud”). Virtual machines (VMs) are coming later this year, with containers to follow early next year. Based on a detailed engineering briefing that Oracle provided to myself and my colleagues, I would say that smart and scalable choices seem to have been made throughout. However, I would characterize this early offering as minimum viable product; it is the foundation of a future competitive offering, rather than a competitive offering today.
In the near term, Oracle’s next-gen cloud will be interesting primarily to a general audience in a bare-metal context. Here, Oracle will compete with Packet, and to some lesser degree, the bare-metal cloud offerings from CenturyLink and Rackspace (OnMetal). It is a true software-defined cloud IaaS offering, provisioned in minutes and billed by the hour. This sets it apart from more hosting-like bare-metal offerings such as IBM SoftLayer, Internap, and Cogeco Peer 1.
It is unlikely that Oracle’s announced price-point — 20% below AWS list prices — will be sufficient to move the needle in a market where AWS’s “real” prices are lowered up to 70% by reserved instances (plus AWS negotiates custom discounts), and where Google is already competing intensively on price (especially on negotiated deals) and has an offering substantially more featureful than what Oracle will have in the market in the next year. Good price-performance is table stakes here. This is not a commodity market; providers compete on their capabilities. This is also not about capital investment to build data centers; Oracle can use colocation until they reach a scale where building makes sense, though since such projects can take years, they’ll need to time that properly.
Bare metal, of course, significantly outperforms VMs in some cases — especially high I/O use cases. But bare metal should be thought of as part of a complete offering — a compute option for some of a customer’s workloads. Price-performance should always be considered in the context of the customer’s specific architecture. In the case of Oracle, bare metal and the layer 2 SDN features are important because they are needed for Oracle RAC and for better performance of Oracle application software. Oracle has built the core of their offering around off-box virtualization of networking and storage, which is important for allowing their cloud IaaS offering to smoothly interoperate with other Oracle hardware placed into the same environment, like Exadata appliances.
Overall, this should be seen as a positive move for Oracle, but one with many open questions about its future. As always, if anyone has more detailed questions, I am happy to answer them in the context of client inquiry, and I’ve set aside some time to speak with reporters during this OpenWorld week.