back to article Oracle hammered as hardware sales soften

Software behemoth and systems player Oracle missed its projections for both hardware revenues and new software license sales in its second quarter of fiscal 2012. While Oracle was facing a very tough compare, the miss is something that will make Wall Street and the rest of the IT community jittery for a spell – at least until …

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  1. Matthew Morris
    Meh

    Matt

    hm. seems like if you buy a company that excels at loosing market share (SUN). then hire a president to be in charge of that group that excels at cutting costs and r&d efforts to improve the margin if you sell any... and don't forget that the same president's secondary skill of losing market share..

    Seems like the numbers are right on target. The question is can either fowler or hurd do anything different.

    In the words of the farmers cat (watership down) " I think not"

    1. Matt Bryant Silver badge
      Alert

      RE: Matt

      Whilst I'm not worried for the software side of Oracle, if I was an ex-Sun customer buying Oracle hardware then the alarmbells would be ringing:

      ".....Hardware support revenues came to $625m, falling 2 per cent, but operating expenses for support fell by 27 per cent to $258m...."

      So, less money being spent on hardware support, and less revenus coming in from hardware support, which - with the ongoing decline in Oracle hardware sales - means less money to plough back into hardware support and development. It's the Sun hardware deathspiral all over again.

      1. Allison Park

        sounds like the same argument to leave Itanium

        Cheers and Merry Christmas

        1. Anonymous Coward
          Happy

          Re: sounds like the same argument to leave Itanium

          Zing.

        2. Matt Bryant Silver badge
          FAIL

          RE: sounds like the same argument to leave Itanium

          ...or Pee-series, or IBM mainframe. But then of those at least mainframe and Itanium have good support revenue generation, which is the difference. And IBM can shaft their mainframe customers to prop up the Pee-series range, as they have been doing for years. Meanwhile, hp simply use the strategy of common components and chassis between Proliant and Integrity to reduce the costs of Integrity. Shall we compare? IBM price-gouge one set of customers to make a profit, whilst hp use cleverer design and x64 marketshare to reduce costs to their Integrity customers. I know which one sounds better to this customer.

          1. Anonymous Coward
            Thumb Down

            RE: sounds like the same argument to leave Itanium

            Yes, very similar in the sense that they are completely opposite situations. Power is up 27% at the end of a chip cycle (no refresh revenue). Itanium (aka HP) is down 23% the last two quarters and will continue to be down by a similar amount for quarters to come without Oracle. HP may be able to leverage their large x86 services group to soften the impact on hardware break/fix, but who is going to pay for HP-UX, OVMS, NonStop and all of the related utility software maintenance? As there is a smaller and smaller install base funding upgrades, HP will either have to cut back or lose money. I think they will choose to cut development and support resources. Similar situation to Sun only that Oracle is a hugely cash rich company and Larry can decide to throw money from his extremely profitable software businesses at Solaris-Sparc if he feels like it. HP is $24 billion in long term debt and doesn't have Oracle money to throw around.

      2. Anonymous Coward
        Coat

        Re: Matt

        Agree, it seems that Oracle has slashed everything in the HW support model. Regardless of what you think of Sun servers, almost everyone agreed that support was good if not excellent at legacy Sun. Not any longer. Oracle has reduced the number of part depots around the US, and presumably the world, to consolidate them into regional distribution centers. It is great from a cost perspective, but if a Sun part breaks in your server and the tech doesn't have it on hand, they have to have it shipped in from who knows where. As Oracle has reduced the amount of inventory in the support system, who knows where may be 2-3 days away. They have simultaneously increased the cost of support and decreased the quality of support.

        1. Matt Bryant Silver badge
          Stop

          RE: Re: Matt

          ".....almost everyone agreed that support was good if not excellent at legacy Sun...." Erm, NO! I can still remember back in 2001, at their supposed peak, having blazing rows with Sun as to why it took them three days to replace a failed disk in a mission critical SPARC cluster server, or why we had to sign an NDA before they'd replace all the faulty Broadcom NICs they'd supplied. And that's when they were telling us we were in their list of the ten most important customers in Europe! I could give other examples of fluffed support calls, mismanaged escalations and - frankly - idiotic hardware engineering work, but they'd be too specific to my company and would probably give the Sunshiners too much ammo to go cyberstalking with.

