Oracle Server Business Shows Signs of Growth

by Sean Michael Kerner

Larry Ellison claims he's regularly beating IBM for big server deals as Oracle Engineered Systems take off.

Oracle is turning the corner with its hardware business as revenues begin to rise. Oracle reported its third quarter fiscal 2014 earnings on March 18, with revenue coming in at $9.3 billion, for a four percent year-over-year gain.

Hardware systems products revenues were reported at $725 million, for an eight percent year-over-year increase. Oracle Exalogic Engineered SystemsThe big winner within the hardware category is Oracle's Engineered Systems category, with revenue growth of over 30 percent.

"Our engineered systems business is growing rapidly for the same fundamental reasons that our cloud applications business is growing rapidly," Larry Ellison, CEO of Oracle, said during his company's earnings call. "In both cases, customers want us to integrate the hardware and software, and make it work together so they don’t have to."

Ellison noted that Oracle's server growth stands in contrast to broader server industry trends where high-end server revenues are in decline. Ellison added that in the next few months, Oracle will deliver it's 10,000th engineered system.

The shift in fortunes for Oracle's server business has not come without some pain. Oracle acquired server technology as part of the acquisition of Sun and had been struggling to deal with x86 servers.

"The x86 commodity business which used to be a big business when we bought Sun has now shrunk to almost nothing," Ellison said. "So our hardware business has gone through the transition where we got neither the commodity storage business nor the commodity server business, and we have replaced it with computing systems with a lot of our own intellectual property."


The primary competitive target in Ellison's sights is IBM and its venerable pSeries servers.

"We replaced a system at the the world's largest cloud company -- you guys can figure out who that is -- and we delivered an Exadata System to them," Ellison said. "They moved their application and got it live in three weeks and experienced 10 times better performance at a fraction of the cost. This is not uncommon."

While Ellison sees IBM as a key competitor, Oracle President Mark Hurd points out that there are other vendors Oracle also has in its crosshairs.

"We actually do a lot of other things than just compete with an IBM," Hurd said. "We compete with EMC, for one -- frankly, we get into those environments because we radically change our customer storage requirements."

Hurd said that, as an example, if a customer has a petabyte of storage, Oracle knows how to compress that data with Exadata to where they may need to use only 100 terabytes of storage.

"So this opportunity for us is to now change the game in a way people think about how they use their infrastructure," Hurd said.

Sean Michael Kerner is a senior editor at ServerWatch and InternetNews.com. Follow him on Twitter @TechJournalist.

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This article was originally published on Wednesday Mar 19th 2014
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