According to an article by CNBC, analyst Rohit Kulkarni of MKM Partners has predicted that Amazon will surpass Oracle as the second-biggest enterprise software company. This is expected to happen in the next 12 to 15 months. The article goes on to explain that Amazon Web Services or AWS is more profitable than the company’s core e-commerce business, generating impressive amounts of $2.26 billion in operating income in Q3 and $9 billion in revenue. Moreover, analysts polled by FactSet expect $45.76 billion in revenue for AWS in the 2020 fiscal year, while Refinitiv expects $41.12 billion for Oracle in the 2021 fiscal year. Will this affect Oracle negatively?
It is important to keep in mind that Oracle’s relational database has been extensively used by large companies that work with huge amounts of data. The article mentions that Amazon was also a huge customer of theirs. The answer to the question is yes. Amazon is their competitor and a dangerous one. This outcome will surely have some negative effect on Oracle. Amazon has launched the Aurora service, directly competing with them. This pushed the company to introduce the second-generation cloud infrastructure to compete with AWS.
Amazon has also switched to using their own software instead of relying on Oracle’s one. This, of course, has a negative impact on Oracle since they lost one of their biggest customers. On the other hand, AWS has an impressive list of customers, including Apple, Lyft, Capital One and more. They have been extremely successful lately, but we should not underestimate Oracle. After all, they have been in this business for 40 years. Will Amazon displace Oracle in enterprise software? It is interesting to see what will happen in the future between these two companies and how their competitiveness will affect the enterprise software market.