          1. Jesper Frimann
            Devil

            Hmm..

            I kind off have some of the same experiences as Matt here, but again I have bad experiences with pretty much every vendor .)=

            Some more than others. But I do remember the "Performance tuning gurus" from SUN, I once worked with together on a client, not really being that guru like.

            Basically there were more interested in blaming the disk vendor (think it was EMC and it wasn't the DMX that was the problem), than fixing the problem.

            // Jesper

  2. Jean-Luc
    Paris Hilton

    About those Fusion thingies...

    Anybody take the new Larry Fusion ERP apps out for a spin? For real-world use, not eval.

    Opinions?

    Paris, because even she can develop standards-based applications, without those nasty proprietary languages like SAP, PeopleSoft, Salesforce.

    1. Anonymous Coward
      FAIL

      Peoplesoft is a Language ?

      All you listed appear to be vendors, some of which have proprietary languages such as ABAP, in addition to more common languages such as Java.

      1. Jean-Luc
        Trollface

        re. Peoplesoft is a Language ?

        Aren't you being a tad pedantic?

        Of course PeopleSoft isn't a language, it's both the vendor and its application framework. There is one programming language, PeopleCode. And a menagerie of about half a dozen programming frameworks going by different names. PeopleCode isn't even necessarily where a PS coder like myself spends most of his time when coding - most of my time is in SQL and Application Engine, followed by Application Designer Pages, PeopleCode is a distant 4th. You are, of course, familiar with all of these, aintcha?

        Salesforce is Apex, IIRC. And, along with SAP, I expect lots of dev time is spent in declaring object definitions in metadata.

        To put it differently, would I have more clear by saying "nasty proprietary languages like ABAP, PeopleCode and APEX"? Perhaps to some, but how many people know mainly the application vendor name, which I used on purpose, rather than the dev language?

        As far as standards based development goes, as a vendor you can go a long long way in marketing without making the lock-in any less. Take for example Oracle's Java-based stored procedures. Std-based, right? OK, now try porting your Java-based procs to another database vendor... You might succeed with Postgres's Oracle compatibility version, but that's about it. What's the gain then?

    2. Anonymous Coward
      Meh

      About those Fusion thingies...

      I have seen Fusion HR in action at a beta user site. Meh, was the reaction. It probably would have been impressive five years ago, when they were originally slated, but at this point they look like Workday. Besides, it is HR, how much new functionality do companies really need in HR, financials, etc? I think Oracle is going to have a difficult time convincing users that there is enough in Fusion to justify the huge migration project from EBS, PeopleSoft, JDE.

  3. Anonymous Coward
    Anonymous Coward

    Ok, this post is immature but....

    ...Oracle in trouble?

    *Pops champagne*

    Karma is a bitch isn't it.

  4. Anonymous Coward
    Anonymous Coward

    Oracle número uno for IT security headache

    Poor IT, next to Adobe and it's products Oracle is a huge security nightmare. Multiple database and java security issues never patched for multiple years on end. They think it's Android or Google that is the reason for their woes when it's their customers losing their appetite for wearing huge security risks from an uncaring commercial organisation with regards to its products.

  5. Allison Park

    Where is Gartner and IDC

    Oracle co-founder and CEO, Larry Ellison, said that the company sold over 200 Exadata and Exalogic systems in the second fiscal quarter – by systems, Oracle appears to mean "racks" – and added that the company will do 300 machines in Q3 and 400 machines in Q4

    "appears to be systems" what does that mean? Full racks? Quarter Racks? or are they counting every compute node and storage node as two?

    Now is the time for real numbers and the truth to be told. Larry didn't seem to know what to say when asked what happened to the 3,000 number you guys said before.

    Watch that analyst not be invited to the next earnings call.

    1. Anonymous Coward
      Happy

      Re: Where is Gartner and IDC → #

      Yes, in addition to that comment. Oracle is very careful not to say they "sold" x number of Exadata/logic. It is always we "shipped" x number of Exadata/logic. That is because they are including demo gear (i.e. here large bank, try this in your dev environment) and PoCs. Also, they are wrapping these boxes into licensing true-ups and renewals, so it isn't so much that they sold them as they gave them away with the price of the software.

