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Oracle (ORCL) Cloud Infrastructure Leveraged by Tata Motors

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Oracle (ORCL - Free Report) recently announced that India-based Tata Motors is implementing Oracle Cloud Infrastructure (OCI) services to boost its operational efficiencies with deeper business insights, greater security, increased flexibility and cost optimization.

Oracle’s Cloud Infrastructure will aid Tata Motors to modernize its Dealer Management System, which serves 60,000 users, supports Tata Motors’ pre-sales, sales, and after-sales market touchpoints, across all the segments of passenger and commercial vehicles. This will help the company effectively monitor sales performance and improve collaboration across its dealer network.

Additionally, functioning on OCI will enable Tata Motors to scale business operations based on demand, while retaining the flexibility to preserve its infrastructure.

Oracle Strives to Boost Presence in the Cloud Space

The cloud computing market is driven by accelerated workload migration to cloud owing to the remote work and flexible work model innovation. Migration to cloud offers benefits like improved scalability, easy deployment of applications and faster disaster-recovery management.

Spurt in e-commerce and higher demand for cloud-native application like streaming services are also driving the market. The adoption of pioneering technologies like machine learning, artificial intelligence, Big Data is another catalyst.

This Zacks Rank #3 (Hold) company's software-as-a-service (SaaS), infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) products are likely to grow strongly over the next few years as enterprises rapidly transition to cloud environment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the second quarter of fiscal 2023, Cloud Infrastructure (IaaS) revenues were $1 billion, up 53% in USD and 59% in constant currency. Cloud Application (SaaS) revenues were $2.8 billion, up 40% in USD and 45% in constant currency.

Increased availability of Oracle cloud regions globally is consolidating its competitive position in the cloud computing market. Oracle offers more than 100 cloud infrastructure and platform services. The company currently has 41 cloud regions in the world.

However, higher spend on product enhancements, especially toward cloud platform, amid increasing competition in the cloud domain is likely to limit margin expansion in the near term.

Intense Competition in the Cloud Space Limits Growth Prospects

Despite its late entry, Oracle has been endeavoring to grab a larger share of the prospective cloud market, which is dominated by the likes of Amazon’s (AMZN - Free Report) Amazon Web Services, Alphabet’s (GOOGL - Free Report) Google Cloud, and Microsoft’s (MSFT - Free Report) Azure Cloud.

According to estimates from Synergy Research Group, Amazon’s market share in the worldwide cloud infrastructure market amounted to 34% in the third quarter of 2022, still exceeding the combined market share of its two largest competitors, Microsoft Azure and Google Cloud which stood at 21% and 11%, respectively.

In third-quarter 2022, global cloud infrastructure service spending climbed to $57 billion, bringing the industry total for the trailing twelve months to $217 billion. Amazon, Microsoft and Google accounted for two thirds of cloud infrastructure revenues in the three months ended Sep 30, with the eight largest providers controlling more than 80% of the market.

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