Oracle & Microsoft’s big cloud partnership: It’s about AI

  • Oracle Autonomous Database will run in Microsoft Azure data centers, making it easier to deploy artificial intelligence applications for enterprises and telcos.

  • The partnership brings Oracle data closer to Microsoft Azure applications, for enhanced performance and security.

  • But important details, like pricing, are yet to come.

Oracle bringing its Autonomous Database to Microsoft Azure data centers will enable the companies to partner more closely to run AI workloads for enterprise and telco customers.

For the first time, Oracle is bringing its Autonomous Database to another company’s cloud, running on Oracle Exadata servers in Microsoft Azure data centers.

It’s a decision largely driven by the needs of AI, said Microsoft CEO Satya Nadella at an announcement Thursday with Larry Ellison, Oracle CTO and founder.

“AI exists because of data,” Nadella said. Running Oracle Database in Azure means AI services such as OpenAI can go to “where the data is.” AI operations such as fine-tuning, pre-training and meta-prompting models require low latency access to data, and the Oracle partnership helps deliver that, Nadella said.

The partnership will be particularly useful for enterprises and telcos that want to connect transactional data with AI for real-time results—for example, for a fraud detection system, Omdia analyst Brad Shimmin said.

It’s a breakthrough.

While Oracle previously partnered with Microsoft, those partnerships have not been this deep.

“Previously, you could only get Oracle with all the features in the Oracle Cloud,” said Constellation Research analyst Holger Mueller. Likewise, Exadata machines were also limited to Oracle Cloud. And Oracle did not provide service to customers on another cloud. “So many firsts,” Mueller said

He noted that Oracle and Microsoft were fierce rivals in the past.

But also an evolution

The Microsoft-Oracle partnership is a step in an industry trend toward multi-cloud support, Shimmin said.

“The industry has already crossed the multi-cloud threshold. The walled gardens are no longer walled and instead have lovely windows and French doors open to their nearest neighbor to share and share alike,” Shimmin said. “Every hyperscaler has discovered it’s a multi-cloud world.”

Some 90% of enterprises operate in two or more clouds, noted IDC analyst Jevin Jensen. “A year ago, Oracle and Microsoft enabled Oracle Database on Azure via the Interconnect service,” Jensen said. However, those joint services available at that time “added overhead and latency, thus excluding some customers from adopting this approach.”

In addition to improved performance, Oracle Autonomous Database on Microsoft Azure will vastly simplify administration, further lowering barriers to entry for enterprises, Futurum Group analyst Ron Westfall said.

“The big new capability is that the new service provides a unified experience by administering Oracle database instances within Azure using only an Azure portal,” Westfall said. “This helps make the underlying cloud network and infrastructure invisible to users, which significantly eases workload management.”

Competitors need to step up

Amazon Web Services and Google Cloud need to improve their multi-cloud capabilities to lessen the edge that Oracle and Azure get from boosting multi-cloud agility and management, Westfall said. “Many enterprises have expressed frustration with the complexity of multi-cloud oversight, including billing complexity, egress fees and limited interworking,” he said. “The [Microsoft-Oracle] alliance can score big inroads by simplifying the purchasing and contracting process, earning goodwill and more influence.”

He added, “Also, Oracle and Microsoft combined have peerless AI credentials that can give enterprises peace of mind in advancing their AI journey.”


Microsoft and Oracle are competing with their own products, but the benefits far outweigh the costs, analysts say. Oracle offers Oracle Cloud Infrastructure (OCI), which competes with Microsoft Azure. And Microsoft has its own databases, including SQL Server.

“‘Better together’ is the strategy,” Jensen said. “Oracle’s cash cow is the database, not OCI. So Oracle keeps that revenue flowing from companies that have already chosen Azure as their general purpose cloud provider but still love Oracle database for their apps.”

Likewise, Microsoft will gain competitive advantage by tighter integration with the popular Oracle database.

“Oracle keeps database customers. Microsoft doesn’t have to spend R&D to build a high-end transaction database and keeps customers for other services. And customers win,” Mueller said.

“Far better to retain and add new customers on their combined offering than to lose out to alternatives,” Westfall said. Both companies can upsell customers on companion enterprise applications, create goodwill and boost revenue by removing multi-cloud pain.

Details are scant

Microsoft and Oracle left a lot of details out, most notably pricing, Shimmin noted.

“There are a lot of unanswered questions. What we got today is the intent, not the fulfillment,” he said.

Also, Oracle and Microsoft didn’t say whether Oracle’s other database offerings, such as 23c and MySQL HeatWave, will come to Azure.

We may see additional partnerships with Oracle and Amazon Web Services and Google Cloud, said R “Ray” Wang, principal analyst and founder of Constellation Research.

Jensen agreed. “It appears the door is now open to run Oracle native on other clouds outside of Oracle, so Amazon and Google should call Larry,” he said.

And as a side benefit, the partnership gives Microsoft protection against anti-trust regulators by partnering with a competitor, Wang said.

First time for everything

Ellison, 79, launched his career in the technology industry more than 50 years ago and co-founded the company that later became Oracle in 1977. And yet this was Ellison’s first trip to Redmond, Wash., where Microsoft is headquartered.

“It’s hard to believe,” Ellison said at Thursday’s event. “I waited until very late in my career to make the trip.”

“It’s 45 years, and here we are,” Nadella replied.