  6. Anonymous Coward
    Anonymous Coward

    Hey Larry....

    Oracle != RedHat

    Exalogic != IBM Watson

    1. Anonymous Coward
      Anonymous Coward

      And, your point being?

  7. Anonymous Coward
    Anonymous Coward

    Legacy Sun Collapse

    Oracle is expecting Exadata/logic to be above $1 billion on an annualized basis by Q4. Lets assume then, conservatively, that the Exa business is running at about $200 million per quarter in sales. Now if you go back before the Oracle acquisition, two years ago to 2009, Sun's systems sales were running at over $2 billion per quarter, obviously without Exa. The server sales were $1.6 of that $2 billion. This was 90% plus Sparc servers with a few x86 servers mixed in. If we assume Oracle sold $0 in storage/switches/accessories, obviously not the case but lets assume, that means that there Sparc server business has dropped in half in two years. $1.6/2 = $800. Oracle has $950 million in HW, more or less, today, minus $200 for Exa = $750 million in legacy Sun. As a significant amount of that $750 in legacy Sun is storage, it is probably closer to $550 (assuming storage/Pillar and other misc is $200 million) or a 2/3s drop off in servers in a little over two years. That is pretty astonishing. It is almost hard to lose that many Unix installs, given how embedded the OS is, in 2 years.

    If you follow the financial decisions of the State of California, it is no surprise they are buying giant Sparc boxes.

  8. Shao
    FAIL

    Oracle is in decline in the SME arena and they are doing nothing about it.

    In the past, Oracle was the latest greatest. To some extent, that is still true and their capitalization on hardware and its own flavour of Linux is an excellent strategy.

    The problem they have is that for an SME that just uses Oracle as 'mainly a standard database' and doesn't use a great deal of the fancy higher end features, everything is moving more in the Microsoft SQL Server direction. In the past, councils etc would have site licences for Oracle - they now have site licences for Microsoft technology. In univesities, they teach Microsoft or OSS. In existing business deployments, SMEs can't extend into hosted services because Oracle's policy of not allowing Oracle applications to sit on VMWare without licensing all the CPUs in the physical box rather than just the CPUs used in the VMWare sectioned off for the application. As trading conditions become tough, SMEs want to extend into providing the entire hosted solution service, and with Oracle, this becomes problematic.

    So overall, I would say that the above all contribute towards Oracle's failed bottom line and that trend will continue.

    1. Anonymous Coward
      Anonymous Coward

      I agree that Oracle has lost their "cutting edge" luster. It is largely the database and a collection of acquired odds and ends. Nothing they have acquired or built has been up to the standard of the DB and the RDBMS market is becoming pretty commoditized outside of high-end.

      I think the hardware and OEL/OVM may have worked, but now Oracle is being so heavy handed about it that they are starting to backfire. If OEL/OVM was one supported option, maybe with some enhanced features for their DB, but VMware, Red Hat, SuSE, etc were equally supported, it would have been fine. Likewise, if Oracle offered Exa-xxx as one option, but all other options were equally supported, no problem. Oracle has chosen to basically ram OEL/OVM down peoples' throats, which is troublesome because they probably use VMware for everything else. Likewise, they are getting pretty aggressive on the hardware front to try to scare everyone away from using anything but Oracle. Of all the vendors in the world, Oracle is probably the least trusted to keep support costs consistent in a lock-in situation, which is what they are after.

  9. Anonymous Coward
    Anonymous Coward

    Should be fun for anyone about to under go an Oracle software audit, as anyone who's suffered one in the past will attest!

    1. Anonymous Coward
      Anonymous Coward

      The real reason software is down is subsidizing hardware

      Oracle sales teams are not allowed to discount the hardware. They have to take the 40-60% off the whole deal out of just the software. While a clever trick to prop up hardware revenue and profit margin it has the nasty affect of killing the sacred cow of software sales.

