IBM and Oracle are so far behind in the cloud, they might stop trying to compete with Amazon altogether and go a different route, analyst says
- A new Forrester report predicts that IBM and Oracle will stop trying to win in the cloud wars against Amazon Web Services, Microsoft, Google Cloud, and Alibaba.
- The report says that altogether, AWS, Microsoft, Google and Alibaba will soon account for 75% of the $75.4 billion cloud infrastructure market.
- Rather than compete directly with those giants, lagging players like Oracle will focus on its applications and databases, while IBM will focus on hybrid cloud and its $34 billion acquisition of Red Hat, the report says.
- Dave Bartoletti, vice president and principal analyst at Forrester, tells Business Insider that they won't get out of the game entirely: "It's really a shifting of positioning," he said. "I don't think IBM and Oracle will get that much bigger. They will just refocus on what they do best."
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In 2020, IBM and Oracle will stop trying to win in a cloud market that is largely dominated by Amazon Web Services, a new Forrester report says.
That's because AWS, Microsoft, Google, and Alibaba will together account for 75% of the $75.4 billion cloud infrastructure market, the report says. With these giants dominating the market, Forrester suggests, IBM and Oracle will instead focus on other efforts.
Dave Bartoletti, vice president and principal analyst at Forrester, predicts that IBM and Oracle, both considered laggards in the cloud wars, will start competing in other ways. That could mean a focus on providing cloud services that work not only on their own platforms, but also those of their rivals.
"What that means to the second-tier players, rather than continue to try to invest billions of dollars every year to keep up with these huge hyperscale providers in terms of building out data centers and also in terms of the number of services they need to offer to compete, IBM and Oracle will retreat back on battling on hyperscale public stage and go back to helping enterprise clients," Bartoletti told Business Insider.
Oracle declined comment. Business Insider has reached out to IBM for comment.
'I don't think IBM and Oracle will get that much bigger'
This past year, the tech industry saw unexpected manuevers like IBM's acquisition of Red Hat for $34 billion, and Oracle's partnership with Microsoft's cloud.
Forrester predicts that IBM will help enterprise customers use OpenShift, a development platform built by Red Hat to help customers update their business applications for any cloud. With Red Hat now under its wing, IBM will also help customers with hybrid cloud, the term for running applications across both the cloud and data centers.
In a broader sense, Bartoletti said, there's an opportunity for IBM to use Red Hat tech to help even customers on Microsoft Azure or Amazon Web Services to get more from the cloud.
"They help companies modernize their applications. It's one thing to get to the cloud, and it's another to transform your applications to take advantage of the cloud," Bartoletti said.
As for Oracle, Bartoletti predicts it will focus on its applications and its AI-powered autonomous database, which automates common management tasks like installing security patches. And under its new partnership with Microsoft, Oracle will recommend Azure to its customers for services like artificial intelligence, where its new frenemy is known as a market leader.
"Oracle's databases powers some of the largest financial services and manufacturing companies and logistics companies and retail companies in the world," Bartoletti said. "If Oracle can help companies operate their databases more efficiently, it might mean taking advantage of Oracle's new autonomous database."
Despite Oracle cofounder and CTO Larry Ellison's ongoing feud with Amazon, Forrester predicts that Oracle will likely forge a deal with AWS to serve its customers, similar to its partnership with Microsoft.
Still, Bartoletti says that doesn't mean IBM and Oracle's cloud business will hit a full stop, and customers will still see their platforms as viable alternatives. Plus, they still have opportunities in South America and Europe. Which is to say: They likely won't get out of the game entirely - they'll just stop pitching themselves against Amazon so directly.
"It's really a shifting of positioning," Bartoletti said. "I don't think IBM and Oracle will get that much bigger. They will just refocus on what they do best."