Oracle 4Q13 Earnings Call Notes

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A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Revenue growth 6%

“For the company, total revenue for the quarter was $9.3 billion, up 6% from last year, non-GAAP operating income grew $188 million to $4.4 billion, up 6% over last year and the operating margin was 47% again.”

Customers want us to integrate hardware/software for them

“Our engineered systems business is growing rapidly for the same fundamental reasons that our cloud applications business is growing rapidly. In both cases, customers want us to integrate the hardware and software, and make it work together so they don’t have to.”

Re-organized for the cloud. SAP is not

“Eight years ago, we started to rewrite all of our applications for the cloud. Now those Fusion, ERP, HCM and CRM cloud applications are competing effectively with SaaS product specialist like Salesforce and Workday.

SAP has not yet begun to rewrite their ERP, HCM and CRM applications for the cloud. This gives the opportunity to become the leader in cloud applications and replace SAP as the leader in the overall applications in the market place.”

Growth in hardware is because engineered systems reach scale

“engineered systems have been growing rapidly for a long time. We keep talking about it. Now the problem couple of years ago was engineered systems was a small percentage of the total. Now engineered systems has grown up to be over 30% of the total. So it is — and soon it is going to be half of the total.”

No longer commodity hardware business

“The x86 commodity business which used to be a big business when we bought Sun has now shrunk to almost nothing. So our hardware business has gone through the transition where we got neither the commodity storage business, we got neither the commodity server business and replaced it with computing systems with a lot of our own intellectual property.”

Integrated solutions driving better performance at lower cost

“We replaced a system at the — in the world largest cloud company, you guys can figure out who that is. World largest cloud computing, we delivered an Exadata System to them.

They moved their application and got in live in three weeks and experienced 10 times better performance at a fraction of the cost. This is not uncommon. When we installed an Exadata Machine or a SPARC SuperCluster to have a very rapid implementation, delivered terrific performance and at a dramatically lower overall cost because all of the complexity of integration is done by us, not by them.”

Don’t just compete with server vendors

“we just don’t compete with the server vendors. We actually do a lot of other things than just compete with an IBM. We compete with EMC frankly when we get into those environments because we radically change our customer storage requirements.”

Salesforce making 12c central to its infrastructure

“I just recently got a note from Mark Benioff who is excited about bringing in Exadata and 12c and making in at the basis of salesforce.com’s cloud computing infrastructure that they put our application on. So we are seeing adopters with very, very high standards in terms of having to supply millions of users, reliably and cost effectively in the cloud. Talk about moving their entire business to 12c and Exadata. That’s just the tip of the iceberg of these hyperscale companies.”

Key to 12c is memory and multi-tenancy

“we think 12c will be the most rapidly adopted new release in many, many years for those two reasons, in memory and multi-tenancy features.”

Give customers the choice of service in cloud or on premise

“We will give customers a choice, but will offer those data analytics in the cloud, data analytics on premise”

Fusion being deployed in the cloud

“what you asked was the deployment of Fusion on premise versus cloud, I think that’s what you asked and it’s cloud, cloud, cloud. So let me say that one more time cloud, cloud, cloud, it’s generally where Fusion is deployed.”

Platform vs infrastructure as a service sales

“as we roll out platform-as-a-service and infrastructure-as-a-service, we will have specialist selling nothing but platform-as-a-service and nothing but infrastructure-as-a-service…we need specialist sales teams that are used to competing with Amazon, other specialist sales team that are used to competing with IBM pSeries. It’s a different sales, with different customer quite often. So we have, but we are lining up against all of our new competitors and making sure we have sales capacity as well as a competitive product.”

New technology enables huge databases

“The fact that our Exadata Machines have multiple periods of cashing, we now not only have DRAM and rotating storage, we have a lot of flash memory that we have to manage. It allows us to manage huge databases, multi-petabyte databases and deliver very high performance.”

Big data is a set of underlying technologies

“we think that Big Data is an underlying set of technologies. For batch, if you want a Big Data batch process, the open source product Hadoop is a very good product, if you’re doing batch processing. If you’re doing Big Data real-time processing *then we think the Oracle databases by far and away the best managed — best technology for managing real-time processing of Big Data.”

Example of big data in practice

“So our telecommunications billing systems which has to manage huge amount of transactions with millions and millions of customers, be able to figure out whether to cut-off a phone call when someone exceeds their bill and do all of that real-time. That’s real-time processing of huge amounts of data by a phone company those are the kind of applications we provide that almost no one else can provide.”

We’re supplying the arms to our cloud competitors, we can build the infrastructure more competitively

“We think with our engineered systems and our data compression technology, we can deliver the same storage and the same compute capacity of our competitors for a lot less money. I mean, that’s what we’re selling — we’re selling this technology to our customers, that’s our pitch. And we think we can build our own data centers just as efficiently and that’s why, I don’t think you’ll ever see our CapEx approach our infrastructure competitors in the cloud.”