Oracle's net income for the fourth quarter ended May 31 rose 36 percent to US$3.2 billion over the same period last year, results that reflect growth in software sales but a slight dip in hardware revenue, the company reported Thursday. Total revenue for the quarter grew 13 percent to $10.8 billion.
New software license sales, which are considered a key indicator of growth and customers' attitude toward IT spending, rose 19 percent to $3.7 billion.
Hardware systems products revenue fell 6 percent to $1.2 billion.
For the full year, net income jumped 39 percent to $8.5 billion on $35.6 billion in revenue, a rise of 33 percent.
The new software license growth in the fourth quarter occurred "with almost no help from acquisitions," Oracle co-president and CFO Safra Catz said in a statement.
The vendor moved into hardware with the acquisition of Sun Microsystems. It has rolled out systems such as the Exadata data-processing machine, which combine hardware and specialized software.
Those systems "made a strong contribution to our growth in Q4," Oracle President Mark Hurd said in a statement. "Today there are more than 1,000 Exadata machines installed worldwide. Our goal is to triple that number in FY12."
Exadata is facing competition from the likes of IBM and its Netezza division, as well as SAP, which has rolled out the HANA (High Performance Analytic Appliance) in-memory computing engine. In-memory computing places data to be processed into RAM, giving a performance boost over reading off disks.
Oracle plans to announce an "in-memory accelerator" for Exadata, as well as a "big data accelerator" involving the open-source Hadoop programming framework, at its OpenWorld conference later this year, Oracle CEO Larry Ellison said during a conference call Thursday. More specifics weren't immediately available.
"An in-memory accelerator could mean many things," analyst Curt Monash of Monash Research said in an interview Thursday. "Managing data in memory in connection with disk-centric data management is a lot harder than just managing data in memory."
"If your management is basically in-memory, and you persist the data to disk in close imitation of your in-memory data structure, that works fine, but may not provide great disk-centric performance," Monash added.
Oracle's plan for a Hadoop-related product comes as little surprise, given the widespread attention the technology has received of late from data warehousing and analytics vendors.
In the meantime, sales of Exadata and of the Exalogic application server are going swimmingly, Hurd said during the conference call. The "ramp-up" for Exalogic is going even better than Exadata's, he said.
While hardware systems sales fell in the quarter, hardware support revenue grew, thanks to better "attach rates" for support contracts on new sales, Hurd said during the call.
Oracle is also "selling fewer systems at higher margins," Hurd said. "These are the fundamentals of a solid hardware business."
"Oracle's doing a good job of pushing hardware in its installed base of customers," said analyst Ray Wang, CEO of Constellation Research, in an interview Thursday before the results were announced. "It's leading with Exadata and slowly learning how to sell and service as a hardware company, not an easy skill for a company that's traditionally not been in hardware."
Wang, who helps software buyers negotiate contracts with vendors, has seen "the usual flurry of end-of-year discounting" in fourth-quarter deals with Oracle, "but not as steep as in years past."
"Oracle's definitely gaining on the apps side of the business, but as with other companies, the growth is coming from the edge apps, not the core ERP apps per se," he added.
After a long wait, Oracle is finally poised to release its next-generation Fusion Applications, which are supposed to combine the best attributes of its various acquired software lines.
Oracle customers are thinking about Fusion Applications in different ways depending on their particular situation, Wang said. Die-hard "Red Stack" customers that are already heavily invested in Oracle technologies are mostly moving to E-Business Suite 12 and then to Fusion Applications, while customers who find their vendors acquired by Oracle "tend to be in a wait-and-see mode," he said.
"I can also say there are some old-time Oracle customers from the 1990s also contemplating a look at SAP," Wang added.
"A number" of Fusion Applications customers are now live, Ellison said during the conference call.
The software will be available on Oracle's cloud infrastructure as well as on customers' private clouds, he said. Oracle's cloud will offer customers "a much higher degree of security" than that of competitors such as Salesforce.com, he claimed.
One thing all Oracle customers may want to brace for is more pressure from the vendor's sales representatives. Oracle is planning to hire more salespeople and is shaking up the way they are distributed, Hurd said.
"There might be a salesperson with 20 customers. We think there's an opportunity for that salesperson to sell as much software to five customers," he said.
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