Oracle Accelerates to the Cloud
Oracle reported its second quarter fiscal 2015 earnings on December 17, showing continued improvement in its hardware business.
For the quarter, total revenues were reported at $9.6 billion, for a three percent year-over-year gain. Net income was reported at $2.5 billion, for a two percent year-over-year decline.
The standout area for Oracle during the quarter was its Software and Cloud business unit, which had revenue of $7.3 billion, for a five percent year-over-year gain. Digging specifically into its cloud business, Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS) revenue was up, reported at $516 million, for a 45 percent year-over-year gain.
Oracle's hardware business, which includes its servers and engineered systems, had revenue of $1.3 billion, for a one percent year-over-year improvement. Looking a bit closer into the hardware numbers, Oracle CEO Safra Katz said on Oracle's earnings call that the hardware support business grew by four percent, with hardware system product revenue of $717 million and hardware support revenue of $690 million.
Oracle CEO Mark Hurd was particularly enthusiastic about Oracle's Engineered server systems, including the Exalogic, SPARC SuperCluster and Big Data Appliance, which all grew by more than 50 percent.
"I just want to make sure for those of you who don't listen to additional hardware companies' calls, it is clear we are taking substantive market share in hardware," Hurd said. "This whole strategy of aligning hardware and software together is what customers want."
Cloud a Key Driver of Growth for Oracle
Going a step further, there are a lot of Oracle customers that want the cloud, too. While some of Oracle's cloud customers are long-time Oracle customers, Oracle CTO Larry Ellison noted that a lot of them are new.
"A lot of our SaaS business are brand new logos and people who've never done business with Oracle before," Ellison said. "You would expect that in PaaS it's virtually all our install base, with the reason being that almost every moderate-size company in the world is already an Oracle user."
Ellison said that during Oracle's next fiscal year his expectation is to sell well over $1 billion of new SaaS and PaaS annual subscriptions. While Oracle has both IaaS and PaaS, the big push now is PaaS.
"We are in Infrastructure as a Service (IaaS), which is a low-cost commodity business where we have the same pricing as Amazon and Google and the rest," Ellison said.
Ellison added that Oracle is in the IaaS business because when customers come they will buy IaaS and then look at other services as well. He said that customers will buy SaaS applications, as well as PaaS and IaaS to help tie things together.
"The suite vendors always beat the point solution guys," Ellison said. "It has happened in every generation of computing where the end user, the customer, doesn't want to be the integrator of 30 separate applications from 30 separate vendors, and it's no different now, It's just on the Cloud now."
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