How Oracle became a cloud player

When Oracle launched its cloud service, Oracle Cloud Infrastructure (OCI), in 2016, very few in the tech industry believed the company could become a serious player in the public cloud market. Established giants like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud had not only dominated the market for years but also had set a high bar for innovation, scale, and performance that seemed insurmountable to newcomers. Oracle’s late entry as an on-premises software and database company trying to pivot to the cloud appeared to be a moonshot at best.

Fast forward to today and Oracle Cloud is a viable alternative to the hyperscalers. It has also gained recognition as a specialist in artificial intelligence infrastructure, attracting enterprises with high-performance needs and unique use cases. To understand how Oracle turned itself into a serious contender, we need to go back and explore its journey into the competitive (and unforgiving) world of public cloud computing, complete with observations from geeky, elderly curmudgeons like myself.

How Oracle joined the cloud game

Before Oracle embraced the public cloud revolution, it was best known for its on-premises database solutions and enterprise resource planning (ERP) systems. For decades, Oracle was synonymous with traditional software that companies hosted on their own servers. It had an enormous installed base of enterprise customers, but when AWS and Microsoft began to revolutionize the IT landscape with scalable, remote infrastructure, Oracle was slow to join the fray.

OCI marked the company’s first dedicated foray into cloud computing, and it wasn’t just a rushed catch-up effort. Instead of mimicking AWS, Azure, and Google Cloud, Oracle focused on adapting its infrastructure to meet the unique needs of enterprise workloads, particularly those requiring high performance and low cost at scale. OCI was initially adopted largely by enterprises that had been longtime Oracle customers and trusted the company with mission-critical workloads.

However, even with existing customer loyalty, OCI struggled to gain momentum in its early years. The broader market saw OCI as a niche product, only suitable for data-intensive workloads that were already Oracle-dependent. Competing with the hyperscalers seemed like a losing battle. But Oracle stayed the course, investing heavily in innovation and architecture suited to emerging technological demands, particularly AI and high-performance computing (HPC).

Differentiation in the cloud market

At the time, most industry watchers doubted Oracle would ever break through the dominance of AWS, Azure, and Google Cloud. After all, Oracle was entering a market that rewarded enormous economies of scale and innovation at a pace only a handful of companies could sustain. Yet, Oracle’s eventual success came from its willingness to focus on differentiation rather than imitation.

One of the key architectural elements that set Oracle apart was its modular cloud infrastructure. While hyperscalers like AWS and Azure relied on enormous data centers the size of football fields, Oracle introduced smaller, more flexible footprints like its “butterfly” OCI instance. This modular design allowed Oracle to deliver a fully private version of OCI, complete with all the same security features and capabilities, in a compact format that enterprises could use cost-effectively. This wasn’t just a token gesture. It filled a gap for companies looking for a private cloud or smaller-scale deployment that simply wasn’t available from the hyperscalers.

Cost-efficiency also emerged as a major strength for Oracle. Larry Ellison, Oracle’s cofounder and current chairman and CTO, has made bold claims highlighting how OCI beats the competition on price-performance metrics, particularly for AI-related workloads. He’s noted that Oracle can deliver private cloud solutions at a fraction of the cost of AWS or Azure, with one OCI deployment just $6 million compared to hyperscalers’ investment of more than $600 million for an identical deployment.

Beyond price, Oracle also has a leg up in terms of flexibility. Its architecture allows it to interoperate with legacy on-premises infrastructure, cloud services from competitors, and workloads running on other hyperscaler platforms. Enterprises no longer need to make an all-or-nothing commitment to one cloud provider. This ability to coexist with competing platforms—a rarity in the increasingly locked-down world of cloud computing—has brought Oracle into the spotlight as an appealing alternative for enterprises seeking maximum flexibility.

A natural fit for AI and ‘alt cloud’

Much of Oracle’s recent growth is driven by its growing reputation as a leader in AI infrastructure. With organizations rushing to adopt AI, there’s a massive demand for underlying cloud platforms that can handle complex AI training and inferencing workloads. These workloads are notoriously expensive and computationally intensive, creating significant market opportunities for cloud providers that can strike a balance between high performance and cost-effectiveness.

Oracle has seized this opportunity by designing its infrastructure specifically for the needs of AI use cases, such as training large language models and performing real-time inferencing. Analysts now recognize OCI as the de facto standard for many of these AI workloads, thanks to its ability to deliver performance at a lower price point than its competitors. Even as the market shifts from AI training to AI inferencing—a far larger market, according to Ellison—Oracle is well-positioned to retain its leadership in this space.

Beyond AI, Oracle has been embraced by a growing segment of enterprises looking for alternatives to the hyperscalers. This trend, often referred to as the “alt cloud” movement, spans a wide array of options, including sovereign clouds, GPU-focused clouds, managed services providers, colocation providers, and private clouds. These players differentiate themselves with offerings that are more customized, affordable, and better aligned with enterprise needs, not just for AI-related workloads, but for traditional business applications as well. Oracle Cloud fits neatly into this category and has gained traction as companies prioritize flexibility, cost-effectiveness, and performance over sheer scale.

A disruptive success story

The emergence of Oracle as a legitimate cloud contender is one of the more compelling stories in enterprise technology today. Here is a company widely dismissed as too late to the game, too reliant on its legacy business, and too far behind the market leaders to make a dent. Yet Oracle didn’t try to beat Amazon, Microsoft, or Google at their own game. Instead, it doubled down on catering to specific enterprise needs, carving out a position as the go-to cloud for critical workloads in areas like AI, finance, and high-performance computing.

Oracle’s rise is not only a win for the company itself but also for the broader market. The success of Oracle Cloud Infrastructure reinforces the importance of competition and innovation in the cloud space. Although the hyperscalers will always dominate the public cloud conversation, the success of “alt cloud” options like OCI ensures enterprises have access to more diverse solutions that deliver better outcomes for specific use cases.

It’s good to see a player like Oracle disrupt the public cloud space in ways that push the entire industry forward. It’s not just about being another option to the hyperscalers; it’s about proving that there’s room for meaningful alternatives in a world that seemed destined for oligopoly.

Oracle Cloud does not have the same market share as AWS or Azure… yet. However, if its continued innovation is any sign, this latecomer to the public cloud race is in it for the long haul, and it looks like the company is playing to win.