Ascending to the cloud

FOR years they loathed one another, rarely missing an opportunity to pick a fight. Their rows, full of sarcasm and sniping, occasionally hit the headlines. Then they started meeting discreetly every now and again—and ultimately realised just how badly they needed each other. Now, to the surprise of many, they have told the world about how they were really made to be together after all.

This is the backdrop to events that have caused a stir this week in the world of corporate computing. On June 24th Oracle and Microsoft announced plans to work closely together in the “cloud”—the business of delivering software and services over the internet. The following day Oracle unveiled another partnership, this time with Salesforce.com, a pioneer of cloud-based services such as hosting businesses’ marketing and customer-relations systems. The day after that, Oracle announced yet another alliance, with NetSuite, another provider of cloud-based business software. Oracle also unveiled a new, cloud-compatible version of its database software.

The partnership between Oracle and Microsoft is especially striking because the two firms—and their high-profile co-founders, Oracle’s Larry Ellison and Microsoft’s Bill Gates—have a long history of feuding. Tension between them escalated in the 1990s when Oracle tried to promote an alternative to personal computers to limit the influence of Microsoft’s Windows operating system and Microsoft began competing with Oracle’s core database business. Relations have thawed somewhat since then, but the companies still compete ferociously in many areas.

The two old foes have come together because they have both been wrong-footed by the speed at which business customers have shunned their costly packaged software and maintenance contracts in favour of cloud-delivered services. Microsoft and Oracle both have their own web-based offerings, but they face stiff competition from the likes of IBM, which recently bought SoftLayer Technologies, a cloud firm, and Amazon, which has built a dominant position in cloud infrastructure. “Amazon could ultimately steamroller everybody,” predicts David Linthicum of Cloud Technology Partners, a consultancy.

To avoid being left behind in the drift to the cloud, Oracle and Microsoft want to show that their services work well together to win customers who fear being locked into a single firm’s products. The two firms have co-operated quietly for some years to ensure Oracle’s database software runs smoothly on servers using Microsoft operating software. But this week’s announcement signals a deeper commitment. In particular, Oracle will ensure that various bits of its software run well on Azure, Microsoft’s cloud platform. In return Microsoft will promote Oracle’s database software and other products to Azure customers.

The partnership comes at a critical time for both firms. Oracle’s revenue was flat year on year in its most recent quarter. Some analysts blame its slow reaction to the rise of cloud computing, which Mr Ellison initially scorned before undergoing a Damascene conversion a few years ago. As for Microsoft, it is said to be preparing a massive internal shake-up to sharpen its focus on things such as cloud services and smart devices.

The alliance between Oracle and Salesforce also caused jaws to drop. Mr Ellison and Marc Benioff, the founder of Salesforce, have revelled in firing potshots at each other’s businesses. Mr Ellison once called a Salesforce product “itty-bitty” and Mr Benioff sniffed at purveyors of “false clouds”, in a swipe at an Oracle product.

Now the two tech titans want to convince the world that their firms are a perfect match. In future Oracle will provide the technology on which Salesforce’s platform and applications will run, and Oracle will integrate Salesforce’s cloud-based applications with its own ones for finance and human-resources management. Salesforce will return the favour by promoting Oracle’s products in these areas. This arrangement guarantees Oracle a big customer (ie, Salesforce), while Salesforce gets to tap Oracle customers for business. All this will only accelerate businesses’ move to the cloud.