Oracle is expanding its cloud services to include full Infrastructure-as-a-Service offerings for public and private cloud applications, a move that will put the giant vendor in direct competition with Amazon.com, IBM and other cloud service providers, CEO Larry Ellison told 50,000 Oracle OpenWorld attendees Sunday evening.

And to support those cloud efforts Ellison debuted the Oracle Database 12c, the next release of the company's flagship database software that will support multitenancy, and the next generation of the company's Exadata Database Machine server.

"True cloud means we have to own the infrastructure, we have to manage the infrastructure, [and] we have to upgrade the infrastructure," Ellison said in a tight 50-minute keynote speech to open the Oracle OpenWorld 2012 show.

[Related: 10 Hot Products To See At Oracle OpenWorld 2012]

Last year Oracle began offering its Fusion applications that can be deployed on-premise or subscribed to by customers as Software-as-a-Service applications. Oracle also has acquired a number of SaaS application providers such as RightNow Technologies, Taleo and SelectMinds.

And this year Oracle began providing its platform software, including the Oracle database and Fusion middleware, as Platform-as-a-Service (PaaS) cloud services.

But Ellison said Oracle has discovered that isn't enough to meet all customer needs, including the ability to run custom applications. "It makes a lot of sense for Oracle to be in all three tiers of cloud services," he said, referring to SaaS, PaaS and IaaS. "Our customers, to fully embrace cloud computing, need to have all three layers of services. Oracle is committed to delivering services at all three levels of the cloud."

Oracle Cloud will now include complete cloud infrastructure services such as compute services, data storage services and virtualization. Those services will run on Oracle hardware including the Exadata Database Machine, Exalogic Elastic Cloud server, Exalytics In-Memory Machine and SPARC SuperCluster server, "all networked together with a modern Infiniband network," Ellison said.

Ellison acknowledged that some customers -- such as banks with strict data security requirements -- prefer to keep their cloud systems running within their own data centers. For those customers Oracle will offer a private cloud option that Ellison described as an extension of the public cloud services. While those private cloud systems will run within a customer's data center, Oracle will own, manage and upgrade the hardware and software.

Customers also can develop hybrid systems, using the public cloud services for developing and testing applications, for example, or for database backup and recovery tasks, while relying on the private cloud services for running production applications.

In addition to supporting Oracle's Fusion applications, Oracle Cloud will be able to run Oracle's older applications, such as PeopleSoft and the Oracle E-Business Suite, as well as customers' custom software.

Ellison did not detail just when the new cloud services would be available. President Mark Hurd and other Oracle executives are expected to address cloud computing in keynote speeches later in the show and could offer more details.

Earlier in the day Judson Althoff, Oracle senior vice president, worldwide alliances and channels, outlined several new cloud-focused channel programs to several thousand solution provider partners attending Oracle OpenWorld.

NEXT: The 12c Generation Of The Oracle Database

The next release of the Oracle database, expected to ship sometime next year, will be what Ellison described -- to applause -- as "the first multitenant database in the world," making it a critical component of the company's cloud strategy.

SaaS applications from Salesforce.com, NetSuite and other vendors are developed with a multitenant architecture, allowing many customers to tap into a single instance of the application and therefore cutting costs.

But Ellison said there are problems with that approach: Query and reporting software tools, for example, don't work well with multitenant applications, he said. And different kinds of SaaS applications, such as CRM and ERP, have to run on separate databases -- often running on dedicated servers -- which leads to increased computing costs.

"With Oracle [Database] 12c we have a fundamentally new architecture," Ellison said, arguing that building multi-tenancy into the database instead of applications will improve cloud system stability, scalability and security. "Multitenancy built at the right level."

Additional details about the new database could come Monday when Andrew Mendelsohn, senior vice president of database server technologies, is scheduled to give a keynote speech.

The Exadata X3 system is the third generation of the database server since Oracle introduced the first Exadata in 2008. The new server operates entirely on DRAM and Flash memory and, unlike earlier generations of the product, uses no disk drives.

"Everything is in memory," Ellison said. "Disk drives are becoming passé."

Each Exadata rack has 26 TB of capacity: 22 TB of flash memory and 4 TB of DRAM. With a data compression rate of 10-to-1, he said, each Exadata X3 rack is capable of storing some 220 TB of information.

"If you thought the old Exadatas were fast, you ain't seen nothing yet," Ellison said, noting that the new Exadata system can perform 1 million input/output data writes per second. "You would need thousands or tens of thousands of disk drives to deliver the I/O capacity of a single Exadata X3 rack."

The new Exadata system outperforms competing data storage systems, such as EMC's recently unveiled Symmetrix VMAX 40K, at lower costs, Ellison said. The Exadata's starting price is $200,000, he said, but added to laughter: "I bet if you talk to an Oracle salesman you can get a better price than that."

Ellison followed a keynote speech by Noriyuki Toyuki, a corporate vice president at Fujitsu, and Ellison noted that Oracle and Fujitsu are co-developing the next generation of SPARC microprocessors. Ellison said many functions now coded in software would be programmed into SPARC chips, greatly speeding up the performance of the Oracle database.

PUBLISHED OCT. 1, 2012