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Report: Amazon Phasing Out Oracle Cloud Services By 2020

Amazon’s dominance of retail is well-documented, but its positioning within cloud computing services is becoming just as noteworthy — so much so that the e-Commerce giant is reportedly phasing out a major cloud competitor across its organization. The e-Commerce giant plans to move off Oracle software entirely by early 2020, according to CNBC.

The report revealed that Amazon began moving off Oracle about four or five years ago, and that the full migration should wrap up in approximately 14 to 20 months.

AWS has been a major revenue and profit driver for Amazon, with the service generating $6.1 billion in revenue in Q2 2018 and achieving 49% year-over-year sales growth. While AWS represents only 11% of Amazon’s total sales, its $1.6 billion of operating income accounted for 55% of the company’s total net income.

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The cloud service has its clients hooked — Amazon noted that AWS already has generated $16 billion in backlog revenue (the total value of future contract obligations), up from the previous quarter’s $12.4 billion. The average length of those remaining contracts also has extended, from 3.2 years in Q1 to 3.5 years in Q2.

The primary issue Amazon has faced with Oracle is the inability of the database technology to scale to meet Amazon’s performance needs, said a person familiar with the matter. And while Amazon has continued its impressive growth trajectory in the cloud business over the past few years, Oracle actually stopped reporting its cloud revenue growth numbers, which had been slowing down in recent quarters.

Executives at the two companies have butted heads publicly. In October 2017, Oracle executives boasted about the cost advantages of using its database software over AWS during the company’s OpenWorld conference. AWS CEO Andy Jassy fired back a few weeks later in an interview with CNBC, saying that Oracle is “a long way away in the cloud.”

Two months later in an earnings call, Oracle CEO Larry Ellison specifically called out Amazon regarding its use of the Oracle cloud platform.

“Let me tell you who’s not moving off of Oracle,” Ellison said. “A company you’ve heard of just gave us another $50 million this quarter to buy Oracle database and other Oracle technologies. That company is Amazon.”

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