Sales of new software licenses rose a healthy 29% to $2.2 billion compared to the comparable-quarter last year.  (Here’s a transcript of the earnings call.)

But the real story on Oracle hardware, on the other hand, remains a mystery. Oracle claimed $1 billion in hardware sales for the quarter but there is no year-ago comparison since Oracle completed its Sun buyout in the midst of its third quarter last year.

Oracle co-presidents Safra Catz and  Mark Hurd (Larry Ellison was on jury duty. I kid you not.) declared several hardware victories, saying Oracle realized an eye-popping 55% margin on hardware sales and claiming Exadata and Exalogic sales were up 50%. Of course, “up from what” would be the relevant question here.

These are big-iron machines and they carry big-iron prices. Exadata starts at $300,000 for a quarter-rack machine, hardware only. A full-rack Exadata lists for $1 mill, also hardware only. Software and support easily add another $250,000. So this tends to be a long sales-cycle kinda deal.  

The mantra out of Redwood Shores since the get-go of Oracle’s Sun odyssey was that Oracle does not care about low-margin, commodity hardware. Good thing, since that business is evaporating at a pretty fast clip given recent IDC, Gartner numbers and anecdotal accounts. The question is whether there are enough customers with the cash and need to buy these high-end machines to make up for all those other lost customers.

Software, most especially database software, is notoriously sticky. It’s hard to swap it out. That means even customers irritated by Oracle’s high-handed sales-and-support tactics, particularly its audits–keep coming back for more. Hardware, on the other hand, is fungible. People can and will switch. HP and IBM are all too happy to welcome Sparc/Solaris shops aboard.

The Oracle sales force is being pushed–hard–to move these things. Sources said each sales person has to sell at least one box per quarter or suffer the consequences compensation-wise. And that means big dough.

Calling down a list of a half dozen Oracle/Sun partners last week, I found exactly one that has actually closed Exadata business but granted, it was quite a lot  of business. Kerry Osborne, CTO of Enkitec,an Oracle partner in Dallas, said his company has sold eight (count em 8!) Exadata boxes since the first of the year. Pretty impressive.

Osborne is not aware of any Exalogic sales and neither is anyone else. Another long-time Oracle VAR said Oracle’s claims notwithstanding, it’s not clear the company has even built, let alone shipped, any Exalogic machines. Oracle announced Exalogic, it’s “cloud in a box” at Oracle OpenWorld last fall.

For more, see Eye on Oracle: Is Oracle Exadata and Exalogic selling as well as Oracle says?

Let us know what you think about the story; email Barbara Darrow, Senior News Director at bdarrow@techtarget.com.

Oracle CEO Larry Ellison told financial analysts late last week that the company–which has bought something like 60 companies over the past few  years–is still in shopping mode. And that chip and vertical software companies top the wish list..

AMD carries a market cap of around $4.7 billion. For its most recently closed quarter, Oracle had more than $12 billion in cash. There’s no reason this deal couldn’t happen.

One might say that Oracle’s already bought a chip company in Sun Microsystems and its SPARC franchise. Of course, Sun no longer did any chip manufacturing per se. It retained the IP but fabrication of SPARCs Fabricating was left to Fujitsu.

In any case, a nagging  chip question has dogged Oracle since  it closed the Sun deal last January. For one thing, the only hardware it’s promoting –Exadata and Exalogic servers–is based on Intel microprocessors. 

And, at a meeting with a few Sun and Oracle partners in August, a hardware channel exec said Oracle has no interest in investing R&D dollars into Intel machines. The question from the VARs was obvious: “What about Exadata?”

Answer: ”We’re looking at other platforms.”

Other platforms? Why not say SPARC? There’s something odd going on here.

In the meantime, the critiques on Oracle’s data center appliance plays are not all glowing. While Ellison painted Exalogic as the latest-and-greatest in hardware-and-software technology knit together from inception. Others called it a return to the mainframe, which may be a good or bad thing depending on what you think of mainframes.

