If you're an IT manager or staffer off to OracleWorld beginning September 21, don't let the September 18 Oracle financials release rain on the party. (If you are not physically attending, you can attend much of it online.) A slowdown after six to eight quarters of real double-digit growth was inevitable and it looks like it has begun. Backcasting for BEA, Agile and a few other minor "strategic acquisitions," real growth was about 6 percent to 7 percent, year over year, in Oracle's first fiscal quarter of 2009 (much of that was currency impact). Oracle's FY 2009 Q1 is the three months that ended August 31.
You kind of knew that "subdued" was going to be the mood in the financial-analyst conference call when Larry Ellison and Charles Phillips are quoted in the press release talking about the database users instead of Oracle middleware or applications usage. I think a quick Google would tell me that the last time Oracle bragged about its deservedly dominant place in the database market was probably 1994. Ever since, the talk has been all about you DataLogix, Siebel, Arbor, i-Flex, Tuxedo, PeopleSoft, J.D. Edwards, Scopus, Hyperion, Plumtree, Retek, WebLogic, Fuego, Demantra, etc. application and middleware customers. But now it's back to the base of heritage Oracle users.
There was one little minute of classic Oracle bravado. Although it does not break out middleware separate from database, Oracle claims that the middleware business grew so fast that Oracle passed or tied IBM in middleware market share. That claims gets hard to debate given that the two companies don't line up their definitions of middleware exactly. And it is because of acquiring BEA, not organic growth.
I don't think Oracle executives even mentioned SAP except to talk about an odd customer win here and there. That's interesting because I believe, at least on a trailing-12-month basis, that Oracle is gaining on SAP in ERP (while SAP is gaining on Oracle in middleware based on the success of NetWeaver). Neither company is doing much among small and medium businesses; that's because of a strategic decision by Oracle and a failed effort by SAP.
"Nothing new" seemed to be the watchword by Oracle executives in answering financial analysts' questions. They say you Oracle customers are going to keep signing up for more products, new seats, and upgrades in the next three months -- as well as renewing your maintenance contracts -- at the same rate as past Sept-Nov periods. In other words, macroecomonics are not affecting your IT purchasing plans. If you don't agree, send me an e-mail.
It looks like operating expenses were held down to make previously promoted profitability goals. Financial analysts were pleased but that might not be good news for users. Larry explained that maintenance is now the largest part of Oracle's business. Maintenance is the most profitable business too, he said, and Safra re-emphasized that in the Q&A. That just fans the flames of Oracle users' concern that they are being gouged by Oracle and other vendors' maintenance pricing and service deliverables. I don't agree in principle but if the supplier keeps emphasizing it, there may be something to it.