      The meek Exa-crap sales cannot make up for the disaster of SPARC and now that they finally admitted that SPARC64 is dead only a daf customer would buy an M-class system which is end of life. (albit long before Itanium is end of life....but I believe Hurd when he says Itanium has a end of life contract...he should know)

      Still curious what this 200+300+400 = 1,000 exa-crap systems means. Do they count every two socket intel box used in exalogic or the exadata storage node AND the exadata datbase node?

      When you count that way they might have 150 customers. And why is Larry so coy about talking about Apple buying exadata for itunes? Is it because they use Power systems to run their business?

      1. Anonymous Coward
        Thumb Up

        Interesting, it would not surprise me if that is the case. I have not heard of a single Exa-xxx deal that was not part of some larger software deal. Oracle just wraps them into the price of the larger software contract and basically tells the customer that their price is the same, with or without the Exalock-in.

        1. Anonymous Coward
          Anonymous Coward

          exactly

          And the way the price is broken out behind the scenes is 0% discount on hardware....that is how we prop up the hardware number at the expense of software. I am so sick of helping out the old STK reps who think they can sell a solution which is application focused. They don't have a clue.

    2. Anonymous Coward
      Coat

      Oracle Software Audit = Exa Customer

      Yes, Oracle will haul out the auditors and lawyers. It will be the standard, "we think you owe us $2 million in licensing true-up. If you disagree, please feel free to bring a lawsuit... which will cost you $2 million in legal fees. Alternatively, you can buy an Exa-xxx and load it with EE software."

  10. Dazed and Confused
    FAIL

    Having declared war on their customers

    just what the hell did they expect!

    Their decision to stop supporting one of their major sources of income has made a lot of significant customers very wary.

  11. ratfox
    Joke

    It's okay

    The legal department is going to be more and more profitable going forward.

  12. Steven Jones

    Squeezing the customer...

    Having worked for a very large Oracle customer, I think some of the moves that Oracle are taking are looked on with a lot of suspicion. Declaring something close to war on HP is going to cause massive disruption to many customers as migrating massive enterprise apps and, especially databases, between hardware platforms is a massively expensive and disruptive. Whilst Oracle are continuing to support x64 and Linux, it's notable that they are explicitly not releasing some of the software technology used in the Exadata OEL cluster into their general releases. I was also in receipt of all sorts of FUD from Oracle sales staff over the support for Linux on x64 vs Oracle on SPARC. The reasons are clear - just compare the price of virtually any standard component on a SPARC server versus an x64 one (memory is a good place to start).

    That leaves customers with the distinct (and not unreasonable) impression that Oracle are hell-bent on locking in customers for the entire hardware and software stack. Once a customer finds themselves in this position, costs start ratcheting up and the price of extricating yourself is huge. The industry has seen this before, and new projects will be put onto more cost-effective platforms. That's what killed DEC when they over-priced VAX and what drove almost all new applications off of IBM mainframes.

    Also, I find El Register's lionising of the T4. Unfortunately Oracle have declined to publish the sort of low level benchmarks that allow customer's to work out if these are practical alternatives to M series machines. There are a bunch of carefully selected application benchmarks which tell you very little save a very strong suspicion that they've been chosen because they fit the heavily threaded multi-threaded nature of the T4. However, many large corporations will have had some apps which perform disastrously on T series due to the very slow single thread performance.

    The advice for anybody looking at large scale future projects is to be very wary about lock-ins to proprietary architectures. Given that, I expect that Oracle will continue to lose ground.

    1. Version 1.0 Silver badge
      Happy

      I started reading your comment and the first company that popped into my mind was - as you point out - the venerable Digital Equipment Corporation ... but that disaster was probably long enough ago that everybody at Oracle has forgotten the lesson.

  13. Anonymous Coward
    Flame

    The Millstone Business Unit

    It appears Mr Ellison bought one company too many this time. He either has to cut them down to virtually zero or see the ex-SUN (now "blackhole") business drag them under.

    One assumes Mr Ellison knew about the relative weakness of SUN hw vs Linux hw, but it seems he is either on an ego trip or on a sentimental trip. Both bad for business...

