Angry about Oracle licensing? The cloud lets you change the game

The pricing and licensing models that enterprise IT loves to hate could be displaced during cloud migrations, to Oracle's detriment

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Robert Couse-Baker via Flickr

Can enterprises trust Oracle to avoid vendor lock-in for its cloud offerings? Fears that it will lock in and abuse customers via burdensome licensing arrangements, as it is often accused of doing for its enterprise software, could lock Oracle out of the growing cloud computing market.

So says the Campaign for Clear Licensing, a Belgian nonprofit advocacy group that conducted a survey showing that enterprises consider their relationship with Oracle to be "hostile." The CCL says it represents both users and software vendors, though it names no member vendors, making it hard to know if any Oracle competitor is behind the campaign.

Regardless of the CCL's agenda, it's true that the cloud computing model could put a damper on Oracle’s ability to make money. As it begins to sell cloud services, Oracle will quickly discover that cloud-related services are not as profitable as its traditional business services. As best I can figure, for every dollar of cloud services sold, Oracle will lose $2 to $3 from its traditional business. But those losses get worse if customers move to other public clouds, such as Amazon Web Services, Google, or Microsoft.

This is not only an Oracle issue. IBM, Hewlett-Packard, and even Microsoft to some extent have the same challenges. Oracle must overcome systemic cultural issues that could hinder Oracle's best path to the cloud, particularly around its decades-old sales models that funded many a BMW and country club membership.

Oracle’s foothold in the enterprise space is rivaled only by IBM's. When you have such a huge stake, the path to enter new markets, including the cloud market, is a lot easier than it is for cloud startups and even other established enterprise vendors. Despite their grumbling, enterprises have accepted Oracle's licenses and prices for on-premises software, so Oracle can't be blamed for hoping they'll do the same for cloud offerings.

How this plays out over the next few years will be interesting. IT will have a chance to vote with its dollars about Oracle's business model for those cloud investments.