How are Oracle's hardware and software businesses performing? Oracle (ORCL) Q1 2012 financial results, released today, provide answers. Software sales were up 17 percent -- impressive, given the weak economy --  but hardware sales dipped 1 percent.

The VAR Guy

September 20, 2011

2 Min Read
Oracle Server Strategy: Less x86, More Exalogic & Exadata

Larry Ellison

How are Oracle‘s hardware and software businesses performing? Oracle (ORCL) Q1 2012 financial results, released today, provide answers. Software sales were up 17 percent — impressive, given the weak economy —  but hardware sales dipped 1 percent. One potential reason: Oracle de-emphasized commodity x86 servers to more aggressively promote high-end Exadata, Exalogic and SPARC M-Series servers. In fact, Oracle CEO Larry Ellison said he doesn’t care if Sun’s x86 server business goes to zero, according to Baron’s. Dramatic words. Here’s the update.

Oracle President Mark Hurd essentially echoed Ellison’s statement, though Hurd used kinder words. In a prepared statement Hurd said:

“Our high-end server business — Exadata, Exalogic, and SPARC M-Series — delivered solid double digit revenue growth in Q1. In contrast, revenue declined in our low-end server business. By moving away from low-margin commodity hardware and focusing on high-end servers, we increased our hardware gross margins from 48% to 54%. Our strategy to grow the profitable parts of our hardware business is paying off.”

Also of note, Oracle President and CFO Safra Catz said Oracle’s operating margins rose in Q1 — a rather impressive feat considering the state of the hardware market. Oracle’s Sun business certainly sells x86 servers. But generally speaking, Oracle Channel Chief Judson Althoff frequently shifts the server conversation back to Exadata and Exalogic. As Althoff stated back in January 2011:

The idea, going forward, is to certify an ISV base on the Exadata and Exalogic stack and also work more closely with embedded OEMs. “We’re going to give ISVs the power of choice, running optimized on premise or in the cloud. We believe Exadata and Exalogic are the cloud platforms of the future, whether it’s on premise or off premise.”

Hurd and Althoff are expected to offer more partner and customer updates on Sept. 21, during a web event to promote some sort of new database initiative. And it’s a safe bet Oracle OpenWorld (Oct. 2-6, 2011) will include Exadata and Exalogic ISV updates.

Clearly, Oracle has stopped the bleeding within Sun’s business. But can Oracle CEO Larry Ellison transform Sun’s overall server business into a growth business? And just how well are those Exadata and Exalogic servers selling? The VAR Guy will seek more answers at OpenWorld.

Read more about:

AgentsMSPsVARs/SIs
Free Newsletters for the Channel
Register for Your Free Newsletter Now

You May Also Like