Oracle positioning itself to take on HP and IBM in the data centre – and why not?

Oracle boss Larry Ellison

As 2010 ends, we will look ahead a little in the next few days on the possible shape of things to come in 2011. We’re starting with a very easy prediction; that Oracle will become more and more a feature of the CIO’s landscape going forward, especially at the high end.

Our starting point: Oracle’s surprisingly strong Q2 figures released last week (for the three months up to the end of November) – showing sales up no less than 47% – have raised eyebrows all round. Why? Because the up-tick can’t be put down solely to the Sun acquisition – which many sceptics had in fact thought would drag old ‘Orrible’s numbers down. In reality, Oracle’s core business is, to coin the cliché, going gangbusters, and that’s across all parts of its activities, by the way.

Revenues were up, as said, to $8.58bn, a figure which includes both all that new hardware, software, and support business from the former Sun but also robust performances in the firm’s old traditional database, middleware and application businesses – expanding at double-digit rate, no less.

In terms of profit, the firm was also able to report a 28% after-tax rise there, despite some Sun-related acquisition and restructuring costs. And it turns out buying the old UNIX stalwart may not have been such a daft idea, either; the business contributed no less than $3bn and change in extra sales it didn’t have before. The firm was able to say in its results con-call with analysts that Oracle post-Sun has an overall profit margin 15% ahead of rival SAP, at 44%, and it could even get that rate higher.

What are its grounds for such optimism? Well, the Sun business is, in this quarter at least, about as much as new software sales (up 21% year on year) and it’s run efficiently, too. Plus, where it wants to go with that business is into the big-deal, data centre market, with founder and CEO Larry Ellison apparently saying on that call that his goal is to become "number one in the high-end server business, both for OLTP and data warehousing".

Who else is in that market? HP and IBM, of course – and Ezza thinks the former is at ripe for taking out, though he is still appropriately courteous about Big Blue (for now at least).

Before you even say it – that’s mostly testosterone, as the firm is still absorbing Sun and has a long way to go to become a truly credible integrated high-end server supplier that could be seen as a truly credible alternative to those.

But when it comes back to the Street to tell us about its Q3, ending in February, the company says it could be showing sales up as much as 30% as more of the Sun business comes online into its spreadsheet, and all in all it does seem that the Sun buyout was a very canny move by the firm that you can’t ever afford to ignore.

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