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The Audacity of Oracle Cloud

Stocks in this article: ORCL AMZN VMW RHT RAX

Even if you wanted to switch, who could you switch to? Microsoft (MSFT)? IBM (IBM)? OK, name three. And you're talking about a multiyear plan that might cost your CEO his job because it might not completely work. So even what looks from the outside like monopoly control looks from the inside like a devil's bargain that must be made.

Oracle has built a virtually impregnable moat around its customers. They know it, Oracle knows it. If you were Ellison, you'd laugh like Guy Fawkes too.

Real cloud threatens to destroy all this. Amazon's (AMZN) EC2 can take workloads directly off these enterprise systems. VMWare (VMW) and Red Hat (RHT) offer software that can let you do the same on your hardware, in your IT department. In many cases this is open source software. Rackspace's (RAX) sponsorship of an open source cloud infrastructure, OpenStack, has taken it from a sleepy San Antonio, Texas, Web host to an enterprise powerhouse in just three years.

The savings from real cloud are just incredible. And it practically scales to infinity. No more per-server licensing fees. No more fancy servers. No more wondering whether your systems can handle the load. Maybe, some day, no more systems.

What most big companies are doing right now with cloud is they are putting their toes in. They have their own little clouds on-premise. They may take some new customer-facing application and host it at Amazon. But they know cloud is compelling, because it scales like their enterprise systems can't. And, in comparison, it's cheap as chips.

Oracle is telling these customers that cloud is just software as a service, that it's just another way to arrange their current systems, that it's an evolutionary step rather than a revolution. That they will handle it. That you, Mr. CIO, don't have to think about cloud.

Just sign here.

I have no doubt many Fortunate 500 CIOs will buy this argument. Better the devil you know. But it's not a plan for growth. Customers who have choices now, customers just starting to scale and facing the wonders of cloud, won't be fooled.

If you can start with cloud, from a blank sheet of paper, you're going to want real cloud. You're going to want commodity hardware. You're going to want open source. You're going to demand choices. And given a choice between Oracle Cloud and real cloud, given the way corporations are evolving into it, Oracle Cloud is going to be a very hard sell.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

(I have no investments in Oracle. I do own some IBM, and some Microsoft, and some Amazon, and some Google. But no Oracle. No Red Hat either, nor VMWare. No Rackspace.)
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