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Software licences drive Oracle revenue, but hardware takes a hit

Caroline Baldwin

A drop in hardware sales dragged down Oracle’s revenue in its latest financial results, but revenue from software licences increased.

Oracle’s total revenue for the first quarter of its 2014 financial year (Q114) was up 2% to $8.37bn from $8.18bn in Q113, and net income was up 8% year-on-year from $2.03bn to $2.19bn. But declines in hardware sales had a knock-on effect on the quarter’s results.

Oracle CEO Larry Ellison at Oracle OpenWorld 2012

The computer technology corporation saw revenue increase from new software licences to $1.63bn making up 20% of total revenues in Q114. New software licences – which include cloud software subscriptions – increased by 5% from $1.57bn over the past year.

But hardware revenues saw a 7% drop from $1.35bn to $1.26bn, driven by a 14% fall in revenue in hardware products from $779m in Q113 to $669m in Q114.

Tim Jennings, chief analyst at Ovum, said that if Oracle can ramp up business in its new application areas - namely, customer experience, customer-facing technology, and big data analytics - he would hope to see more growth in future.

“It is the database that’s in their heartland and will be an immediate driver as it’s the product that’s so ubiquitous around the world. If they can convince all their customers to upgrade to the 12C [database] version, that will be good revenue,” he said.

Oracle CEO Larry Ellison (pictured) announced that the company would be launching an in-memory upgrade option to its database at its annual Openworld conference in San Francisco next week.

“Virtually every existing application that runs on top of the Oracle database will run dramatically faster by simply turning on the new in-memory feature,” he said. 

“Our customers don’t have to make any changes to their applications whatsoever; they simply flip on the in-memory switch, and the Oracle database immediately starts scanning data at a rate of billions or tens of billions of rows per second.”

Rival SAP has pointed to rapid growth in its Hana in-memory database as a key factor in its recent revenue growth. 

Computer Weekly will be attending the Oracle Openworld event next week - follow all our coverage in this Oracle Openworld guide which will be updated with all the news from the conference.


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