Oracle Buys Nimbula as Tech Giants Wake to Cloud Potential

Last fall Oracle CEO Larry Ellison announced a new an Infrastructure as a Service cloud computing offering. Today Oracle said that it has bought Nimbula,which makes private cloud technology.

Larry Ellison might love the cloud after all. Oracle has acquired open cloud player Nimbula, a provider of private cloud infrastructure management software.  Nimbula’s product is complementary to Oracle's growing cloud play, with Nimbula expected to be integrated with Oracle’s cloud offerings. The transaction is expected to close in the first half of 2013.

Nimbula’s flagship product is Nimbula Director, which allows enterprises and service providers to build large-scale, fully functional infrastructure services from bare metal in a matter of hours. Nimbula Director differentiates by its high level of self-service, automation, application orchestration features, and ease of use. Providing a one-stop virtual data center management solution, Nimbula Director isolates customers from the operational and hardware complexities associated with deploying a private, hybrid or public cloud. Nimbula joined the Open Stack movement last October.

Oracle most likely was attracted to Nimbula because it addresses a private cloud management need, as well as adding some heavy cloud talent in the form of the company’s founders. So we have one of the most promising early entrants in the cloud landscape joining with one of the most misunderstood (in terms of cloud) tech giants. The details of the acquisition are sparse, but the deal indicates that Oracle is continuing to get serious about its cloud play.

Nimbula, which emerged from stealth mode in June 2010, was founded by former Amazon executives Chris Pinkham and Willem van Biljon, who led the development of the Amazon EC2 public cloud service. It was an early player on the scene, and one that was surrounded by a lot of hype thanks to its founders. The company never quite seemed to live up to its promise, mainly because its promise was astronomical and market confusion around cloud has been pervasive.

Oracle's Misunderstood Cloud Ambitions

Also misunderstood has been Oracle’s cloud strategy. By many accounts, Oracle and CEO Larry Ellison used to be a bit disdainful about the cloud. This perception was built on a few comments by Ellison rather than the actual business, as Oracle has a growing play across all parts of the cloud stack (Infrastructure as a service, Platform as a Service, and Software as a Service). However, perception is a driving force in the market.

Oracle has been forward-thinking in terms of cloud in some regards; it has several SaaS-based enterprise applications and has pushed to bring social capabilities across the portfolio. Ellison founded NetSuite, one of the earliest SaaS players. Most of the disdain Oracle and Ellison have displayed in the past appears to be for "cloud washing," an industry-wide rebranding of everything and anything as "cloud." However, Google "Ellison Cloud" and you’ll see quite the controversial history.

There are several promising cloud players out there that offer a piece of the larger puzzle, but the overall picture remains fragmented. However deals such as this one are occurring more frequently as traditional technology giants are finally moving away from legacy practices ( namely, license and maintenance fees) as the driving force behind revenue.

Cloud flips long-established business models on their heads, which is why there’s been some hesitancy on the part of the largest technology companies. These tech giants, particularly the public ones, are under pressure from investors to maintain license and maintenance revenue, and cloud/recurring revenue services has historically been seen as a cannibalization of these revenues. However, both investors and enterprise tech giants are realizing that cloud is the way of the future, so there’s been, and will continue to be, consolidation occurring in the market. Companies like Oracle will continue to pick up important cloud pieces out there to build out full cloud plays.