Oracle systems group slammed again in Q3

Oracle has gotten its software business back on track and is fixing to get its systems house in order soon as well, the top brass at the software giant and hardware maker have declared. In the financial quarter ended on leap day, Oracle's sales rose by 3 per cent to $9.04bn, driven by higher than expected sales of new software …

[Anonymous Coward]

x86

They are still saying the hardware problems are due to x86. Oracle has been making that excuse for the last two years. At this point, according to Oracle, they have lost all of Sun's x86 revenue several times over. It isn't x86, Sun barely scratched the surface of the x86 market in the first place, it is Sparc that is falling off a cliff.... With Oracle's revenues and profitable segments, they probably could care less though. They will keep pushing Sparc systems for another year or two to give their sales team opportunities to "upgrade" them to Exa-xxx and then pull the plug on Sparc and port them over to x86.

[Phil 4]

Wonderbra-whats up with your rant on SPARC?

Its clear you are an IBM gnome. Why would you say that Oracle will pull the plug on SPARC anytime soon?

Since Oracle published the *public* SPARC roadmap, now 2 years ago, they have delivered on every milestone and even Larry, yesterday, stated that the future of Oracle is with SPARC. Future SPARC CPUs will integrate Oracle SW components, which is where Larry believes he can innovate and differentiate.

With over a 1,000 engineers, http://www.oracle.com/us/corporate/innovation/innovator-hetherington-191304.html, Oracle has even pulled in several developments like the SPARC T5, now expected end of this year and the performance gains on SPARC T4 60% greater than what they promised, beating Power7 and Westmere-EX on many relevant benchmarks.

Its clear that Oracle is having difficulty increasing server revenue, especially when a new SPARC T4 system is a fraction of the cost of the older M-Series systems, competing against Xeon on price, while they are less than half to a third the cost of an equivalent IBM Power system but I think with the SPARC T4 systems ramping in volume, http://www.marketwatch.com/story/oracles-sparc-t4-servers-in-high-demand-in-the-communications-industry-2012-01-31, and SPARC SuperCluster showing massive ramp up as well (Oracle announced a 139% revenue increase in engineered systems yesterday), the revenues will be returning very soon. As Mark Hurd and Larry Ellison said on yesterdays great Q3FY12 performance, Q4 and FY13 will be the year of Oracles Systems.

[Anonymous Coward]

Re: x86?

Seriously, what makes you think that once Oracle has announced a strategy publicly, committed to something that they would pull the plug on the strategy? What product have they actually done that except for where they've supplanted it with a superior product (i.e. Weblogic over Oracle Application Server) or merged functionality (i.e. Hotspot Java merged with JRockit)? They've even stuck with their woeful Beehive collaboration software as their strategic direction in that space. So all this FUD that they're going to drop SPARC is silly. In fact, if you were a company and starting to see the beginnings of market momentum in your R&D investments i.e. comments from Larry, Safra and Hurd on T4 picking up steam, why would you then pull the plug on it, especially when a larger value-added differentiating product i.e. SPARC SuperCluster T4-4, is based on that? Would you not want to ramp volume up to get even more economies of scale, reduce costs per processor and gain even more margin on each sale?

With respect to Intel, my personal perspective is Intel makes a damn good chip in the volume space. In the mid-range space, they're getting better and better. It's evident they're slowly incorporating more Itanium capabilities into Xeon and trying to eat market share from IBM POWER, SPARC, and their own Itanium, which makes good sense (reduce product lines, gain volume, increase R&D spend on one strong product line). I don't know if they can ever kill Itanium given that HP's Integrity NonStop product lines use them and occupy a very profitable market niche. But if SPARC picks up and gains momentum (which it can given its install base) and POWER continues to be strong (can't see IBM doing otherwise), AMD continues to be the cheaper server space alternative, and ARM and Apple A5 are eating into the low end or client side compute, don't you think Intel will start to feel at least a little bit of market pressure?

