CEO Ellison: Oracle Cloud IaaS Will Compete On Price With Microsoft, Amazon, Rackspace

While Oracle's cloud portfolio to date is focused on its own products, it's planning to roll out a cloud IaaS service in the first half of next year that's aimed at Amazon Web Services, IBM and other cloud providers.

"We intend to compete aggressively in ... the commodity infrastructure as a service marketplace," Ellison in a Q&A Wednesday during Oracle's second-quarter earnings call, according to Seeking Alpha's transcript.

[Related: Oracle's Profit Dips Slightly In Q2, But Execs Say Engineered Systems Gaining Steam ]

The Oracle empire was built on high-margin products, which is why this was a surprising comment. It's hard to imagine Oracle engaging in a price war in the cloud IaaS trenches with Amazon Web Services, which is constantly slashing pricing for its cloud services, and Microsoft, which has vowed match Amazon's price cuts with Windows Azure IaaS.

Turns out cloud IaaS is just a part of Oracle's cloud strategy. Oracle will also sell a "highly differentiated platform as a service" as well as a suite of enterprise SaaS apps, Ellison said during the earnings call. Oracle's combination of cloud apps, platform and infrastructure is something its enterprise rivals can't match, according to Ellison.

"We are going to be cost competitive and price competitive at the infrastructure level while being highly differentiated at both the platform level and the application level," Ellison said on the call.

One bright spot during Oracle's second quarter was cloud bookings, which grew 35 percent during the quarter compared to last year. On the call, Ellison said this success was partly attributable to Oracle setting up sales teams that focus specifically on Oracle's competitors.

The combination of Java and Oracle's 12c database, which is built specifically for the cloud, gives Oracle a stronger platform than any of its SaaS competitors, Ellison said.

Ellison also said Oracle has sales teams dedicated to competing with Workday in human resources software, Salesforce.com in customer service software and SAP in ERP software. "We are organized by functional area so we can compete effectively against these new generation of specialists," he said on the call.

PUBLISHED DEC. 19, 2013