Oracle is a towering software giant in the world
Entry into cloud computing
Oracle has entered into Cloud computing for the first time. Oracle’s CEO Larry Ellison is confident of this move because of the security and performance of Oracle. Oracle’s machines were designed from the beginning by a company that controlled both the main hardware and the software. If you have your machine designed in concert with both hardware and software, it offers an advantage to you. The advantage is in the form of better ease of use, better performance and lower cost. For making its softwares effective in Cloud environment, Oracle rewrote more than hundred business softwares like its sales management software. Oracle’s sales management software has a competitor Salesforce.com. But this software was constructed by many suppliers and is less effective than Oracle’s. Security wise also, it does not compete with Oracle. Oracle announced its entry into Cloud and launched its social network in San Francisco during its annual event, Oracle Open World.
Launching of social network for enterprises
Oracle Social Network is an internal social network for enterprises with a Facebook like friendly user interface. Oracle’s Cloud has the Infrastructure as a Service (IaaS) and Application as a Service (AaaS). Users are offered the flexibility of Amazon EC2-like elastic computing. What this means to the user is that they can move freely from various clouds to Oracle’s cloud any number of times they feel like. They can expand or shrink their usage as they feel. Users have to pay a monthly subscription fee and can access any Oracle software in the Oracle cloud like for example Oracle Sales Management, Human Capital Management, CRM, Oracle network etc.
Hardware capability
One of the problems a company venturing into cloud computing faces is the hardware capability. They need to store millions of data of the users securely and qualitatively so that users can retrieve or manipulate their data in any way they want. As Oracle has expertise in both software and hardware, this is not a big problem to it. In fact, cloud computing is a natural offshoot for Oracle’s capabilities, which have been proved time and again. But one thing is mysterious. Why is it that Larry Ellison chose to attack salesforce.com so often during his speech in the Oracle Open World event? Ellison compared his product with that of salesforce.com and even called the latter as a fake cloud. A company executive should talk only about the superiority of his products and explain their salient features before the assembled people. No mention need be made about the competitors. If your products are superior, they will prove so in the market place. Market is the best place to test the superiority of one’s product. Therefore, Larry Ellison should have avoided criticising salesforce.com in his speech and that too so often. Of course, Ellison’s anger is understandable because a few hours before he spoke, salesforce.com’s executive Benioff had called Oracle as false.
Parallel computing is powerful
Oracle recently launched its T4 Sparc processor of Sun Microsystems, which Oracle acquired in 2010. Oracle is keen to establish itself in parallel computing for enterprises. Parallel computing means breaking up a huge task into several smaller tasks and doing all of them simultaneously. Oracle’s Exxdata and Exalogic software launches were successful. Now Oracle has launched Exaalytics during Oracle Open World conference. These engineered systems simplify the IT infrastructure of an organisation by combining both hardware and software. They reduce cost and improve speed and productivity. Exaadata enhances database of the company. Exalogic enhances application processing. Exalytics will find usage in business intelligence to handle and analyse data. Larry Ellison stated that this new engineered system will deliver data analysis at the speed of thought. Exalytics will feature parallel hardware and software architecture and dense data compression. It has a memory of 1 TB (terabyte). The average response time improvement over other existing business intelligence is nearly 18 times. It will be an open solution for use in heterogeneous IT environments. Testing of this software has been done by the government, telecom industry and data service providers.
Powerful data interpretation software
The software will help companies take better business decisions. With an array of data at their disposal, it will be useless if there is no proper data analysing or data interpreting tool in their possession. Exalytics has solved this problem. In the past decade, there has been an explosion of data. Add to this, machine generated data and social network data. Companies are finding it difficult to cope with this huge data flow. It is not possible to manually handle the situation even if you employ hundred people. Moreover, human errors can nullify any effort in data interpretation. Therefore companies were facing the challenge of acquiring, organising and finally interpreting a huge volume of data. Now Exalytics has come in handy for them.
Planning more acquisitions as it is a cash rich company
Oracle is planning to purchase industry-specific software makers as it is facing mounting competition from the smaller rivals. Oracle is focusing on verticals like financial services, banking, telecommunications and retailing industries. Oracle is a cash rich company and has $31.7 billion in its cash kitty. Therefore acquisitions will not be a problem for the company. Oracle is world’s largest maker of database software. The company’s software and hardware can boost efficiency, letting customers reduce the number of servers and databases they run. The small companies that pose a competition to Oracle focus on specialised software applications and make inroads into the Oracle’s business. Oracle has spent more than $40 billion for acquisitions since 2005. Last year, Oracle acquired Sun Microsystems for $7.4 billion. The acquisitions have helped Oracle to gain programmes in the domain of operations, human resources and other complicated computing tasks in various fields.
Sale of OFSS falls through
Oracle was trying to sell Oracle Financial Services Software’s services unit to the private equity firm Catlyle and former top executives of the company. But now the deal has fallen through. The bid received was below the expectations of Oracle. Now Oracle is reconsidering whether the sale is worth or it can retain it. But bankers are trying to romp in some IT services companies that may be interested in expanding their Indian operations to make a fresh bid for the unit. Oracle Financial Services Software was earlier called as i-flex Solutions. The bid amount received was $200-$300 million, but Oracle’s valuation was close to $1 billion. The basis of valuation by Oracle was that the services division was contributing nearly 35% of Oracle’s India revenue. OFSS had a market capitalisation of around $4 billion. Its shares were last traded at Rs.2156 in the Indian stock markets. But Carlyle feels that since the services unit does not possess any intellectual property, it does not merit this much valuation. Oracle is experienced with over 50 acquisitions that include companies like Peoplesoft and Siebel. But when it comes to selling, Oracle seems to lack negotiating skill. Others who showed interest in acquiring OFSS were CapGemini, HCL Technologies and L&T Infotech. The banker involved in the deal was Credit Suisse.
Oracle files lawsuit against Google
Services are not a key focus for Oracle. Its strong points are technology and products. Services business came to it automatically when it inherited i-flex Solution in 2005. There is a patent litigation going on between Oracle and Google. Oracle Corporation wants to question Google CEO Larry Page in the course of litigation between the two towering corporate giants involving high stakes. Oracle had sued Google last year, claiming that the Android technology infringes upon Oracle’s Java patents. Oracle bought Java programming language through its acquisition of Sun Microsystems in 2010 January.
Good results but hardware performance not satisfactory
Oracle reported an increase of 36% in its net income to $3.2 billion in the quarter ended 31.05.11 as against an income of $2.38 billion in the corresponding period of the previous year. The growth was driven by software sales. The company recorded a decline in its hardware business. Total revenue increased to $10.8 billion from $9.5 billion in the corresponding period of the previous year. It represented a growth of 13%. Software license sales are the main contributing factor to the company’s growth and it increased by 19% to $3.7 billion. This was achieved with almost no help from acquisitions. Sales of hardware products declined by 6% to $1.16 billion. This shows that Oracle has not been benefitted fully from its acquisition of Sun Microsystems Inc.
World’s second largest software maker
Oracle is world’s second largest software maker (in data-based software, it is world’s number one). In India, the company’s name has been somewhat tarnished because of the Irish lawsuit against Oracle Financial Services (OFSS). Allied Irish Banks has filed a lawsuit in the Irish High Court against Oracle and one of its subsidiary companies, claiming damages of more than 84 million pounds for breach of contract, negligence and misrepresentation. But it should be noted that lawsuits are quite common among big corporate giants. They have a full fledged legal department to handle such matters. This will not affect the reputation of the company unless any adverse judgement comes.