Oracle Acquisition Spurs Cloud Competition
Publication: Wall Street Journal
Oracle Corp’s latest acquisition is small — fewer than 50 employees — but it’s an important step as the company looks to reinvent itself in a rapidly changing information technology market.
The database giant on Friday quietly bought an Austin, Tex., startup called StackEngine Inc. The Oracle did not disclose the terms of the deal, but the acquisition will be working in a strategically important area called the Oracle Public Cloud.
StackEngine will give Oracle a boost in selling a new generation of cloud services based on the software known as containers, which give software developers flexibility by letting them run a several copies of an operating system on a single computer. Containers are part of a sea change in the way software developers create computer programs, offering new ways to quickly build and roll out software on large networks, said Joe Breda, a former Google engineer who is now an entrepreneur in residence at the VC firm Accel Partners.
The acquisition could help Oracle catch up with other tech giants that have emphasized containers in the wake of Docker, a startup that popularized the concept in early 2013 by giving away its container technology, also called Docker, under an open source license. Cloud computing providers including IBM Corp., VMware Inc., Microsoft Corp. and Amazon.com Inc. in the past year have delivered software and services based on Docker, said Scott Johnston, Docker’s senior vice president of product.
“These companies are, in fact, putting investment behind this trend,” he said. “It’s like the large players are starting to wake up to the idea that this is a real thing,” said Patrick Reilly, the CEO of Kismatic Inc., a startup that builds software that helps manage containers.
Oracle plans to keep the StackEngine team in Austin, where its employees will develop new features for Oracle’s cloud-computing products. Container management software built by StackEngine will be used in Oracle’s container service, which will “be a significant part of enterprise computing,” said Peter Magnusson, Oracle’s vice president for cloud development.
StackEngine’s technology could help Oracle attract corporate customers to its cloud services, which run on the company’s own servers. The Redwood Shores, Calif., company is struggling to remain relevant on the cloud, even as most of its revenue comes from elsewhere. Licenses and product support contracts for software that runs on customers’ premises account for 70% of the company’s revenue.
Oracle’s new software license sales were down 18% during the company’s most recent quarter. Its computing business grew by 7%, totaling $649 million, but that growth rate pales in comparison with Amazon.com, whose cloud business grew by 78% during its most recent quarter.
Read full article here