Oracle began incentivizing perpetual licenses in favor of subscription deals as it introduced its database systems via rival cloud vendors, say licensing experts.
Oracle still prefers customers go out and either bring – or even buy net new – traditionally licensed perpetual software, even in their own cloud, even in Database@Azure or AWS
In a series of announcements over the last two years, Oracle began promoting its database services hosted within cloud offerings from Microsoft, Amazon, and Google, and installing its optimized hardware in the leading three hyperscalers’ datacenters.
The move culminated in last week’s announcement that Oracle Database@AWS was available in the US East and US West Regions, with more regions to follow.
Like its installations in other hyperscaler datacenters, Oracle Database@AWS means users can run Oracle Autonomous Database on Exadata, the vendor’s optimized hardware, managed by Oracle Cloud Infrastructure, but running in an AWS datacenter to reduce cost and latency and improve integration with AWS services. It would appeal to entrenched Oracle database users who want the option of standardizing on a cloud vendor other than Oracle.
As the database giant has introduced its new hosting model, it has also created incentives for users to continue with their on-prem licenses rather than using a subscription model.
For example, a blog post published in July points users toward “a dedicated Exadata Infrastructure subscription” with “a nominal cost that not only secures the hardware reservation, but provides access to the storage and memory on the respective servers.”
However, last year, a post from Gloria Lee, senior database cloud outbound product manager, pointed out that the cheapest way for users to deploy Autonomous Database was to use a perpetual license – which they might own, or can buy – and convert it with the Bring Your Own License (BYOL) process.
“You get substantial savings on your total cost of ownership (TCO) because BYOL lowers the price of Autonomous Database compute by 76 percent. Unlike BYOL to other Oracle Database cloud services, where you must bring licenses for every database option you use, BYOL to Autonomous Database provides almost all the options functionality without your having to bring option licenses,” she said.
To access Oracle Database@AWS, users need a “private offer” from Oracle, which will allow them to activate an Oracle Database@AWS subscription in the AWS Marketplace.
Eric Guyer, founding partner at Oracle and SAP advisory and consulting firm Remend, said: “A lot of people don’t fully understand that you still have to go to Oracle, negotiate a subscription, and an agreement. Once you’ve negotiated that with Oracle, then you effectively upload the contract into AWS, and then start applying those credits. You’re still negotiating with Oracle, and utilizing the same Exadata stack as in OCI, or on-prem. You’re just able to do it natively in AWS’s datacenters.”
While Oracle offers a “license included” model, in which Oracle Database licenses are bundled into the price of the cloud services, the BYOL deal is markedly cheaper, Guyer calculated.
“Oracle still prefers customers go out and either bring – or even buy net new – traditionally licensed perpetual software, even in their own cloud, even in Database@Azure or AWS. Most of Oracle’s customers already own enough software, especially the bigger ones. They already own enough software that they don’t need to do the ‘license included’ model. It’s a remarkable difference,” he said.
Guyer said he could only assume that Oracle wanted to retain the margins it makes on support that comes with perpetual licenses. “Call it $20 billion per year of annual support payments among the global customer base: that’s not really any secret. They’ve always been known as creating 90 percent profit margins on their support business. They want to keep that cash cow creating, call it, $19 billion a year and just free cash. They want to keep that flowing as long as possible.”
Nick Walter, CTO and vice president of licensing advisory firm House of Brick, said Oracle Database@AWS introduces some “interesting licensing scenarios” for customers using a BYOL approach because it falls under the rules of OCI cloud licensing, not AWS cloud licensing. “This means potentially more favorable licensing metrics and possibly free usage of some add-ons options/packs for Oracle Database Enterprise Edition,” he said.
Oracle has been offered the opportunity to comment. ®