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Why Oracle Is Spending on Data Centers

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Mar. 9 2018, Updated 7:32 a.m. ET

Oracle expands its cloud infrastructure footprint

Earlier in this series, we discussed Oracle’s (ORCL) position in the cloud space, which became a $180.0 billion market in 2017. Earlier this month, Oracle announced that it is adding 12 new data center regions globally for its cloud business.

The addition of these data center regions is expected to expand Oracle’s cloud infrastructure footprint in Asia, Europe, and North America.

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Oracle’s data center expansion in comparison to peers

Amazon’s (AMZN) AWS (Amazon Web Services), the leader in the cloud space, has 53 Availability Zones and plans to add another 12. Microsoft’s (MSFT) Azure currently has 36 regions, with six to be added soon. Among the top cloud players, IBM (IBM) has the greatest number of data center regions, around 60. However, only 33 of those are dedicated to IBM Cloud.

According to Synergy Research, Amazon’s AWS, Microsoft, IBM, and Google are the companies with “broadest data center footprint.” According to the Tech Republic, “Oracle’s data center expansion plans likely won’t be enough to help it compete more fully in the cloud immediately, as it will need to ramp up spending to match its rivals.”

By 2020, 92% of the overall workloads are expected to be processed in cloud data centers. This forecast explains these players’ competition to make billion-dollar investments in the cloud space. As Oracle’s new data centers turn online and become more efficient, their profitability is expected to increase and boost Oracle’s bottom line.

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