John McCarthy rejected that analogy.

“It’s worse than that! It’s a return to the VAX! It’s the hardware, the OS, the database all combined. They’re putting all their wood behind one arrow,” said McCarthy, who is VP and principal analyst for Forrester Research.

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1: What’s really going on with Sparc? While John Fowler promised continued innovation around the Sparc architecture, there is still precious little in the way of details. It’s probably because Oracle and Fujitsu, which is responsible for the production of Sparc64 chips used in Oracle’s M series servers, are still talking things out.

Some speculate that despite Larry Ellison’s “we’ll invest more in Sparc than Sun” shtick, Oracle will give its hardware business a year and if it doesn’t pick up, offload it whole hog to Fujitsu.  New Gartner numbers are not encouraging. They show that in terms of revenue, Sun (Oracle) server share is off nearly 11% for the second quarter compared to the year-ago quarter. In terms of units, the Sun server business fell a whopping 26%. Oracle formally took possession of Sun in January, so these are early returns. But, in that same period, HP, IBM, Dell, Fujitsu and even “other” all posted impressive share gains in units sold

 A Sun channel exec told VARs recently said Oracle has little interest in investing R&D in future Intel-based machines. What does that mean for next-gen Exadatas?   “We’re looking at alternative platforms.”  Interesting coming from a Sun guy. You know Sun, the company that invented Sparc.

2: Will Oracle support Solaris on outside hardware or not? Oracle initially said it would not support Solaris on non-Oracle (non-Sun) hardware then announced that it would do so for Dell and Hewlett-Packard hardware. So, where do users running Solaris on IBM hardware stand? No one’s saying. Not Oracle, not IBM. Here’s guessing there’s more negotiating going on.

3: Will Oracle’s software audits alienate customers and partners enough to cause defections? Oracle’s aggressive software licensing audits continue with the company assessing use of its software by SaaS partners. Word is its software police have gone into several mid-tier SaaS providers–not the Salesforce.coms or NetSuites of the world — but mid-tier players. They are not amused. 

4: Will Oracle buy…. Insert name here: 3Par? HP?  Informatica? Inquiring minds want to know. The Wall Street Journal this morning reported that Oracle was in the hunt for 3Par before dropping out and leaving the field to Dell and HP which are now sparring over the storage prize.

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And there’s no shortage of Sun VARs who claim–off the record– that their customers are irked–make that irate–over the policy changes. Not at all hard to believe.

What I haven’t seen thus far is hard evidence that the Oracle changes have finally pushed Sun shops over the edge. Face it, most Sun hardware shops started to evaluate alternative hardware suppliers well before Oracle opened up its checkbook and the feds finally signed off on the buyout. The independent Sun Microsystems was a basket case for years before M&A rumors started to swirl around it, kicked off in earnest by IBM’s unsolicited bid for Sun last year.

Oracle is banking that those shops–and perhaps more–will go for its iPod-like integrated appliance to the data center and there it’s got some problems. These Exadata machines are very pricey and when you factor in support costs, they’re going to be beyond the pale for many, many shops. Add to that the fact that interested parties cannot get a demo unit without a signed purchase order. Note to Oracle: If a PO is involved, it ain’t  a demo unit.

So what are you seeing in Sun hardware accounts. Are customers really defecting en masse, or are they slowly “peeling” off new server purchases and spending with HP or IBM instead of Oracle-Sun?

For an educated look at Oracle’s Sun support plans and what they mean, check out Eric Guyer’s Oracle Optimization  blog here.

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Of course, Sun’s probably spending a lot less on those things than it did in its glory days, but that’s still a pretty strong statement of support. So there, IBM and HP!

The ad carries a quote from Oracle CEO Larry Ellison telling IBM he’s looking forward to competing with it in hardware.

A few open source wags note that there is no mention of MySQL, the Sun-owned open-source database that is at the center of European regulators’ concern over the acquisition. The European Commission has another four months to delve into the merger.

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