Analysts do not see signs of a speedy recovery of Oracle hardware business

In one of my past posts there was such a phrase: “Oracle, which ranks fourth in the list of the largest suppliers, lost 11.5% in revenues (4Q11) compared to last year and occupies 5.2% of the market”. I thought that we need to elaborate on this.

According to Oracle's third-quarter earnings reports, profits for software and services grew, while hardware and integrated systems business declined by 16% and 4%, respectively. Against the background of these figures, analysts say they are not sure about the good prospects of the Oracle hardware distributors.


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According to Canalys CEO, Steve Brazier, the degree to which Oracle “weighed down” the Sun Microsystems server business after the acquisition is “very surprising,” and the reason is that “they don't understand the channel.” “They [Oracle] have assigned people from the software business to manage the hardware channel.” This is clearly not working, business is drowning very quickly, ”he said.

Brazier added that “there are no signs” of understanding this situation in Oracle and attempts to change it. Steve Braziera claims that “purulent inflammation” began on the day that Oracle completed the acquisition of Sun Microsystems and Larry Ellison announced that he would deal with dealer accounts directly. “The expansion of another part of the Oracle business — RightNow takeover — went very well due to the fact that this company is a software developer. Oracle has a lot of experience in merging software companies, but the hardware business is stagnating and it will be difficult to deploy it, ”he added.

Oracle published data on annual sales cuts for seven of eight quarters, after acquiring Sun Microsystems. Nathaniel Martinez, EMEA's server research program manager at IDC, believes that Oracle’s policy of isolating resellers will most likely lead to “squeezing it out of the hardware channel.” Nathaniel says such an approach can increase the profits of some large suppliers of complex Oracle systems, but “in terms of increasing sales, this is a dead end.”

Mike Norris (Mike Norris), Chief Executive Officer at Computacenter, said that the only reason that Oracle didn’t get rid of the hardware channel entirely is that switching to shipments of only integrated systems requires strategic transformations and increased sales. ” In order to make the Oracle hardware direction successful, we need to work more efficiently with the channel and find the causes of the problems, ”he said.

Oracle declined to comment on these statements.