Oracle CEO Larry Ellison announced this week that his company will begin competing with Amazon.com on price, according to Reuters. That’s a pretty bold proposition, as Amazon Web Services (AWS) has continually snipped prices over the past few years, but Oracle has precious little choice: sales of the company’s legacy database software licenses are down, as more businesses turn to the cloud to support backend infrastructure.
AWS is widely viewed as the competitor to beat in the cloud-storage space, its services more widely used than similar offerings from Microsoft and Google. That hasn’t stopped other potential rivals, notably China’s Alibaba, from eying an increased market presence. If Oracle offers more commercial alternatives to AWS services, it could drive the price of cloud services—already dipping at a fairly rapid clip—even lower.
For those who need cloud services, that’s a good thing; pennies spent on compute capacity can just as easily go to salary and other expenses. A more diverse marketplace for cloud computing and storage can also serve a greater variety of customers. But for the cloud providers themselves, this steady erosion in margins may eventually force a few of them—especially smaller competitors—out of the business entirely.