Could an Amazon and Oracle merger be possible?

Could an Amazon and Oracle merger be possible?

Staggering analyst claim centres around two key points of rationale

Jeff Bezos (Amazon) and Larry Ellison (Oracle)

Jeff Bezos (Amazon) and Larry Ellison (Oracle)

Credit: Amazon / Oracle

A potential market merger between Amazon and Oracle has been flagged as a “very real possibility” in a move which would create the largest technology company on the planet.

The staggering claim has been raised by Trefis, a Boston-based analysis firm specialising in data forecasting.

“While the idea may sound very ambitious, in order to keep itself at the top of the cloud technology food-chain, Oracle may be the best acquisition Amazon could ever make,” a research forecast noted. “Our estimate is based on Oracle’s standalone value as well as its value as a part of the combined entity with Amazon.”

According to Trefis, the potential merger - based on nothing but analyst sentiment - centres around two key points of rationale.

Firstly, the theory that customers will benefit from the security of Oracle-designed Gen 2’s architecture, backed up by Amazon Web Services’ high levels of customer service, leading to a “differentiated product versus competition”.

“AWS’ early mover advantage may now be waning on account of competition in the market,” Trefis added.

Such competition comes from Microsoft Azure and its strong enterprise heritage, Google Cloud under new leadership in Thomas Kurian and IBM backed by the recent acquisition of Red Hat.

“Another factor weighing against the incumbent cloud leaders is the drying up of the low hanging workloads that could have been migrated to the cloud,” the analyst note stated. “The remaining workloads are mostly mission critical and have high security requirements.”

Delving deeper, Trefis claimed data breaches impacting AWS customers such as Capital One and Malido Air could also prompt action from the Jeff Bezos-owned vendor.

“During Oracle’s annual analyst meet, Larry Ellison was vocal about how Gen 2’s architecture could have avoided such breaches,” the analyst firm stated.

Secondly, Trefis claimed that AWS is yet to create a “credible database alternative” to Oracle, with the combined entity capable of meeting the requirements of both enterprise customers and start-ups.

“Oracle has been trying to move its databases to the Oracle cloud, the company’s software growth has not been able to offset declines in its other businesses,” the report added. “On the other hand, AWS has had a preferred partnership with VMware to bring AWS to on-premise systems (where Oracle and Microsoft have a leadership position).

“Considering that Oracle wants customers to move to a cloud and AWS wants on-premise customers to expand into, we think Oracle and AWS represent a good complementary pair.”

On the flip side however, Trefis cited four roadblocks to a potential merger, including a history of rivalry; technology stack combination considerations; anti-competitive concerns and the sheer size of the deal.

Most recently, Amazon completed the migration of the databases in its consumer business away from Oracle, turning off the last Oracle database this month.

Meanwhile, continued criticism of AWS by Larry Ellison - founder and CTO of Oracle - during the past few years has become somewhat of an annual occurrence, with such outlandish comments suggesting tensions remain high between the two technology giants.

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Tags MicrosoftOracleGoogleamazonlarry ellisonAmazon Web ServicesJeff Bezos

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