Oracle Unveils Powerful new SPARC Servers, Chips

By Jeffrey Burt  |  Posted 2013-03-26 Print this article Print

Oracle's new hardware rollout comes a week after the company released relatively disappointing quarterly financial numbers, including hardware revenues that fell 23 percent from the same period in 2011, from $869 million to $671 million. At the same time, Ellison—who in December 2012 had predicted that the hardware business would stop its fall by February and begin growing again by May—said that things would not start getting better until August.

Oracle is still in the process of shedding the lower-margin systems and will begin focusing more on the higher-end, Solaris-based engineered systems, he said during the March 20 call. President Mark Hurd also noted that Oracle is selling a lot of 1/8th rack systems, though pricing for the servers is less than other systems, putting pressure on the bottom line.

However, some analysts said Oracle is under the same pressure as other systems makers, with enterprises increasingly looking to the cloud to run much of their businesses. "On the hardware side they're facing the same headwinds that everybody in the hardware industry is facing, as you get more consolidation and commoditization of hardware," Pacific Crest analyst Brendan Barnicle said during an interview on CNBC after the earnings.

Oracle also is being dogged by an overall decline in demand in the Unix server market. Analysts at IDC noted that in the fourth quarter of 2012, Unix server revenues fell 24.1 percent, to $2.6 billion, the sixth consecutive quarter of revenue declines, a trend that hit all major Unix server vendors. Still, the Unix market represented 17.6 percent of server revenues in the quarter.

Analysts over the past three years have questioned whether it made sense for Oracle to keep Sun's hardware business, not only because it forced Oracle into a market segment it didn't know, but also because it brought it into direct competition with such longtime partners as Hewlett-Packard.

However, both Ellison and Fowler touted the results of the engineered systems, and said the performance and cost efficiencies the servers will bring will be difficult for businesses to ignore. In addition, Fowler, who came over to Oracle from Sun, noted that when combined with the entry-level T4 SPARC/Solaris systems introduced last year, Oracle is now armed with a complete portfolio.

"The SPARC family is now completely revamped since we joined Oracle," Fowler said.



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