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by Pete Harris, Oct 19, 2017

Analysis: Oracle’s Blockchain Move Is Critical


Oracle

The recent news regarding Oracle and blockchain technology is really important. In some ways, Oracle’s embrace of the blockchain is more significant than IBM’s big bet on the technology and Microsoft’s support for it.

While Oracle’s blockchain ambitions were socialized over the summer via blog posts and low-key presentations, the official launch of the Oracle Blockchain Cloud Service took place at the company’s annual Oracle OpenWorld conference on October 2.

“Oracle Blockchain Cloud Service provides enterprise-grade blockchain capabilities and is able to accelerate innovation for on-premises [enterprise resource planning (ERP)] and cloud-based [Software as a Service (SaaS) and Platform as a Service (PaaS)] customers,” noted Amit Zavery, senior vice president of Oracle Cloud Platform.

Oracle’s blockchain offering is based on the open-source Hyperledger Fabric, running on Oracle’s cloud offering, via which Oracle has begun to deliver applications for ERP, customer relationship management (CRM), human capital planning and supply chain management.

Launched in 2011, Oracle’s cloud also offers a platform on which third parties can develop their own applications, drawing on an array of databases, service-oriented architecture (SOA), integration middleware and a number of enterprise Java services (Oracle has acted as a key steward of the open-source language following its 2010 acquisition of Sun Microsystems, which created Java).

So, why is Oracle’s blockchain offering so important? After all, on the face of it, Oracle’s service is “me too” in that it looks similar to services already offered by IBM and also recently introduced by SAP, a key competitor in the business application and database spaces. Both IBM’s and SAP’s blockchain platforms are based on Hyperledger’s Fabric codebase (indeed, IBM was a major code contributor and remains a key maintainer).

The “me too” analysis probably fits — not least as Oracle is marrying blockchain technology with cloud technology, and it also sees clouds as a channel to play in the artificial intelligence and Internet of Things (IoT) worlds. Comparisons to IBM’s Watson IoT and SAP’s Leonardo are valid, even if there are differentiation devils in the details.

The answer lies not in what Oracle has done but rather that it has done it.

For sure, Oracle has a strong technology portfolio covering hardware, systems and middleware software, and business applications. Moreover, anecdotal evidence suggests that it has created a credible internal group of blockchain technologists. It has also begun to file patents, including one this summer titled “Accountability and Trust in Distributed Ledger Systems,” which describes its own permissionless blockchain implementation, based on an open-source offering from Tendermint.

As a generality, though, the company is not a first mover and does not operate at the technology bleeding edge. True, it does have an Oracle Labs operation, staffed no doubt by clever technology futurists (about 100 of them), but it’s not on the same scale as IBM’s 3,000-strong research division.

Oracle tends to enter markets only when it believes they are ready for a commercial offering. In short, Oracle is focused on making money from its products and services, not on research and development for the sake of it or for some potential future promise.

To underpin that assertion, one just has to consider how Oracle approached the cloud marketplace. Cloud technology has recently become a central component of its offerings, but that was not always the case. Back in 2008, Oracle’s then-CEO Larry Ellison (he’s now executive chairman and CTO) referred to the delivery mechanism as “complete gibberish” during a presentation where he mocked how the technology had gained much attention. At the time, cloud technology was certainly being championed by many vendors, but corporations were cautious in their approach to it. That attitude tangibly began to change a few years later, which is when Oracle made its first positive announcements about cloud services.

Fast-forward to today and what Oracle’s move into blockchain technology signals is that businesses are now ready to invest in the technology on a significant scale. If it has indeed got the timing right, then many blockchain companies, not just Oracle, are going to benefit greatly in 2018 as corporate demand accelerates.

It’s clearly early days in Oracle’s embrace of blockchain technology, and it’s probably too soon to determine how the technology will be incorporated into its overall portfolio. That said, the company operates across several verticals — financial services, healthcare, manufacturing and education — where blockchain technology is showing merit. And Oracle is also a big player in cross-industry businesses, such as supply chain and IoT.

At a more technical level, it will be interesting to see whether Oracle leverages servers based on its SPARC microprocessor within its cloud for blockchain apps (for the most part, Oracle’s cloud runs servers based on Intel x86 chips). The latest SPARC chips — based on a technology that came from Oracle’s Sun acquisition — are equipped with cryptographic accelerators that could improve blockchain performance significantly. 

Crypto performance is certainly one of the selling points that IBM is pushing for its cloud-based blockchain service, which leverages its own LinuxONE servers. In fact, IBM reckons that 50 percent of the computing power required for blockchains is sucked up by cryptographic processing.

It will also be interesting to see whether Oracle’s and SAP’s presence within the Hyperledger Project changes a dynamic in which IBM currently has great influence (understandably, since it puts a good deal of effort into various Hyperledger initiatives). 

Whether Oracle can (or chooses to) invest enough resources into its blockchain initiatives to become a real enterprise blockchain alternative to IBM is yet to be seen. But such a move, so long as it’s based on standards, would undoubtedly be good news for the industry as a whole.

Big Blue versus Big Red in the blockchain space will hopefully be a fascinating battle to observe.

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