Sources: Oracle May Delay On-Premise 12.2 Database Release To Drive Sales Of Cloud-Based Version

Oracle wants more customers using its cloud services, so it's considering delaying the on-premise release of its next major database update to drive sales of the cloud version, sources familiar with its plans said Friday.

The sources told CRN that Oracle may release a cloud-only version of Database 12c Release 2 -- also known as 12.2 -- within the next two months. The Redwood Shores, Calif.-based vendor is holding OpenWorld this year in mid-September.

"Oracle Database 12.2 will probably only be available in the cloud for the first few months, which means on-premise customers won't be able to upgrade right away," one of the sources told CRN, speaking on condition of anonymity.

Releasing a cloud-only version of Database 12c Release 2 first could help Oracle get more customers using "cloud credits" -- licenses redeemable for Oracle cloud services that are a common component in software deals -- and in turn drive more cloud sales, said the source.

[Related: Ex-Employee Sues Oracle Over Alleged Cloud Accounting Shenanigans, Oracle Plans Countersuit]

Oracle launched a beta version of Database 12c Release 2 last October at its OpenWorld conference and said the final version would be generally available within a year.

Database 12c Release 2 -- the first major update to the product since 2013 -- features a number of cloud-focused upgrades, including improvements to multitenancy -- which lets more databases run on a single machine -- as well as faster in-memory database and big data analytics performance.

An Oracle spokeswoman declined to comment.

Oracle CEO Mark Hurd alluded to a cloud-first release on the vendor's fourth-quarter earnings call Thursday, in response to an analyst's question about whether customers will buy the on-premise or cloud version of Database 12c Release 2.

"We're encouraging our customers to look at an alternative. Why don't you just use the latest version in the cloud, and why don't you do your experimentation and your testing and your application migration and your upgrades in the cloud?" Hurd said. "It’s going to save you some money, and allow you to get access even faster."

One industry watcher who works with Oracle told CRN he doesn't think such a move would go over well with customers because some aren't ready to use the cloud.

"This would frustrate a lot of customers who already feel that Oracle already dictates to them what they should buy, as opposed to letting the customer choose," said the source, who didn't want to be named to avoid retaliation from the vendor.

Oracle also sells a version of its cloud that runs in a customer's data center, for ones that can't use public cloud infrastructure for regulatory compliance reasons.

"You'll buy it just like it's cloud, in other words, you won't buy the hardware. There will no upfront cost for the hardware. There's no upfront cost for the software," Hurd said on the call.

Oracle's cloud business accounts for only about 8 percent of its overall revenue, but it has become the primary focus during earnings calls. On Thursday's call, Chief Technology Officer Larry Ellison said Oracle -- with $2.9 billion total cloud revenue in fiscal 2016 -- may beat out Salesforce as the first SaaS vendor to reach $10 billion in annual sales.