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Ellison: Oracle Cloud will Be Price Competitive with Amazon

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Oracle is once again growing its hardware business as growth prospects in the cloud also continue to show promise.

Oracle reported its second quarter fiscal 2014 earnings late Wednesday with revenue reported at $9.3 Billion for a two percent year-over-year gain. Looking forward, Oracle President and CFO Safra Katz provided guidance for the third quarter fiscal 2014 revenue to grow between two and six percent on a year-over-year basis.

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One particular area highlighted by Oracle was its overall hardware business, which grew by two percent during the quarter. The hardware business has been one that Oracle has been trying to turnaround in recent quarters and CEO Larry Ellison is now confident that his company has now turned the corner.

“I know we got a lot of criticism when we bought Sun and we have gone through this transition where we had a growing hardware business, Engineered Systems, and a shrinking hardware business, Commodity Systems as we shied away from Commodity Systems in trying to be competitive in that marketplace,” Ellison said during his company’s earnings call.

Oracle acquired Sun in 2010 for $7.4 Billion, which included both hardware and software assets. Oracle has been building its own Engineered Systems including the Exadata database machines since then and Ellison said that the transition from Commodity Systems to Engineered Systems has now been more or less completed.

“The Engineered Systems business is now a large business and it has much higher margins than the commodity business that we have gotten out of over the last couple of years,” Ellison said. “So the mix has changed in hardware from the low margin hardware to much higher margin hardware.

Oracle President Mark Hurd said that all six of Oracle’s Engineered Systems saw double-digit revenue growth during the quarter, including Oracle’s Big Data Appliance and SPARC SuperCluster, which saw triple-digit growth. The Oracle SPARC SuperCluster is among Oracle’s newest Engineered Systems and was first announced in July of 2013.


Ellison also took time during the call to highlight Oracle’s Cloud strategy, which includes participation in the Software-as-a-Service (SaaS), cloud applications, platform and infrastructure markets.

“We think we are going to be especially strong in platform with our two platform brands. Our database brand is the Oracle Database 12c and our programming language brand is this thing called Java,” Ellison said. “So we think we have a much stronger platform than any of our SaaS competitors.”

Ellison is also bullish on Oracle’s prospects in the Infrastructure-as-a-Service (IaaS) cloud layer as well. He said that it is Oracle’s intention to be price competitive with Amazon, Microsoft Azure and Rackspace.

“So we are going to be cost competitive and price competitive at the infrastructure level while being highly differentiated at both the platform level and the application level,” Ellison said. “We will continue to expand our footprint and use our size as an advantage.”

Sean Michael Kerner is a senior editor at Datamation and Follow him on Twitter @TechJournalist

Photo courtesy of Shutterstock.

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