http://investor.oracle.com/files/doc_financials/3QY15/3q15-pressrelease-March_v001_e7v93w.pdf
Many years ago, the engineers at Facebook, Google and several other web companies turned to MySQL to scale out on commodity hardware. Given the economics of their data centers, it simply wasn't feasible to build on proprietary products like Oracle or IBM's databases.
It's unlikely Oracle or IBM could have handled the scale at which the web companies needed to run. No database really could, even MySQL. But because MySQL is open source, each company was able to tailor the database to its specific needs. As more companies are turning to open source databases this has an impact on proprietary databases.
The impact shows up in Oracle’s sales of new software licenses, which have declined for seven straight quarters compared with the period a year earlier. New licenses made up 25 percent of total revenue in fiscal 2014, down from 28 percent a year earlier -- a sign the company is becoming increasingly dependent on revenue from supporting and maintaining products at existing customers and having a harder time finding new business. Oracle reports fiscal fourth-quarter earnings next week.
Oracle started with just database software, yet now it has a massive software portfolio and consists of the following:
- Oracle Databases - Oracle, MySQL, TimesTen In-Memory Database, Oracle Berkeley DB, Oracle NoSQL Database
- Oracle Apps Server - Weblogic
- Oracle Fusion Middleware - Oracle SOA Suite, Oracle Data Integration, Oracle Business Process Management Suite, Oracle WebCenter software, Oracle Business Intelligence Suite, Oracle Identity Management
- Applications - Oracle E-Business Suite, Siebel, PeopleSoft and JD Edwards
Overall Oracle's new software sales have declined year on year by 7%, yet Oracle does not break up new software sales by product category. I estimate most of the revenue loss occurred from databases rather than business applications software, if anything business software revenue grew. Hence for Oracle to have lost revenue by 7% on aggregate the database new sales must be down to over 10% year on year....This is bad news for Oracle's core business!
Update 17/12/2015: Q2 Fiscal results show 18% decline in New software sales:
Update 17/12/2015: Q2 Fiscal results show 18% decline in New software sales:
Update 16/03/2016: Q3 Fiscal results show 16% decline in New software sales and 13% in Hardware:
Update 16/09/2016: Q1 Fiscal results show 11% decline in New software sales and 20% in Hardware:
Update 20/03/2013: Q3 Fiscal results show 16% decline in New software sales and 14% in Hardware:
Oracle's lifeblood is Oracle database, they have 350,000 customer running Oracle database on-premise. If people stop buying Oracle databases and move to AWS/Aure/Google Cloud database or move to a SaaS service then Oracle is in big trouble
Here are last few quarter of Oracle, clearly shows new software licencing sales revenue declining 7%, 18%, 16%, 11%, 16%....they now make most of their money now on very expensive updates/support. Yet the higher the fees are the more likely is customer will start looking at lower cost alternatives and start moving to low cost managed database as a service on Cloud. It is completely utterly unrealistic to expect that 100% of their customer will move to Oracle Cloud. Oracle started late with cloud and now they are desperate to move their business to cloud.
As Fortune reported, Hurd discounted the idea that his company cannot compete in cloud services with Amazon, Google, and Microsoft because those three companies spend so much more on data center infrastructure. Those three cloud giants invested an estimated $31 billion on infrastructure last year while Oracle dedicated about $1.7 billion, according to figures assembled by The Wall Street Journal from public filings.
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