Oracle uses Sun as springboard in Q4
More hardware appliances on way
Looking ahead to more systems sales
Oracle gave itself some pretty wide error bars when it dished out guidance for the first quarter of fiscal 2011 ended in August, but was pretty precise, if conservative, about what it expected from its hardware systems business.
Catz said on the call that new software license sales would grow by between 4 and 14 per cent at constant currency and given prevailing exchange rates, that would work out to growth of between 2 and 12 per cent as reported. Non-GAAP revenue growth would be between 41 and 45 per cent as reported, including Sun obviously, and earnings per share would be 17 to 18 cents. Not much in the way of a hard number.
But Catz said that the Sun business would generate $1bn in revenues worldwide at constant currency, putting a stake in the ground, and one that she said was conservative. She reiterated the long-held target from Oracle that it can extract $1.5bn in operating profit from Sun in its first year of possession in fiscal 2011 and another $2bn in fiscal 2012.
Ellison agreed that the $1bn hardware number for the first quarter was conservative. "We are focused on growing the Sun business and growing that business very rapidly," Ellison said. "We are adding a lot of sales people, but it takes a lot of time to get them up to speed." He said that Oracle would more than double the Sun sales force to help it peddle its more streamlined and profitable server, storage, and switching products.
One of the products that Ellison has been hot to trot on since last September is the Exadata V2 database appliance cluster, which is based on Sun hardware and Oracle software. Ellison said that in the fourth quarter, Oracle's Exadata V2 beat out IBM in thirty deals, Teradata in nine deals, and Netezza in seven deals. He added that the Exadata V2 revenue pipeline for fiscal 2011 is approaching $1bn.
Charles Phillips, the other co-president at Oracle, said that the company added 400 customers to its Red Hat Enterprise Linux knockoff, Oracle Enterprise Linux, during the quarter and that the customer base for this product now numbers 5,000 companies.
Phillips said that Oracle was working on what he called an "Oracle VM Machine," which would be a bundle of Sun server and storage hardware and presumably Oracle VM Xen-style virtualization. "We can package these technologies together in a way our competitors can't."
Well, at least in the x64 server racket. Makers of mainframes, proprietary midrange boxes, and RISC/Unix platforms have had such control for a decade or two, depending on the system. Which Phillips knows full well, or should. ®
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