Oracle has quietly altered course on the way it sells its ‘private cloud’ product, a key area of its cloud computing strategy (ORCL)

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Oracle quietly changed its "Cloud at Customer" product earlier this year, which is its "private cloud" offering.
It’s now based on its Exadata product line, meaning it is designed to run Oracle’s database.
This is another indication that Oracle’s cloud strategy is really about keeping customers from defecting to rival cloud databases, rather than taking on cloud giant Amazon Web Services head-on.
This strategy is not a bad idea, but it is a risky one.
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After three years of fanfare, Oracle quietly changed its "Cloud at Customer" product in a big way earlier this year, according to market research firm Gartner — a move confirmed to Business Insider by Oracle.

Oracle stopped selling the original version of its "Cloud at Customer" product, which is Oracle’s "private cloud" offering, and started selling a new version, using the same name, based on its Exadata servers. Private cloud is the concept of running cloud software in a customer’s own servers, rather than having it hosted from a data center operated by mega-providers like Oracle.

Exadata is geared to run Oracle’s databases or applications that require Oracle’s database. In contrast, the original Cloud at Customer product was designed to run almost any kind of software a company wanted to use.

So the short version of the significance of all this: This is yet another indication that Oracle’s cloud is becoming a niche player, more of a way to serve and preserve its all-important database customers and less of a general purpose cloud that will really challenge a giant like Amazon Web Services, as Oracle has been promising to do.

As Gartner puts it in its recent market research report on the cloud infrastructure market, "OCI is best suited for enterprises requiring cloud IaaS for Oracle applications and for applications that require an Oracle Database."

On-ramp to the cloud

With Oracle’s Cloud at Customer, companies lease Oracle hardware and software infrastructure and plunk it into their own data centers, but it is managed by Oracle and paid for on a subscription basis. This model is often referred to as private cloud.

The original, general-purpose version was supposed to be an on-ramp onto the Oracle Cloud Infrastructure (OCI) platform, making it easy for companies to transfer data and apps from their in their own data centers to OCI.

Today, companies that want to transfer apps and data from their own data centers these days to Oracle’s cloud are told to do so with a telcommunication network connection provided by one of the database giant’s partners, Gartner says.

"Oracle previously offered Oracle Cloud at Customer, a private cloud IaaS offering, but it is no longer being sold. Colocation needs are met via partner exchanges (Oracle FastConnect)," Gartner says.

Not a bad idea … but risky

Oracle’s focus on a cloud for its database customers isn’t an entirely bad idea.

If it works, it will keep Oracle’s customers on its playing field. And maybe these customers will want to use Oracle’s cloud for more of their needs in the future as Oracle builds out the features they need.

Plus, Oracle is making strides in attracting customers to the cloud versions of its other enterprise software — HR software, financial software, and so on — that run on a different set of cloud infrastructure. And its database is still the company’s bread-and-butter product.

Meanwhile, Amazon is the big bad wolf in the cloud world, which is definitely trying to eat Oracle’s database customers.

Amazon even built a tool that solves the hardest part of switching from a software database to one in Amazon’s cloud: transferring the data. On Thursday, Amazon said it has moved more than 150,000 databases into AWS using this AWS Database Migration Service since it launched in 2016.

Not all of them are Oracle databases, and AWS doesn’t disclose the type of databases that used the service. The tool can also be used to move Microsoft’s SQL database to AWS, and the same again for MySQL, the open source database owned by Oracle.

But the service is definitely targeted at Oracle customers. The word "Oracle’ is mentioned 13 times on the tool’s marketing page, compared to Microsoft (3 times) and MySQL (4 times). And AWS CEO Andy Jassy frequently disses Oracle when talking about Amazon’s fast-growing database service, despite Amazon’s ethos not to focus on its competitors. (Oracle’s chairman, Larry Ellison, also frequently disses Amazon.)

This isn’t the only indication that Oracle is focused on a cloud for its database. The company recently shocked the world by partnering with its previous archrival, Microsoft, to make OCI work better with Microsoft’s cloud. The idea, Mark Hurd, one of Oracle’s CEOs explained, is to allow Oracle’s database to run in its own cloud, but to let customers have access to their other software running on Microsoft’s cloud.

And its executives frequently talk up that its cloud was built for performance-intensive Oracle and non-Oracle apps, while avoiding going head to head and feature-for-feature against competitive clouds.

The risk, of course, is that Oracle could forever wind up being a niche cloud player and could lose its database customers anyway.

Being a niche player in this golden age of massive cloud growth means that Oracle’s customers will use a rival’s cloud for sure, with that cloud often being the market-leading AWS. Once there, they will be encouraged by their salespeople (and perhaps by their curiosity) to try out that cloud player’s database.

As Gartner points out, "Oracle is unlikely to ever be viewed by the market as a general-purpose provider."

While Gartner praised Oracle’s ability to hire top talent to build its cloud (that’s a good sign), it also criticized the company for having a scattered roadmap — building features tailor-made for individual customers, not the basics that enterprises demand.

And, Gartner warns, Oracle’s reputation of playing hardball with both its customers and developers hasn’t endeared it in the market. Those are two of the biggest groups of people who buy cloud services.

Or, as Gartner put it, "Oracle’s late start with OCI, and the polarizing nature of Oracle in the minds of developers who often are the leading influencers for public cloud IaaS," says Gartner.

Are you an Oracle insider with insight to share? We want to hear it. Contact me at jbort@businessinsider.com, on Twitter at @Julie188 or on Signal.

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