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Oracle Set to Merge Its Cloud Business

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How Oracle could benefit from its consolidation

Oracle (ORCL) is gradually converting its cloud service types—SaaS[1.software-as-a-service], PaaS[2.platform-as-a-service], and IaaS[3.infrastructure-as-a-service]—into a single standard data center. These data warehouses are supported by a bare-metal infrastructure managed by a single unified operations team.

The consolidation of these cloud services may help offer Oracle huge economies of scale by sharing data warehouse costs across the three categories, expanding margins. By bringing all three categories under one roof, the company can also improve efficiency.

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The future of cloud technology

Big cloud players are integrating AI features to make their service more effective. To safeguard its position against top cloud players such as Amazon (AMZN), Microsoft (MSFT), and IBM (IBM), Oracle has decided to upgrade its two most popular cloud products, Fusion ERP[4.Enterprise Resource Planning] and Fusion HCM[5.Human Capital Management], combining them with machine learning, voice-enabled, and mobile features. The features are set to be available as PaaS services on Oracle Cloud.

As Oracle started late in the cloud business, these new features may boost its cloud revenue. As shown in the chart above, the company’s cloud service and license support unit has maintained stable revenue growth over the last four quarters.

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