Both Oracle co-presidents were upbeat on yesterday’s third quarter earnings call–flaunting 37% revenue growth to $8.8 billion compared to the year-ago figures.
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?
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