SAP Aint Buying It
"> SAP, meanwhile, takes the stance that Oracle is not being true to its word with actual application sales growth rates. Steve Bauer, SAPs vice president of global communications, said an in-house apples-to-apples comparison between Oracle, Hyperion and Stellent, Oracles real application performance is closer to -2 percent year-over-year. "In spite of its recent claims of growth, the size of Oracles applications business is still below the size of what it was in 2004, when Oracle and its acquired companies operated as stand-alone entities," said Bauer. "From a share perspective it will take Oracle 12+ quarters at current rates to return to 2004 consolidated market share.""While nearly all the numbers are very strong the year-to-year growth rate for Oracle applications and new licenses declined to 13 percent in calendar 2Q 07 from 57 percent in 1Q 07," wrote TBR analyst Stuart Williams in a June 27 research note. "Applications revenue increased a modest 5.1 percent year-to-year in the Americas in 2Q 07, down from 68.9 percent in the pervious quarter. This is the lowest year-to-year growth rate for Oracle applications new license revenue since [the quarter] following the PeopleSoft acquisition." Oracle reported overall license revenue of $2.5 billion, up 17 percent year-over-year, beating the streets expectations of 5 to 15 percent year-over-year growth. During the fourth quarter conference call Ellison blamed flat sales in North America on a tough comparison to the same year ago quarter, where Oracle reported blow out results. UBS analyst Heather Bellini said in a research note that Oracles new application sales fell short of her expectations for 14 percent growth. She is looking for more numbers from Oracles acquisitions to get a better sense of how quickly Oracle is gaining market share on SAP. "We continue to believe that Oracle can sustain organic application license revenue in the low-to-mid double digit range over the next few years as we view the companys decision to offer unlimited support on its acquired products and its vertical focus as offering a point of differentiation and helping unfreeze customers wallets," wrote Bellini, who pointed out that SAPs 2005 organic growth rate "dwarfed" Oracles. Bellini expects the gap to normalize in the latter half of the year, with Oracle starting to outpace SAP in the third quarter. Of course SAP said Oracles efforts are for naught. SAPs Bauer said Oracle has not been successful in gaining market share or customers from SAP, and Oracles middleware doesnt integrate all its disparate applications. "It only connects them," he said. Bauer said that SAP has more than 13,000 customers using NetWeaver and that the platform has a distinct advantage over Oracles Fusion Middleware: the ability to integrate business processes. "SAP has been delivering integrated SOA-based applications services across its ERP suite and composite xApps for several years," Bauer said. Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.
If the modest numbers that Oracle posted in application sales in the North American region are any indication, next-quarter sales may be more tempered than Oracle would like to admit.