Oracle database deal in Azure comes with a health warning from licensing experts

Five months after cloud love-in, critics worry about costs of deploying Oracle hardware and DBs in Microsoft’s cloud

Updated As the dust settles on Microsoft's decision to house Oracle hardware in its datacenters, experts keeping a close eye on Big Red's commercials are warning customers to tread carefully when choosing the transition.

In September last year, the two tech giants announced some of Oracle's hardware would live in Azure datacenters for a service called "Oracle Database@Azure." The plan was, they said, to reduce latency when users shift data between Oracle databases and Azure services and/or infrastructure.

Speaking at the time of the news, Oracle founder and CTO Larry Ellison said: "We've made it one seamless thing: you go to the Azure portal, you can provision an Oracle Autonomous Database, our very latest technology on an Exadata server, our very fastest technology. You can then marry that to OpenAI technology, [Microsoft collaboration platform] Teams. You can marry that to this incredible library of Microsoft technology: it's all now one multi-cloud system."

But in the documentation [PDF] describing guidelines for licensing its products in the cloud, Oracle says it counts "two vCPUs as equivalent to one Oracle Processor license if multithreading of processor cores is enabled."

The outcome is that, as Oracle sees it, customers pay double to move their database license to Azure. In the main news, Oracle said customers could use their Bring-Your-Own-License scheme or Unlimited License Agreements (ULA), to make the purchases in Azure.

Oracle licensing expert Craig Guarente, Palisade Compliance founder and CEO, told The Register: "They say you need twice as many licenses over there [in Azure], but none of this is contractual; it's just stuff Oracle makes up. I think it's going to be an expensive solution. You have to buy some stuff from Oracle, and you have to log into Microsoft marketplace and buy some stuff from Microsoft. It's not one vendor. Now you're dealing with two."

Guarente said customers considering the move should look at their contracts with Oracle for the terms detailing different ways to license in cloud versus on prem, such as processor definitions.

"It's the same issue with virtualization and VMware that has been going on for years and years. It's not a negotiation. If you're running on-prem and you want to move to Azure, the last thing I would do is go to Oracle and say, 'Am I allowed to do this?'"

However, notwithstanding commercial considerations, for some users, the Oracle-Microsoft tie-up could work well, he said. "These are embedded Oracle users using Exadata on-prem, and… [if] you're an Azure fan, then this could be a really good fit for you."

The Register has asked Oracle for a statement.

Eric Guyer, founding partner with software asset management advisory firm Remend, said interest from Oracle customers had been muted since the announcement of Oracle Database@Azure. "[Nonetheless] I'm confident it comes at a premium. Larry Ellison said in the announcement that Exadata is the model, and the part numbers affirm this. Our customers seek to commoditize database services and save money; Exadata runs the opposite direction, the most expensive deployment model, no matter whose cloud," he said.

Another licensing expert who spoke to The Register and asked not to be named said he had seen many cases where companies lift and shift their infrastructure to the cloud to reduce their IT costs or to use new technical advantages presented by advancing cloud technology – only to find that their migration now requires double the amount of Oracle licenses previously required.

"The cost of enterprise software simply cannot be ignored when making the decision to move to the cloud. My advice to any organization considering Oracle Database@Azure would be to make sure that their Oracle licensing experts are sitting at the table throughout the decision-making process," he said. ®

Updated at 15.51 UTC on February 15, 2024, to add:

Following publication, Oracle finally replied to us with a statement, disputing some of the points raised by the licensing experts we spoke to. We also asked the licensing specialists for further comment.

In the statement, Oracle said the Oracle Database@Azure runs on Oracle Cloud Infrastructure (OCI) within Microsoft Azure so has the same pricing as any other OCI deployment. Oracle said the referenced “Licensing Oracle Software in the Cloud Computing Environment” document applies to users installing and running their own Oracle software licenses at Azure outside of Oracle Database@Azure.

Oracle said in terms of licensing per processor, the same rules apply to move from on-prem to Database@Azure as on-prem to OCI: one Oracle processor license for on-prem equates to one Oracle processor license in OCI. However, Larry Ellison, Oracle co-founder and CTO said at the launch of the Database@Azure offer that the service would run the Oracle Autonomous Database on an Exadata server.

Eric Guyer, founding partner with software asset management advisory firm Remend, pointed out that Exadata server requires an active clustering technology known as RAC. Any customer moving from another Oracle database would, therefore, require twice the compute capacity, “if not more”, to serve that cluster.

“That's a technical statement, not a policy statement,” he said. “If you're pursuing a commodity database solution, you're not going to run RAC or Exadata... That is the most expensive way to run an Oracle database."

Craig Guarente, Palisade Compliance founder and CEO, said Oracle database users considering the Database@Azure should review their contracts rather than rely on Oracle policy statements, conversations with sales reps, or marketing material.

He said the Azure-based hardware deal could end up being more expensive than existing database deployments because users have to pay for Oracle licenses, the required Oracle support, Oracle OCI and Azure. Deploying Oracle databases on Azure without the Database@Azure deal would not require payment for Oracle OCI.

Another Oracle licensing expert, who asked not to be named, said every organization that transacts with Oracle have every right to be wary of Oracle's positioning.

“They have a history of changing how their products are licensed.”

For example, Oracle ramped up its audits of Java licensing in 2016 and introduced two new licensing models for its commercial Java platform, Standard Edition (Java SE), in April 2019. In 2022, it began a new auditing campaign for that platform. In January 2023, it introduced a new subscription licensing model for Java, which Gartner later estimated would cost users two to five times more than previous licensing models.

More about


Send us news

Other stories you might like