Oracle server revenue slides (again)

Oracle HQ

Those who hoped that Oracle would break its streak by posting server revenue gains last quarter, have to keep on hoping.

Revenue for Oracle’s “exa boxes” fell again, 23 percent year over year to $671 million from $869 million. Revenue on hardware systems support was  also down — 6 percent — from the year ago quarter.

As GigaOM has reported, Oracle has yet to hit on a winning formula for its highly engineered boxes although the company and its proponents maintain that the company makes good profit on each box it sells. It’s just that the revenue it makes on these high end boxes does not make up for revenue it had made on lower end “commodity” servers in the past.

On the earnings call Wednesday night, Oracle chairman Larry Ellison said the company plans to launch its next SPARC-based servers next week.

Said Ellison:

“Our new T5 servers have up to eight processors, and are more than twice as fast as the T4 systems that they replace. Even more important is our new M5 server, which has up to 32 processors and runs its Oracle Database over 10 times faster than the similarly priced old M9000 server it replaces. With the delivery of the M5 server next week, Oracle will finish upgrading every server in the SPARC product line dating from the time we acquired Sun.

He also said that Oracle’s delivery of lower-end boxes last year dinged average selling price.

“… we announced some lower-end Exadata systems, in our engineered space, and new customers have been beginning with the smaller systems, now that they’re available, eighth rack rather than quarter racks. And that’s somewhat lowered our ASP…” Ellison said.

Seeking Alpha has the full earnings call transcript.

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Oracle’s server revenue was off 18 percent year over year in the previous quarter.

Overall, Oracle results came in below consensus expectations on license revenue and earnings per share, according to Nomura Securities analyst Rick Sherlund. “After robust 17% reported license and subscription revenues growth in Q2, this was down 2% y/y in Q3 (or down about 6% organic, constant currency), below the Street’s growth estimate of 8% y/y,” Sherlund wrote in a research note, adding: “The long anticipated hardware turnaround remains elusive.”

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