Hardware sales distract attention from Oracle's software


Hardware sales distract attention from Oracle's software

Oracle has taken an interesting stance with its decision to walk away from loss-making hardware deals. Explaining why the company's hardware revenues were 6% down in the fourth quarter, president and CFO Safra Catz said it had decided to avoid unprofitable deals, adding: "We'd just rather make money than make revenue."

Other vendors have done this in the past, of course, but typically there's always someone willing to make the deal for potential gains further down the track, or just to retain an important customer. Besides which a deal that might be unprofitable for Oracle's hardware business could, conceivably, be profitable for another hardware vendor.

The added complication is that those of a more cynical bent might wonder whether this new strategy is a rather convenient way of putting a positive spin on the fact Oracle is losing hardware business. To those who suspected Oracle might find it harder to sell hardware after buying Sun than it initially thought, these figures will be seen as the first concrete evidence that their suspicions have been confirmed.

Annoyingly, the hardware figures distracted from the positives in the software business where software licence revenues increased 19%. CEO Larry Ellison chose to focus on Oracle's success in the cloud computing space. "Over the past years we added features to the Oracle database for both cloud computing and in-memory databases that led to increased database sales this year."

When Oracle bought the Sun hardware business it was considered by some to be a distraction from its core software business. It's ironic, then, that the hardware business should prove a distraction from Oracle's software business in its latest results.

This was first published in June 2011

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