Will Oracle’s New Servers Offer The Company The Boost It Needs?
In an event at its Redwood City, California headquarters on Tuesday, Oracle (NASDAQ:ORCL) unveiled its latest line of servers aimed at combating sliding hardware sales and regaining market share held primarily by IBM Corp. (NYSE:IBM).
The new products rely on technology acquired from the Sun Microsystems purchase that Oracle made in 2010. The servers — there are two, a mid-range computer and a high-end model — use the T5 chip and M5 chip, respectively. Founder and CEO Larry Ellison and John Fowler, Executive Vice President of Systems, presented the products.
Hardware revenue is down, and Oracle is finding it more difficult to retain customers in an evolving industry that is seeing more competition constantly. Oracle’s last quarter suffered significantly as a result, falling 23 percent to achieve revenues of $671 million, and sent the company’s stock rolling downhill. In response, the new products are intended to target markets including telecommunications, banking and manufacturing, competing against comparable products from IBM, Bloomberg reported.
“When Oracle bought Sun, a lot of people said ‘Sparc [scalable processor architecture] is a real laggard,’” Ellison said at the event, referring to chips developed by Sun. “The big question is, when playing catch-up, that’s got to be easier. Can you keep it up, can you keep going? And the answer is, we think we can.”
Currently, IBM occupies 63 percent of the sever market, with Oracle and Hewlett-Packard (NYSE:HPQ) occupying the rest with 17 percent a piece. In the forth quarter, the entire Unix-based market fell 26 percent, highly indicative of the decline that the industry is experiencing in the face of cloud-based technologies.
Oracle’s Sparc-based T-series grew in single digits for the third quarter, but did little to offset the losses from the M-series line. Speculatively, consumers were holding off on purchases of the M-series in anticipation of the M5 chip, which the company debuted yesterday.
Don’t Miss: Will Easter Bring Out the Bargain Hunters?