I'm just saying that don't bet completely on one architecture winning out, which by the way wouldn't be a good thing for the industry or the fields of computer science/computer engineering. Competition is good for the market place and variety is good for job creation.

[Anonymous Coward]

How do the hardware numbers compare with Sun at its peak?

It would be interesting to know how Oracle's hardware numbers compare to Sun's peak revenue. Trolling the web, I came across a few interesting items that you see below. It is interesting that these numbers represent all of Sun's products, not just servers, storage and Solaris (which if you remember Solaris 8 had significant license and support revenue due to its licensing methodology that has since changed with S10 and S11):

"Year 2000:

$15.72 billion yearly revenue

$5 billion mark for the first time - quarterly revenue

$1.85 billion net income

"In software the company made key developments in its iPlanet product line and Java technologies. It expanded solutions for managing open storage networks. Sun's Solaris 8 platform won several awards as the best mission-critical server operating system. New hardware introductions included the Sun Blade 1000 line of workstations, Netra servers, the Sun StorEdge T3 arrays, Sun Cobalt appliances, and the Sun Fire midrange servers. A new high-end Sun Fire enterprise server was scheduled for delivery in the first half of fiscal 2002, as were additional UltraSPARC III technology-based products. With its focus on supporting the Internet and intranets, Sun remained a premier supplier of e-commerce enabling hardware and software solutions."

Year 2001:

$18.25 billion revenue in 2001

Revenues for the fourth quarter of fiscal 2001 were $4.00 billion

Pro forma net income for the fourth quarter of fiscal 2001 was $134 million, compared with $717 million for the same period in 2000. On a GAAP basis, Sun reported net income for fiscal year 2001 of $927 million compared with $1.85 billion in fiscal year 2000. "

[Matthew Morris]

Exa Numbers

I tried listening to the call while driving yesterday.

At Fiscal Year-End last year, Oracle was going to push the bar form 1,000 DATABASE Machines installed to 3,000 by the end of this fiscal year. Then there was a note at the end of 2nd quarter, that stated revised numbers for a combined Exadata (Database Machine) and Exalogic appliance installs. Revised to a slightly lower number.

During the call how many Appliances Database Machines and how many combined systems (database machine, exalogic and exalytics) have been installed at the end of Q3? did anyone hear?

Still not sure how Fowler is STILL employed... of course not sure how Martin Fink is still employed for that matter. Then there is that Hurd guy. Helped the HP stock number by killing R&D and cutting costs rather machete like. How is he going to turn a low-margin business like x86 gear into a raging money maker for Oracle. Forget SPARC (both platforms) Hurd couldn't deliver margin on in house developed products either....

[kevinclosson.wordpress.com]

"Ramp-up" or selling

"Exalytics in-memory database appliance was the fastest-selling product "

Actually Mr. Hurd said "the fastest ramp of [sic] any engineered system that we've released." Not to be a nit, but there is a huge difference between "fastest-selling" and an accelerated ramp up. From 1 to 2 in 2 days is 100% in 24 hours. That's an awfully fast ramp-up too.

We all have short memories.

In the Q2 call there were are ***specific*** unit counts specified by Mr. Ellison. He said 200 units in Q2, 300 in Q3 and 400 in Q4. Offering some nebulous percentage gain from an unspecified baseline is not the same as asking, "Um, Msrs. Ellison and Hurd, did you take book revenue and ship on 300 Exa[data|logic] units--to customers--in Q3?"

Remember Oct 2011: http://youtu.be/jAmgVbuFZwY

[Phil 4]

Re: "Ramp-up" or selling

A few corrections here.

