Oracle bets on Sparc with new releases next week

Ellison has little interest in selling commodity x86 systems and is blunt about it

Oracle next week will announce a new Sparc processor and a high-end server, as it continues to try to make the best of its acquisition of Sun Microsystems from last year.

Oracle plans to detail its Sparc T4 processor, an eight-core processor optimized for Oracle applications, with a performance that the company says is five times faster than that of its predecessor, the T3. It will be part of the high-end server called Sparc SuperCluster, which was initially announced last year.

Oracle's emphasis will be on delivering high-end systems that lead to higher profits, said company officials in a conference call Tuesday with financial analysts.

Oracle CEO Larry Ellison was blunt about the shift and what it may mean for some of the x86 products that Oracle inherited from the Sun acquisition.

"I don't care if our commodity x86 businesses go to zero," said Ellison during the conference call. "We don't make any money selling those things."

Ellison said the company has no interest in selling the intellectual property of other firms, including Intel and Microsoft.

"Sun sold that stuff and we are phasing out that business," said Ellison. "We have no interest in it whatsoever."

By the numbers, hardware sales have been lagging at Oracle. In the call with analysts to discuss its latest quarter, the company said that new software license sales revenue grew by 17%, but hardware sales were down 5%.

Overall, the company's revenue for its fiscal first quarter was up 12% to $8.4 billion.

Although the company doesn't break down sales figures for its high- and low-end servers, it said its high-end server sales, which include Sparc systems, were up double digits for the quarter.

Jean Bozman, an analyst at IDC, said Oracle uses x86 chips to build some of its high-end systems, and said she believes Ellison is drawing a distinction between the x86 low-end systems sold alone and those used to build high-end platforms.

In the broader economic picture, Oracle's quarterly report was in line with Forrester Research's report on worldwide tech spending, also released Tuesday.

Worldwide IT spending will increase by 11.5% this year, but next year it will be half of that, at 5.5%, as the effects of the global economic turmoil take hold, said Andrew Bartels, an analyst at Forrester.

Bartels said he was expecting good results this quarter from companies whose quarters ended in August, and Oracle is in line with that.

There is typically a lag lasting a quarter or two between the time when economies slow and when companies take action on their IT budget in response, Bartels said.

"Given that lag, we have been expecting that the momentum that started in the first half of the year would continue until Q3," Bartels said. He isn't expecting to see significant slowing appear until the fourth quarter, but Oracle may do better because its quarter ended in August.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed . His e-mail address is pthibodeau@computerworld.com.

Copyright © 2011 IDG Communications, Inc.

  
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