Oracle is close to resuming growth in its hardware
business, according to Oracle executives who, three years after spending $7.4
billion to buy Sun Microsystems, say the acquisition has more than paid for
itself.
"The cash flow has far
exceeded the value" of what Oracle paid for Sun, Oracle president Mark
Hurd said in response to a question during a conference call with journalists
recently.
Hurd also said the technologies
that came with the acquisition, including Java development tools and server
hardware, have helped the company develop new products. The most obvious
example is Sun's server technology, which forms the foundation of the company's
"Engineered Systems" products, including the Exadata and Exalogics servers
and the SPARC SuperCluster servers.
Oracle's hardware sales have been
steadily declining since Oracle bought Sun three years ago. In the second
quarter ended Nov. 30, Oracle's hardware systems sales declined 23 percent
year-over-year to $734 million, accounting for 8 percent of the company's total
sales.
When revenue from hardware systems
support is added to the mix, hardware accounted for a little over $1.3 billion
in second-quarter sales -- about 15 percent of total revenue for the quarter.
Oracle executives have maintained
that hardware sales are declining as the company discontinues sales of
commodity server products, focusing instead on value-added products such as the
Engineered Systems that combine hardware with Oracle software. Oracle also discontinued
OEM sales of several storage system products from other vendors, focusing
instead on the Sun ZFS line of storage products.
"We've been very particular
and deliberate to focus on our value-add strategy," Hurd said during the
media call Monday. He said Engineered Systems saw 70 percent sequential growth
in sales bookings in the second quarter.
When asked when hardware sales
would resume growing, Hurd said: "We're right about at that
crossroads." That echoed statements by CEO Larry Ellison on the second-quarter
earnings call in December when he said the company was "just about
finished with the downsizing phase" and about to "start growing our
hardware business.
Meanwhile Java has continued to
prove a security nightmare for years. Part of the problem, as observed by
InfoWorld Security Adviser Roger Grimes, is that companies neglect to turn off
Java or to even roll out security patches as they emerge. The reason:
"It's the number of mission-critical enterprise apps tied to specific Java
versions. In case after case, IT security people say they can't patch Java in a
more timely manner because doing so breaks too many vital applications."
Can Java be repaired, though? More
important, has Oracle made an effort to find out? Krebs raised that very
question as he called out the company for being negligent of the customers it
unwittingly acquired when it consumed Sun in 2010:
"I feel strongly that Oracle
is an enterprise software company that -- through its acquisition of Sun
Microsystems in 2010 -- suddenly found itself on hundreds of millions of
consumer systems. Much of the advice on how to lock down Java on consumer PCs
simply doesn't scale in the enterprise, and vice-versa. Oracle's unprecedented
four-day turnaround on a patch for the last zero-day flaw notwithstanding, the
company lacks any kind of outward sign of awareness that its software is so
broadly installed on consumer systems. Oracle seems to be sending a message
that it doesn't want hundreds of millions of consumer users; those users should
listen and respond accordingly".
Zsolt Sandor, a veteran Java
developer, said until Oracle gives Java a much-needed thorough code review,
browsers makers should develop a Java applet whitelist, such that browsers
simply would not allow unapproved applets from executing. "This would
solve the 99.9 percent of the cases until the code review is made, and fixes
are done," he wrote.
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