If you look at all the earnings call transcripts, you'll see the following statement that if you read it, would realize that further #'s are never guaranteed and clearly things can change.

http://seekingalpha.com/article/315180-oracle-s-ceo-discusses-q2-2012-results-earnings-call-transcript

"As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business, which may potentially affect these forward-looking statements. While these forward-looking statements represent our current judgment, these statements are also subject to risks and uncertainties that may cause actual results to differ materially from statements made today. As a result, we caution you against placing undue reliance on these forward-looking statements"

After all, if we believed IDC, Itanium would be a $100BN+ business by now, considering IDC forecasted $30BN+ in Itanium sales by 2002 with a massive ramp!

http://en.wikipedia.org/wiki/File:Itanium_Sales_Forecasts_edit.png

http://www.theregister.co.uk/2006/02/17/itanic_oracle_idc/page2.html

http://www.theregister.co.uk/2004/08/30/opteron_itanium_sales_q2/

And you'll find quite a few mis-leading statements from the Intel leader at the time who's now leading EMC.. Interesting.

http://www.theregister.co.uk/2006/06/08/intel_gelsinger_stanford/

I guess its all marketing after all. And many will say "Figures don't lie, but liars figure"

So in the end, the proof is in the pudding http://blogs.barrons.com/techtraderdaily/2012/03/20/oracle-fyq3-beats-2/?mod=BOL_qtoverview_barlatest

[kevinclosson.wordpress.com]

Re: "Ramp-up" or selling

Of course I've read it. It's cookie cutter.

The problem I have is the the fact that **specific** numbers of units were cited in the Q2 call. The projection was 300 for Q3. Those words came out of Mr. Ellison's mouth on Dec 20 just short of 1/3rd into the quarter (Q3). Let's forget all that hubris and bravado back at OOW 2011 (Oct 2011) where Mr. Ellison said 3,000 this year. We all know that isn't happening.

Don't get me wrong. This isn't an ENRON feeling, but since the stock has dropped about 8% in the last 48 hours and there is all this rosy speak of Engineered systems to hype the stock, doesn't it seem reasonable to harken back to those ***specific*** numbers cited? Just the 300. I expected to hear about the 300 for Q3. Instead we get some bizarre rant about the good folks at Workday which, of course, doesn't need any prophylactic disclaimer because nobody in their right mind cares about those sorts of rants anyway.

So, in short, this get out of jail free based on the standard forward-looking disclaimer is a ruse.

[WW0]

Re: "Ramp-up" or selling

kevinklossen.wordpress.com seems a very interesting blog. It starts out an interesting read with some pragmatic views on Oracle products and then from 2011 onwards it then descends in to what can only be described as a very unhealthy obsession attacking Oracle.

What happened? Did Larry steal your candy?

[Billl]

Re: "Ramp-up" or selling

EMC (Kevins employer) purchased Greenplum at the end of 2010. From that point on Kevins blog entries have been a bit less... um, pragmatic. Listening to Kevin Klossen about anything Oracle is like listening to Microsoft say anything about Apple.

Kevin has turned into a troll, unfortunately.

[Anonymous Coward]

year 1999 "(source: http://www.sparc.org/news/00dec13.1.html)

Sun overall: 48% market share of worldwide UNIX server shipments. The second quarter in a row, Sun shipped more servers than HP, IBM and Compaq COMBINED.

Entry Level Sun units shipped: 88,108

Entry Level Sun revenue: $1,178 Million

Midrange Sun units shipped: 8,110

Midrange Sun revenue: $902 Million

High-end Sun units shipped: 723

High-end Sun revenue: $750 M

HP+Compaq:

Entry Level HP+Compaq units shipped:

Entry Level HP+Compaq revenue:

Market share:

Midrange HP+Compaq units shipped: 6,858

Midrange HP+Compaq revenue: 1233

High-end HP+Compaq units shipped: 158

High-end HP+Compaq revenue: $147 M

IBM:

Entry Level IBM units shipped:

Entry Level IBM revenue:

Midrange IBM units shipped: 1,927

Midrange IBM revenue: $739 Million

High-end IBM units shipped: 80

High-end IBM revenue: $190 M

=====================

Q4 2011:

http://www.idc.com/getdoc.jsp?containerId=prUS23347812

Q4 2011 and 2011 Annual:

http://www.gartner.com/it/page.jsp?id=1935717