Oracle will give cloud users first dibs on its next big database update

Customers are now faced with an 'Orexit vote,' one analyst says

Oracle's namesake database may have been born on-premises, but the next big update to the software will make its debut in the cloud.

Oracle Database 12c Release 2, also known as Oracle Database 12.2, is slated for release in the second half of this year. It will first be made available in the cloud, with an on-premises version arriving at some undefined point in the future.

“We are committed to giving customers more options to move to the cloud because it helps them reduce costs and become more efficient and agile," Oracle said in a statement sent by email. "Oracle Database 12.2 will be available in the cloud first, but we will also make it accessible to all of our customers.”

The news was first uncovered in a Wednesday CRN report based on a tweet from Mike Dietrich, master product manager for database upgrades and migrations at Oracle based in Munich, Germany. Included in that tweet was an image from a presentation by Penny Avril, an Oracle vice president in charge of database product management, outlining the "cloud-first" plan at a user group meeting.

Dietrich's post drew several less-than-enthusiastic comments.

"So sorry that @Oracle hasn't realized the impact of this 'release' plan at a lot of sites," wrote Twitter user Morten Egan, for example.

"Customers will doubt about future with oracle. Not good," wrote Franck Pachot.

Similarly, "Why Cloud ? Does Corporations investing money on Oracle as database platform mean nothing to Oracle Corp ?" wrote Srini Y.

The move promises to be frustrating for many users who have purchased on-premises licenses and pay for premium support, said Craig Guarente, cofounder and CEO of Palisade Compliance, which helps Oracle customers negotiate with the database giant.

"These companies are paying for phone support and updates, and it's a 90-plus percent margin for Oracle -- it's their cash cow," Guarente explained.

Oracle is trying hard to convince customers to move to the cloud, Guarente added. While most customers probably won't jump to the update right away, frustration levels with the cloud-first plan will depend on the length of the delay, he added.

"If it's a year, and a cloud-based competitor gets the update first, there's all that stuff that could come up," he said. "If I'm paying $10 million a year for Oracle support and you tell me I don't get that update, I'm kind of ticked."

Affected customers should begin by asking for more detail on the timing, Guarente said: "If Oracle doesn't answer or leaves it vague, I'd be worried."

The move makes good sense from Oracle's perspective, said Duncan Jones, a vice president with Forrester. Microsoft does something similar with Office, and so does SAP with Ariba, he pointed out.

"The early use cases for the new version are likely to be dev and test workloads that are often most suitable for IaaS," Jones explained. "Moreover, Oracle can control the environment and hence iron out teething problems more easily than if the new version is running on customers' unknown environments."

In the meantime, customers are now faced with a sort of "Orexit vote" over the next year or so in which they decide whether or not to stay with the company, Jones said, referencing the U.K.'s Brexit vote Thursday. "Do they want to accompany Oracle on its journey to the cloud, or vote for an uncertain but independent future?"

Oracle has long boasted that it gives customers freedom of choice to run its systems on-premises or in the cloud, noted Frank Scavo, president of Strativa.

"I guess that promise no longer applies to the latest version of its database," Scavo said. "It shows how much pressure Oracle is feeling from Wall Street to show momentum in the cloud."

Recently, a former employee in Oracle's cloud business accused the company of unscrupulous accounting practices.

In the company's recent fourth-quarter earnings call, however, executive chairman and CTO Larry Ellison reportedly said Oracle could be the first SaaS company to hit $10 billion in annual revenue.

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