A Price War Is Brewing Between Oracle and AWS

A Price War Is Brewing Between Oracle and AWS

Oracle's (NYSE: ORCL) cloud computing business is a fraction of the size of market leader Amazon (NASDAQ: AMZN) Web Services. While AWS produced $4.6 billion of revenue in Amazon's latest quarter, Oracle's total cloud revenue was just $1.5 billion. Most of that came from software-as-a-service sales, with infrastructure-as-a-service and platform-as-a-service revenue adding just shy of $400 million.

Oracle will (probably) never be as big as Amazon in the cloud, but what it can't afford to do is lose database customers. Amazon's database market share was just 2.3% in 2016, compared to over 40% for Oracle. But with AWS so dominant elsewhere in the public cloud market, its percentage is bound to rise. Oracle's strategy for repelling Amazon's inevitable charge is to compete aggressively on price. And Oracle Executive Chairman Larry Ellison signaled the company was doubling down on that plan during its most recent earnings call.

Oracle executive chairman Larry Ellison. Image source: Oracle.

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Source: Fool.com