Oracle Discusses New Products, Financials

Oracle Corp. announced that its applications now run on Amazon.com, Inc.'s Elastic Compute Cloud (EC2). Additionally, the company discussed it Sparc T processor roadmap. Finally, Oracle announced better-than-expected financial results for its fiscal second quarter of 2011.

Focal Points:

• According to Oracle, JD Edwards Enterprise One, Oracle E-Business Suite 12.1.3, and PeopleSoft CRM are now available as Amazon Machine Image (AMI) workloads to run on Amazon's EC2. Oracle did not announce whether Siebel applications will also be available as AMIs; although, Oracle said that more applications will be ready in EC2 at a future date. The Amazon AMIs were prepared using OracleVM, and can be pre-configured as a virtual appliance, according to company officials. Oracle will make its customers a customized AMI version of each application, which can then be sent to EC2, if the customer chooses to run the application in the cloud instead of on-premise, the vendor added. The Oracle applications that are available require the larger instance sizes offered on EC2, which start at $.50 per hour for Extra Large, $1 for Double Extra Large, and $2 for Quadruple Extra Large. Additionally, the Oracle applications will be available as reserved pricing. This requires an upfront payment for time to be used, although the hourly charge is lower than the on-demand pricing, said Oracle.
• Oracle said that the next-generation Sparc T4 processor was "less than 12 months away." Moreover, according to the vendor, the Sparc T4 has a new core that was developed in 2006 and 2007 and would be delivered in 2011. This core combines enhanced throughput performance through threading as well as high-speed single thread performance, Oracle added. In future Sparc T processors, Oracle will align its application, database, and middleware stack to the Sparc chips and vice versa. As such, when performance is critical for an application, one thread on the multi-threaded core in a Sparc T machine will monopolize the thread and not share resources with other threads, said Oracle. As a result, lower priority applications will use threads on the core when they become available, Oracle added.
• For the second quarter 2011, Oracle announced total revenues of $8.58 billion, an increase of 47 percent over the same period 2010. Despite having $189 million in restructuring charges and another $47 million in costs related to the Sun acquisition, Oracle reported a net profit of $1.87 billion, up 28 percent compared to last year. Per the earnings release, Sun hardware sales accounted for $1.11 billion in revenue while sales from hardware support were $641 million, bringing total sales from hardware systems to $1.75 billion, said Oracle. Meanwhile, Oracle reported $2 billion for the second quarter in new software license sales, up 21 percent compared to the year-ago quarter. Sales from software license updates and product support contracts were $3.65 billion, up 12 percent, and overall software revenue rose 15 percent to $5.64 billion, Oracle added. Services revenue also increased to $1.75 billion, up 24 percent. By geography, Oracle said that revenues in the Americas were $4.45 billion, rising 49.4 percent, while sales in Europe, Middle East, and Africa (EMEA) were $2.74 billion, up 38.6 percent. Sales in Asia/Pacific (APAC) were $1.39 billion, up 54.2 percent over the same period 2010, announced Oracle.

Experton Group believes Oracle continues to surprise skeptics and deliver on its growth roadmap and strategy. The deal with Amazon.com to make specific applications available on EC2 gives Oracle a SaaS edge over SAP AG that it should be able to quickly leverage. While these offerings are "cloud" applications, Oracle has enabled them through use of virtualization and has not yet made the applications cloud ready with features such as multi-tenancy and rapid provisioning. The new Sparc T4 announcement conflicts with previous roadmap pronouncements. It appears Oracle has dropped one of the T series releases, slipped on performance commitments, and moved the date for the next round out to 2013. The good news is that Oracle is still committed to a Sparc roadmap; the bad news is that the chip performance will have trouble keeping pace with IBM Corp. and Intel Corp. microprocessors. Overall Oracle sales were quite strong while the Sun revenues held up. The company even maintained an operating margin of 44 percent. The next major challenge will be to actually grow Sun revenues and expand its customer base. This may require a change in corporate culture, which has a low probability of occurring. IT executives should expect Oracle to maintain its current customer relationship management methods and use its traditional methods to drive new hardware-software solution stacks. IT executives looking at expanding Oracle usage within the enterprise should be prepared to deal with aggressive marketing and should not forget the "caveat emptor" warning.