Microsoft Teams Up With Oracle to Reach for the Cloud

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Microsoft (NASDAQ:MSFT) is teaming up with long-time rival Oracle (NASDAQ:ORCL) to work on cloud-based computing options, an important arena in which both companies are lagging behind.

Internet companies like Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN) are currently dominating cloud-based computing. Microsoft and Oracle are more traditionally-based software companies and have had a hard time adapting to cloud-based services.

Microsoft’s Azure cloud-computing service will now run Oracle’s database and Java tools. Even though the two companies have a long-standing rivalry dating back to the rise of personal computers, they recognize that customers want products from the two companies to work together. The collaboration essentially means Microsoft will be promoting Linux and Java software that competes with its own Windows products, but analysts have said the cloud opportunity is important enough for Microsoft to support its rival’s software.

Microsoft has been battling a continuous slump in PC sales by seeking new sources of revenue in online services. Oracle has been shifting to focus on business software sold through online subscriptions rather than being traditionally installed on computers. Through the collaboration between the two companies, customers will be able to run Oracle software through Azure using their current software licenses.

Microsoft’s biggest competitor in the cloud market is Amazon Web Services, which allows businesses to rent computing power, storage and database software via the Internet, services that represent the fastest growing segment of the cloud market. Amazon has left both Microsoft and Oracle in the dust in terms of cloud-based computing. Oracle shares plummeted after reporting disappointing fourth-quarter gains, and Azure has failed to catch up with Amazon Web Services, as Amazon shares have grown 237 percent in the last five years.

Oracle and Microsoft have collaborated on some projects behind-the-scenes in the past, but Microsoft Chief Executive Officer Steve Ballmer said, “That behind-the-scenes collaboration is not enough. People wanted more from us. In the world of cloud, you’ve got to do that kind of partnership actively, not passively.”

Business customers who use software from both companies can now look forward to easier collaboration between the products and better cloud-based services.

Follow Jacqueline on Twitter @Jacqui_WSCS

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