Oracle’s New IaaS Cloud Option: There’s a Catch

Lately, Oracle has embraced cloud computing in a big way. The company’s latest twist on its cloud infrastructure as a service is an on-demand option that incurs no large up-front costs and only a monthly fee. But you’d better take a look at the fine print before you sign on the dotted line.

 Rachel King writing for ZDNet provides the details. First, let’s consider the service itself. According to Oracle’s own product overview users can get Oracle Exadata, Exalogic, Exalytics, SPARC SuperCluster, and Sun ZFS Storage Appliance hardware and support, right in their own data center, for a monthly fee. Users can pay to access peak CPU capacity only when they need it (such as during the holidays for a retail business). Oracle customers using this IaaS (Infrastructure as a Service) solution will receive “periodic hardware refreshes to enable access to next generation technology.”

Now here’s where it gets a little tricky. One of the benefits Oracle lists for its service is that it will “Eliminate upfront capital expense and spread the cost over time.” How, exactly, does that make sense if you’re only paying a monthly fee? Well, like many phone companies, you may only pay a monthly bill while you use your “free” hardware and service, but you’re locked into a contract. If you check out the four-page FAQ covering this service, you’ll find that there is a three-year minimum term commitment. At the end of that term, customers “have the option to end the service and return the hardware to Oracle or extend the service to a fourth or fifth year, in quarterly increments, at an additional discount to the monthly fee.”

Here’s another interesting twist from the FAQ: if the hardware is damaged or destroyed while in the customer’s possession, they are responsible for replacing or repairing it. However, the hardware is not available for purchase at any point – even at the end of the contract.

By the way, just because Oracle’s IaaS solution calls for only a monthly fee, don’t think that you’ll entirely escape large upfront fees. The monthly fee does NOT cover the required software licenses and software support. Oracle does note, however, that “customers can apply existing software licenses, term licenses, and Unlimited License Agreements (ULAs) toward Oracle IaaS.”

So what kind of advantage, exactly, does Oracle’s service offer over leasing the hardware? The software company points to greater predictability in cost because the service’s monthly fees are published; the cost of leasing hardware, on the other hand, “involves interest rates that can vary over the course of time.” Oracle also cites the flexibility of its Compute Capacity on Demand service.

So is this new service option really as useful as Oracle claims it is? It does offer somewhat more flexibility than more traditional solutions. However, it may not be as open or cost-effective as the hype might lead you to believe. If you’re concerned about being “locked in,” Oracle IaaS offers only a partial answer at best.

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