Oracle(s orcl) execs including CEO Larry Ellison attributed the company’s third-quarter earnings miss to a lackluster sales effort that let big deals slip into the fourth quarter, but others see more ominous signs.
For the period ending February 28, Oracle reported earnings of 65 cents per share on revenue of $9 billion, just short of the 66 cents on $9.4 billion in revenue that analysts had expected. Oracle co-president Safra Catz said sales were likely hurt by the prospect of government spending cuts.
“It didn’t help that our quarter ended on the same day as the sequester deadline,” she noted on the company’s earnings call Wednesday night. But, overall, Oracle’s sales people took the fall. “What we really saw is the lack of urgency we sometimes see in the salesforce as Q3 deals fall into Q4,” Catz said.
Oracle, HP, Microsoft tread treacherous path
Skeptics maintain that Oracle faces something much more critical than an unmotivated sales force. Rather, they say it, and other legacy IT players must confront a fundamental shift in how companies buy enterprise IT and a shift in the database mix to more NoSQL products and a similar transition to distributed data stores.
Oracle’s bread-and-butter product remains its market-leading relational database which is entrenched in financial services, healthcare and many government and academic accounts. But that dominance is under fire as more companies see the need to add non-relational database capabilities to the mix.
Many of these same enterprise and government accounts are also sick of paying huge fees for yearly software and hardware upgrades in an era where they can easily move at least non-mission critical workloads to Amazon(s amzn) Web Services or some other cloud provider.
Oracle isn’t the only company affected — Microsoft(s msft), Cisco(s csco), EMC(s emc), HP(s hpq), and other legacy IT vendors — will continue to face tough times as these transitions play out.
Sunil Dhaliwal, founder of VC firm Amplify Partners, concur that this is a massive “multiyear” transformation that will shake legacy IT providers to their core as more workloads go to Software as a Service offerings which negate the need for massive in-house server upgrades.
Can the giants shrink-down and speed up?
That, and the solid acceptance of open source software is still something the legacy players have yet to deal with, although most of them have made huge acquisitions to bolster their SaaS and open source stories. (Oracle bought RightNow and others as a response to Salesforce.com(s crm) and Workday, and its acquisition of Sun Microsystems put it into the MySQL and Java business.)
The thinking is that more enterprise players are buying compute, storage, networking and software like they “buy” electricity. While the traditional players see this change coming, it’s unclear if they will be able to adapt fast enough beat lower-cost, younger and more nimble players that were built for this new market.