    1. Matt Bryant Silver badge
      Trollface

      RE: The Millstone Business Unit

      "It appears Mr Ellison bought one company too many this time....." Larry's problems seem to stem from his decision to buy all of Sun when he originally only wanted the software toys, Java, MySQL and Slowaris, probably in that order. This also appears to be the origin of the schism in the relationship between hp and Oracle, which up till then had been cosy and warm. When hp declined to partner up with Oracle and take the hardware bits of Sun, Larry was left with the unwanted bits as well as the software. The smart decision would have been to dispose of the hardware bizz for whatever he could get, keep any hardware patents, and just keep on partnering with as many hardware vendors as possible. Instead, I suspect that Larry let John "Foul-up" Fowler talk him into the fantasy of Sun hardware having a future.

      The good news for Snoreacle shareholders is Larry likes profits, and he's proven pretty ruthless with underperfroming Oracle products in the past. As long as Larry gets to the right conclusion before he retires and hands over the reigns to Mark Hurd, Oracle should go back to being a software powerhouse rather than a software powerhouse with a hardware millstone. If Hurd gets control before then I'd say the millstone's drag will only increase.

      1. Anonymous Coward
        Anonymous Coward

        Amazingly, I agree with you. Oracle should have sold off the legacy Sun business for whatever they could get for it. HP, in retrospect, probably wishes they would have just bought the legacy gear to keep Oracle from going thermonuclear on them. As Oracle bought all of Sun for $5.5 billion net of cash, they probably would have been willing to part with the HW for $1-2 billion. IBM would have probably picked it up if the price was right and just added Solaris to Power. The issue was probably that Oracle wanted to keep Solaris, ZFS and the rest of the OS software, which would make the servers pretty worthless.

        1. Anonymous Coward
          Stop

          @Wunderbar1

          I do think it does not just hurt HP, it also hurts Oracle that they artificially limit the sale of their database server. HP does have a powerful sales organization, who loves to sell Oracle+HP9000 packages.

          Also, if HP takes it personally, they could aggressively push alternatives - from Sybase to an "Allbase 2012", if they so desire. They certainly have all the financial resources they need to do that.

          I think this is more the case of an old man becoming increasingly stupid.

          1. Anonymous Coward
            Anonymous Coward

            or DB2

            9000? HP killed 9000 four years ago.

            HP should be pushing, and should have been pushing before the Oracle situation, IBM DB2 on Itanium. IBM took the high road and did not discontinue DB2 when Oracle, MS, RH announced EOL on Itanium. Sybase is still working on a port to Itanium. I do not believe it is there yet. Regardless, Sybase has about 1% of the DB market. There are no skills to administer it and it is expensive. SAP may increase the interest in Sybase, but I think they are looking past Sybase to HANA. SAP would have a hard time selling Sybase, as they refused to certify it for SAP for the past 15 years.

  14. Destroy All Monsters Silver badge
    FAIL

    "rising on optimism about the European debt crisis being resolved and housing starts in the US"

    Who comes up with this kinda sh*t, apart from people sniffing cocaine from rolls of penny stocks?

    1. Local Group
      Childcatcher

      IMHO

      Our optimism or pessimism about the condition of the global economy varies from day to day.

      But today's big players are making money betting on the volatility of the markets, not on future growth of the global economy or the absence thereof.

  15. Anonymous Coward
    Anonymous Coward

    Am I missing something here?

    "In the quarter ended November 30, Oracle's overall sales were up only 2 per cent to $8.79bn,"

    There's a world recession on yet its sales are still UP. Wtf is the problem?? How is this being "hammered"??

    When the hell are these financial types going to come down out of their ivory towers and back into the real world where hopefully they might finally twig the fact that neverending growth in sales or overall output is an impossibilty anyway for a company or a country since there isn't an infinite number of people out there to buy shit. The best that can be hoped for one day is a steady state where you seell replacements for older kit.

    1. Anonymous Coward
      Anonymous Coward

      I agree with you - they are being "reported" as terrible results by many, and while they did miss the projected growth targets, they are still firmly in positive growth.

      The reason the world and his dog are shrieking, I think, is because Oracle has always been seen as a bellwether (as the story suggests) for the market, and the wider economy to a degree, so if Oracle are starting to see slippage, then all is is not rosy with the economy.

    2. Matt Bryant Silver badge
      Facepalm

      RE: Am I missing something here?

