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Oracle Reports Growth; Talks up Sun’s Contributions

Does the Sun acquisition have any impact on Oracle’s cloudy perspective?

Oracle reported its financial results for the third quarter of fiscal 2010 ended in February, and sales of Oracle's products sans Sun rose by 7 percent. Including one month of sales attributable to Sun, Oracle's revenues were up 17 percent, to $6.4 billion. Sun has brought in $273 million in hardware systems sales since the acquisition, and another $185 million is attributed to hardware support. It also touted its Exadata Storage Server introduced over a year ago as "the fastest growing product in Oracle's history".

Oracle's history of strategic acquisitions have always compensated for any intrinsic lapses in innovation. The latest entrant to its portfolio is no exception. The company's Cloud plans seem to have gained more buzz after the Sun acquisition. Armed with its own enterprise apps in conjunction with Sun's home grown server and storage wares, Oracle is doggedly intensifying its integrated platform services that could tread on the territory of the other lead  (ex)contender for Sun, IBM.

Safra Catz, one of the two co-presidents of Oracle, predicted in a conference call with Wall Street analysts that the Sun unit would have hardware sales of $1.2 billion to $1.3 billion in the fiscal second quarter ending in May. Oracle holds firm that it would squeeze out $1.5 billion in operating margins out of the Sun in the first one year following the acquisition and $2 billion in the following year."The Sun integration is going even better than we expected," said Safra Catz. "We believe that Sun will make a significant contribution to our fourth quarter earnings per share as well as meet the profitability goals we set for next year."

Oracle's version of Cloud focuses more on private cloud solutions that it deploys through what it calls "On-Demand" , probably due to CEO Larry Ellison's aversion to the term "cloud". Oracle obviously does not share the general notion that it is a relatively late participant in Cloud and has chosen to position its version of cloud as a natural progression of its existing Grid computing products and services.

The Oracle Platform for SaaS targeted at ISVs encompasses everything from infrastructure to cloud based apps which can be deployed in either private or public clouds like Amazon Web Services. Oracle's free virtualization software is also expected to get a face lift this spring with Oracle VM3.While some critics remain skeptical about its potential (or lack thereof ) as a game changer in the industry and wonder how long it would take Oracle to lock-in customers and start demanding fees; Oracle is banking on the sheer practicalities of logistics management - the fact that at least some of its huge client base would not be able to resist a cheaper ( no cost for now) VMware alternative and the convenience of a more integrated single source stack.

As a departure from its traditional boxed software packages for high end clients, Oracle has also set to capture the SMB CRM market alongside rivals Microsoft and SAP, and has been delving into SAAS offerings that cater to the price needs of small enterprises with added hybrid options of on premise and hosted tool sets. The Redwood City Company recently doled out its latest version of hosted CRM software, On Demand Release 17 sporting some enhancement updates on Forecasting and Analytics functions.

Even as Oracle insists that it is an enabler for other cloud vendors and not so much an infrastructure provider, it is quite reasonable to expect it to make a pitch for its middleware and support technologies in shops running Oracle goods. The Sun acquisition has certainly blurred several lines in terms of whether Oracle would continue to remain strictly a cloud enabler or tend towards becoming an infrastructure provider as it adds Sun's hardware, storage boxes and Oracle VMs into the mix with end-to-end Enterprise Cloud solutions "On-demand".