Weak Oracle Q2 Doesn’t Mean IT Slowdown But Cloud Growth
Okay, so a lot of people are very worried about Oracle’s disappointing FY2012 second-quarter financial results, figuring they mean the IT sector has slowed down and that the channel is in for some dark times. But in this case, the silver lining is the cloud.
- Oracle’s new software sales rose only 2 percent from a year earlier to $2 billion during the quarter. Analysts, on average, were expecting new software sales of $2.2 billion, according to StreetAccount.
- Oracle hardware sales fell 14 percent to $953 million, below the average Street account forecast of $1.06 billion.
I can actually almost hear Salesforce.com CEO Marc Benioff snickering when I say: Of course software and hardware sales dipped. IT departments and service providers alike aren’t buying new software or new hardware. They’re moving to the cloud.
Let’s face it. Up until Larry Ellison went on stage to announce Oracle Public Cloud, the company’s cloud strategy was a giant question mark hovering over the IT sector (despite some chatter around positioning Exalogic and Exadata for hosting providers). Oracle Public Cloud may be real, but it has yet to impress anyone. And while Oracle hesitated, competitors including Salesforce, Zoho and even Microsoft took big chunks out of Oracle Public Cloud’s prospective customer base.
In short, Oracle Public Cloud may or may not be the finest and best thought-out cloud solution, but it’s at a severe disadvantage. Customers are spending less on Oracle’s infrastructure solutions because they’re going out into the cloud market for the same functionality, and until very recently, Oracle didn’t have a serious stake in the game.
I’m not saying all is lost for Oracle. Oracle Public Cloud is definitely a product to watch in 2012, and strong momentum there could end up reinforcing the second half of Oracle’s fiscal year. Keep watching TalkinCloud for more insight going forward.