      To put it simply, yes! Investors look at the performance before the Sun acquisition, when Oracle was just about pure software, and then compare the dividends to what they get now with the Sun hardware millstone dragging on the rest of Snoreacle. To them, it looks like the business would have been better off not having the hardware millstone so they look at other companies to see if their stocks are performing better. Remember, Larry was gushing on about how he planned to make $2bn out of the Sun hardware bizz in a year and failed, so they will look at his other projections with scepticism.

    3. Anonymous Coward
      Anonymous Coward

      I agree, this is not as bad as it has been reported. Sales were basically flat and profits increased by 12%. Oracle missed their targets, but it is hardly a disaster.

  16. Euneeks
    Linux

    Drop in hardware sales.

    So, Oracle tear up the traditional support options and only offer premium support with a platinum support price tag. But that means all dev/uat boxes now have have the support cost of a Plat prod box??

    Then the premium SLA's are not as transparent as they were with Sun (a 2 hour engineer to site from the moment Sun picked up the phone and answered is a distant dream) and the chances of you having an onsite Engineer dimished to another pipe dream unless your into coughing seriously high cash for that pleasure. And allowing any other engineer to work on that kit if you centralised your support?

    The responses to repeatedly failing systems (which happens to all vendors equipment) is now met with repeat "certification" that a box is clean, to be followed by another failure. Sun would take it offsite while loaning a replacement so the original was diagnosed in a Sun lab, not in the customers server room where it had a function.

    And come to the actual support, you could pick up the phone and speak to someone, now you wait for a callback or web response which may come from a suitably knowledgeable engineer or may come from someone who can't comprehend the actual problem & require many levels of frustration while they realise it needs to be escalated.

    The original support folks are still there, in a backline function far removed from you unless escalated fairly sharply through account managers who have to jump through flaming hoops to find those few valuable nuggets of knowledge still inside the mothership.

    I can ignore hardware costs/features totally. Why would you purchase a Sparc machine unless for M-series high-end /legacy apps (or an Itanium box from HP for that matter) to get such diabolical treatment. Solaris is great & kicks linux but thats only one part.

    Comparing the same cost spent buying 2 or 3 x86 machines and vmware'ing/clustering/DR'ing them so you can cope with the poor x86 diagnosability but still achieve the same overall service availability on RHEL/SUSE/x86. Or spend your cash on intelligent storage offerings instead that genuinley assist with DR.

    Sun sold slow but reliable kit with good tiered support that justified the cost. Oracle suck out your cash with promise of a feather bed while you actually lay in a bed of thorns.

    Just need x86, Linux & dedicated support contracts with each respective vendor (not one combined 'cheap' support offering from an x86 vendor who promises but also can't deliver, ie: HP/IBM)

    Fingers crossed for Sybase/SAP to take out some of the monopoly. Maybe they can buy SUSE at some point and complete the software offerings.

    1. Allison Park

      Power7

      We bypassed all that garbage and moved to IBM. Now we play Oracle and IBM off each other to keep them in check. It's the old Amdahl dual vendor strategy play

  17. Beachrider

    The problem was ORCL's predictions...

    The stock market rides largely on predictions. Oracle had guided the stock market to larger numbers and then missed. That will ALWAYS cause the stock to drop. It doesn't mean that Oracle will be going out of business, just that they don't know how to predict where they are going.

    When Oracle put T4 out there and then couldn't deliver it anytime soon, they 'froze' their market. People were incentivized to defer purchase until T4 came out. Many ridiculed IBM because they 'missed' their Power 7+ window (in Aug/Sep), but everyone knew that IBM then-wouldn't rush out that notification in Oct/Nov/Dec. It is bad business to cause customers to defer purchases to 2012, when you can get them in 2011.

    That being said, it was quite aggravating for IBM to 'miss' on Power 7+, they did get the stock-hammer affect, too.

    1. Anonymous Coward
      Anonymous Coward

      I don't think they missed on Power7+

      They delivered the Power7` (power7 prime) in October and will deliver power7+ next year. The +'s come out depending on when the fab is ready so anywhere in the 18-24 month timeframe.

