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How Oracle Is Pushing to Close the Gap with Amazon in the Cloud

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Jan. 24 2019, Updated 9:00 a.m. ET

Oracle opens a data center in Toronto

Oracle (ORCL) currently lags behind Amazon (AMZN), Microsoft (MSFT), IBM (IBM), Google (GOOGL), and Alibaba (BABA) in terms of its share of the global cloud market, according to Synergy Research estimates. But Oracle is keen to rise up the cloud vendor chart—and for good reason. About $176 billion was spent on public cloud services worldwide in 2018, according to data from Gartner. This year, spending is expected to exceed $206 billion, and it’s expected to hit $278.3 billion by the end of 2021.

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In a move that suggests it views limited capacity as what’s holding it back in the pursuit of cloud revenue, Oracle recently opened a data center in Toronto, which it said would allow it to bring enterprise-grade cloud services to more Canadian businesses and meet strong demand for its cloud services in North America, eWeek reported.

Capacity expansion

In addition to North America, Oracle is planning to expand its cloud capacity in Europe, Asia, and the Middle East. In 2017, Oracle revealed that it would open data centers in India, which would allow it to take better advantage of the rising demand for cloud services in the country and keep the pace with rivals such as Amazon, which already operate data centers in India, the Times of India reported.

Revenue unchanged

Oracle generated $9.6 billion in revenue in the second quarter of fiscal 2019, which ended in November 2018. Its revenue was mostly unchanged from a year earlier. Oracle doesn’t break out its cloud revenue as a single item, but it reported that its cloud services and license support revenue had risen 3.0% YoY to $6.6 billion in the second quarter, representing 69% of its revenue compared to 67% a year earlier.

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