Will This Acquisition Help in Oracle’s Race to the Cloud?
News out of Oracle has been relatively positive for the past few months. Back in November, the company was seen reaching for the cloud with its acquisition of Instantis — a move to help the company stay competitive with SAP (NYSE:SAP), which has also been targeting the cloud.
More recently, Oracle appeared to fare the fourth quarter better than competitor SAP. The Oracle saw a 17 percent increase in software revenue for the quarter, while Oracle fell below expectations with only a 12 percent rise in group revenue. However, SAP may have been weighted down by its $7.7 billion acquisition of web-based computing companies Ariba and SuccessFactors…
SAP’s acquisitions can be expected to help the company ramp up its presence in the cloud, delivering online networking solutions to enterprises. Though web-based services brought in less than 2 percent of SAP’s revenue last year, the market for cloud-based technologies and services is expected to continue growing, and SAP may be able to improve performance through it.
Of course, SAP isn’t the only one in the cloud now. Though the acquisition still requires regulator and shareholder approval, Oracle’s deal to purchase Acme Packet (NASDAQ:APKT) would help it enhance its service offerings in the growing cloud.
The acquisition would cost Oracle $2.1 billion — its biggest acquisition since Taleo Corporation for $1.9 billion last year. For comparison, SAP paid $7.7 billion for Ariba and SuccessFactors. So, Oracle’s cheaper acquisitions could help it push up closer to SAP in the competition.
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