      The problem with Oracle hardware is IT has more discretion in buying hardware. Business units want the software and applications and the CIO's don't want to be held any more hostage by larry

      1. Anonymous Coward
        Thumb Up

        Agree, IBM hasn't missed anything with Power. We cover this in another forum, but Power 4 - 2001, Power 5 - 2004, Power 6 - 2007, Power 7 - 2010. IBM releases a clock speed kicker 24 months into the cycle. Compare that to Sparc or Itanium.

    2. Anonymous Coward
      Meh

      T4 - Not a factor

      The T4 announcement was Oracle's excuse this quarter, replacing x86 losses the past few quarters, as the reason HW fell by double digits again. Very few customers are biting their nails waiting for the latest Sparc chip to hit the market so they can buy it the day it is available. Most Sun installs are legacy installs that people are working on getting rid of, not worrying about upgrading a month after the new chip hits the market. Sparc is plummeting. If Oracle would just say that they have this legacy HW (Sparc) that people are dropping because it is not competitive, but don't worry about it, Wall Street, because we are selling Exa-xxx and we purchased Sun dirt cheap because we knew this would happen, they would be better off.

  18. Beachrider

    You can argue about Power7+...

    But the IBM stock took a beating in September when there was no significant advance announced. Don't be anonymous if you want to cite their timelines. The Reg was surprisingly informed on IBM's product cycles, over the summer.

    1. Anonymous Coward
      Thumb Down

      I don't think the financial analysts covering IBM are too concerned about Power 7+ (I doubt any of them can even tell you what it is). Power's sales have been up 27% in the most recent quarter (Q3) while Power competitors (Sparc and Itanium) were both down 20%. Also, Power is one part of one division in IBM. Not even going to register with the financial analysts, especially if sales are great.

      1. toughluck
        Facepalm

        Lucky then that the financial analysts covering Oracle are able to tell what SPARC is, considering those covering IBM aren't able to tell anything about one of IBM's most valuable assets.

        1. Anonymous Coward
          Meh

          Sparc vs. Power financial analysts

          Yes, but the difference is that Power is moving along without incident, actually growing rapidly. Sparc, HW in general, is the clear blemish on Oracle's financials, always down double digits when everything else is up double digits. As HW is an issue, the analysts dig deeper to figure out what is going on. Power is going well, so no one is going to question a business that is growing rapidly... as any perceived delays in Power 7+ have not effected the financials.

          1. Jesper Frimann
            Boffin

            Bang for the buck.

            Well one thing one have to take into account when looking at POWER sales is the big jump in capacity going from the old pSeries platform you are upgrading to POWER7.

            1 Socket machines

            POWER5 -> 12,5 rPerf

            POWER5Q -> 20,3 rPerf

            POWER6 -> 14,7 rPerf

            POWER7 -> 92,0 rPerf

            2 Socket machines

            POWER5 -> 24,9 rPerf

            POWER5Q -> 38,3 rPerf

            POWER6 -> 39,7 rPerf

            POWER7 -> 176,6 rPerf

            4 Socket machines

            POWER5 -> n/a rPerf

            POWER5Q -> 75,6 rPerf

            POWER6 -> 78,6 rPerf

            POWER7 -> 335 rPerf

            8 Socket machines

            POWER5 -> 96 rPerf

            POWER5Q -> n/a rPerf

            POWER6 -> 141,2 rPerf

            POWER7 -> 692,5 rPerf

            32 Socket machines

            POWER5 ->393,6 rPerf

            POWER5Q -> n/a rPerf

            POWER6 -> 553 rPerf

            POWER7 -> 2812,7 rPerf

            Which basically means that when you are upgrading a Big POWER5 based p595 which costed you a fortume, had hundreds of adapters, and perhaps ran at 20-40% utilization you are now putting in for example a POWER 770 which cost 20% of the p595, runs at 40-70% utilization and use 16-24 adapters.

            Furthermore the 770 is perhaps able to house the load of two p595.

            So the fact that POWER revenue for IBM is increasing, means IMHO that a lot of capacity is being shipped, cause again you only have to spend around 10-25% on hardware to get the same capacity.

