Oracle_logo_2010.jpgThere probably isn’t a whole lot of mileage in reporting that Oracle (news, site) has just released its Q1 figures, which show that it made buckets of cash again. ‘Buckets’ might be a tad vague, so just for the record, revenue grew 47% to US$ 8.6 billion with net income growing 28% to US$ 1.9 billion.

Sales of new software licenses -- a key metric for Oracle that measures new business as opposed to sales to existing customers -- rose 21% compared to the same period last year, to US$ 2 billion.

Oracle, IBM and HP

However, it's what was in the commentary around the earnings release from all concerned that caught most people’s attention. While Larry Ellison did spend a little bit of time haranguing SAP (news, site) -- no real surprise there -- it was relatively mild and seemed more focused on HP (news, site) and the server market. Hardly surprising given that revenues from Exadata are close to the US$ 2 billion mark and caused Ellison during the earnings call to remark that HP would start running into problems over the course of 2011.

Our goal is to be number one in high end systems for high end transaction processing and data warehousing . . .We're not interested in the low end, we're after the high end, high margin part of the market. We think IBM is quite competitive, while HP's servers are big, slow and offer little software value add . . .”," Ellison said in a conference call with analysts.

Exadata was always going to be a point of interest in this quarter's figure. At the end of Q4 of the last financial year Oracle had identified IBM (news, site) as its bigger competitor in this respect.

Ellison claimed at the time that they had beaten IBM 30 times on sales during the course of the year and that in some cases they had sold directly into IBM strongholds.

Version 2 of our Sun Exadata database machine outperforms IBM’s fastest computer in both data warehousing and transaction processing … some of IBM’s largest customers began buying Exadata machines rather than big IBM servers in Q4 of FY2010,” Ellison said at the time.

Oracle and ERP

So does this mean a change in strategy whereby it will focus on the complete Oracle stack, hardware included, rather than taking pot-shots at competitors -- notably SAP?

Highly unlikely. Leaving aside the fact that that kind of change of heart doesn’t seem to be in Ellison’s lexicon, SAP, in the ERP space, is still the major player and its turning fortunes can only help it.
Typically, after taking a few shots at HP and IBM in the server space, he also turned his attention to SAP -- again.

At this point, SAP-bashing is a time-honored tradition at Oracle and this year was no exception. Last time CEO Charles Philips claimed they continued previous trends by taking “large chunks of market share” from SAP.

At the end of Q4 CEO Charles Philips said “ . . . Over the last twelve months Oracle’s applications business has grown 5% … while SAP’s business has declined 24% over their previous four quarters. This trend has been going on for a long time: Oracle’s applications business has grown 60% in the last four years while SAP’s business is 7% smaller than it was four years ago.”

While Oracle repeated the mantra that it continues to take SAP’s market share, this time around the shots were relatively weak and lacking in detail, leading some analysts to wonder whether Oracle is really starting to pay attention as SAP appears to be on the turn.

However, that really wouldn’t be enough to deter Ellison, most people agree. The more logical explanation for a shift in focus away from SAP and towards HP is the growing importance of this market segment for Oracle. We should know for certain by the end of this quarter.