Oracle's Hardware Sales Down Sharply Again

Three months ago, Oracle reported financial results for the company's second financial quarter. Its hardware sales declined 14% year over year, to $953 million. Oracle predicted that hardware sales would fall again anywhere from 4% to 14% in the next quarter (at constant currency).

Actually they fell 16% year over year, to $869 million. Quarter to quarter they fell about 9%.

For perspective, Oracle claims that their nascent Exadata/Exalogic/Exalytics business is fast growing, but that only means the far larger Oracle/Sun Solaris business is collapsing even faster. Also, the earnings report reveals that "hardware systems support" (a.k.a. hardware maintenance) declined only 3% (constant currency, year over year). So Oracle's remaining customers are caught in the perfect storm of a cratering Oracle/Sun Solaris business combined with escalating maintenance prices. Fabulous.

Of course I realize that hardware sales can be cyclical, but Oracle's hardware problems are deeply structural. Oracle introduced servers with the new SPARC T4 processors in September, 2011, which took the SPARC CPU up to 3.0 GHz. This past quarter should have been a terrific one, or at least a decent one, given that Oracle/Sun model cycle. Instead it was awful again.

I predict that Stuart Alsop now has the opportunity to correctly predict when the last Oracle/Sun Solaris server will be unplugged.

by Timothy Sipples March 21, 2012 in Financial, History, Systems Technology


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