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The cloud isn’t Oracle’s biggest moneymaker, licensing is

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January 30, 2015

Oracle’s co-CEO Mark Hurd is trumpeting the database giant’s overall success in cloud computing, though it still represents a very small percentage of the company's revenue.

In a recent television interview, Hurd is reported to have come out fighting quite a bit in defending his company's motives.

Hurd said: “Make no mistake about this, we are laser-focused on taking a decent market share. We are focused on growing. We are focused on driving the company forward, our guidance is to accelerate growth.”

“We are one of the few cloud companies, were not only getting bigger, but our growth rate is actually accelerating at the same time,” he added.

Hurd claimed that was because of better training and lots of sales people, lots of R&D and “some good acquisitions.”

Cloud is the fastest growing part of Oracle’s herculean business-– software and platform as a service is up 39 percent and infrastructure as a service is up 60 percent, making just over $500 million for Oracle during its most recent quarter.

However, cloud isn’t Oracle’s biggest moneymaker, licensing is. New licenses for its software and maintenance contracts make the lion’s share of Oracle’s revenue: 21 percent and 50 percent respectively.

Of these, its maintenance that’s saving Oracle’s 'hide' by growing: plus six percent while sales of new copies of Oracle’s software like its signature relational database are falling, down four percent.

Cloud currently accounts for just about five percent in the total. Hurd was put in front of TV cameras the day Amazon announced what’s believed to be a 41 percent year-on-year increase in its cloud revenue, to $1.74 billion.

Amazon also said it would report its AWS revenues as a separate line item. Until now, Amazon’s AWS has been included in the “other” category for North America in its financial reporting.

The rapidly growing market for 'no-frills' Ethernet switches isn't bothering Brocade for now, according to A/NZ senior director Gary Denman.

Speaking to media reporters over a whole slew of start-of-year announcements, Denman said the bare-metal switch market remains a niche model, but that can change any minute since the market is so competitive.

While Brocade is fully aware that companies are looking to reduce their up-front network equipment costs, unless the user needs the deep access to networking silicon that the bare-metal model cannot provide, there isn't much to differentiate a bare-metal switch.

To be sure, in the enterprise segment and wireless carrier business, network automation is still a more important goal, and Denman said that Brocade believes the combination of the company's subscription-model offerings for hardware as well as software will let it offer a competitive way to keep capital expenditures to a minimum.

But Denman did acknowledge that as more open standards take hold in the software-defined network (SDN) market, network hardware vendors will come under increasing competitive pressure.

Software like Open Daylight is easily replaceable, so vendors basing their offerings on open standards and open source software “have to deliver”, he added.

Denman said Brocade is closely watching the virtual customer premises equipment (CPE) market, in the belief that it will be the segment where SDN starts to impact the enterprise market.

The virtual CPE world offers the programmability, remote control, and agility that wireless carriers want to offer their customers.

For Brocade, the virtual CPE plays into the managed services market, letting a provider new services for a customer (extra bandwidth or value-adds) without a long provisioning lag.

“For example, distributed customers can grow their footprint rapidly, and since the Vyatta controller can run on small devices like Intel's Next Unit of Computing and still handle gigabits of traffic, customers can also keep a spare in the cupboard,” he added.

Brocade's key announcements were port-based encryption for its modular routers and Vyatta is now available for free download on a one-year license.

Source: Oracle.

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