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Bernstein Analysts Don't See Amazon Web Services Putting Oracle Out Of The Cloud Business

The actual cost saving of using Amazon.com, Inc. AMZN 0.78% AWS Aurora versus “old world” databases like that offered by Oracle Corporation ORCL 0.24% is 31-39 percent, Bernstein’s Mark L. Moerdler said in a report. He maintained an Outperform rating on Oracle, with a price target of $51.

AWS claimed that its Aurora database a similar performance to that provided by old world databases, at a tenth of the cost. Many investors are concerned that the significant reduction in the cost of hosting databases offered by AWS Aurora would disrupt Oracle's database market dominance, analyst Mark Moerdler noted.

Is The Saving Enough To Disrupt Oracle?

With analysis showing that the actual cost saving is in the 31-39 percent range or lower, Moerdler commented that this may not be enough. He pointed out that price had not been the key deciding factor for customers, who had selected Oracle despite it being more expensive.

“Clearly, AWS is a serious competitor and increased competition would lead to incremental pressure on financial performance of Oracle's database business. However, we do not think Aurora poses an existential threat to Oracle in the foreseeable future,” the analyst wrote.

Microsoft Corporation’s MSFT 0.07% SQL Server is 89 percent less expensive and MySQL 99 percent less expensive. These competing products had “existed for decades,” Moerdler mentioned. Yet, the Oracle database has been chosen by customers for critical workloads and competition had not significantly impacted the company’s database revenue.

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DateFirmActionFromTo
Jun 2016Maxim GroupInitiates Coverage onBuy
Jun 2016KeyBancMaintainsOverweight
Jun 2016William BlairInitiates Coverage onOutperform

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