            // Jesper

            1. This post has been deleted by its author

            2. Anonymous Coward
              Thumb Up

              Yes, that is exactly the point to remember about Power's sales growth. Power has released massive performance improvements while holding the price constant over the last generation. If Power was just holding their installed accounts, e.g. Corporation X moves SAP from Power 6 to 7, there would be a huge fall-off in Power sales revenue. The fact that they are growing at 27%, even with the cost-per-performance improvements, means that the actual amount of workload running on Power has grown exponentially during the past few years. Power is taking over the Unix market because Itanium and Sparc flat out cannot compete with Power's performance. In addition, Power looks like the safe path vs. Itanium/Sparc. Itanium is all over but the crying. Sparc looked like it was dead, and it probably still is, but no one is exactly certain what Oracle is doing. Regardless, predictable IBM looks great as compared to the Oracle-Sun and HP soap opera.

      2. Matt Bryant Silver badge
        Happy

        RE: Wunderbar1

        ".......Power's sales have been up 27% in the most recent quarter...." I suggest you stop looking at just US sales figures and look Worldwide. You also don't draw attention to the fact that many of those Pee7 sales in Q3 in the States were customers that had delayed purchasing Pee-series kit whilst they vainly waited for the Pee7+ (which was due Q1 or Q2, but seems to have gone the way of Pee6+) and then settled for Pee7 instead. Of course, including sales from other areas means having to include bad news for IBM like the the 14.7 drop in IBM mainframe sales in the EMEA market now the recent IBM mainframe refresh cycle is over. And we all know how important those mainframe sales are in propping up Pee-series.....

        Worldwide, the biggest seller is x64 by a massive margin, and especially blades, where hp owns 50% of the market and dwarfs IBM.

        1. Jesper Frimann
          Headmaster

          Sales of Power.

          Well what fuels POWER7 sales right now is the fact that POWER5(+) kit is seeing EOL, in terms of typical company depreciation. So people are going from Power5(+) -> POWER7.

          Which surely is stupid cause it's much cheaper to do n+1 upgrades, rather than n+2 forklift upgrades.

          Now the recent upgrades to the 770 and the 780 are actually pretty major ones. Both the POWER 770-MMB and the 780-MHB IMHO suffered from having to much processor punch compared to in system unit IO and Memory.

          So I think the new 770-MMC and 780-MHC are more balanced, and you should be able to keep all your adapters in the system units, if you do proper IO virtualization, and 4TB ram to 64 cores is more like it.

          // Jesper

    2. Anonymous Coward
      Anonymous Coward

      The stock went down in August-September, but that was in line with the rest of the S&P 500 (not unique to IBM). The stock was up 40% since the beginning of the year, so there was probably some profit taking by Wall Street as well. Certainly nothing to do with a mid-cycle clock speed kicker that was arguably late in a business that is booming. I don't think it is at all late. If you look at the historical chip cycle, they release a new chip every three years with a + 24 months into the cycle. Power 7+ is due early next year. Power 8 in another appx. year or a little over.... I am not citing any proprietary information. This is all in the past tense. Search Wikipedia or whatever you like to find when Power chips have been released.

  19. Beachrider

    Power 7 vs x64...

    Power 7's traditional competition was HP & Sun Enterprise UNIX platforms. That competition isn't over yet. The whole point of this market segment is to construct machines that cannot economically be serviced with Intel/AMD/Via x64 machines. If they no-longer can service that market, then there is no reason for them to exist, unless they are cheaper.

    (Remember that Power also services IBM's i-Series as well as their AIX).

    Because x64 keeps 'marching on', Enterprise UNIX must also progress. Some of that is CPU speed (with less cache-stalling), some of it is IO speed (faster buses) some of that is scaling (with better integration of large core-counts, large memory and generalized 64-bit function) and some of it is uptime (is specialized hardware/software more reliable than commodity hardware/software).

    For a lot of high-end management, use of Windows on x64 is perceived to be a key advantage (this is quite a technical sticking point, though).

    Sooo... The question I like is: Can Power 7 continue to compete with x64 from a full-range of perspectives. If it does, then IBM gets a 'kick' to its bottom line that is unique to them.

    1. Jesper Frimann
      Angel

      iSeries.

      Well, iSeries does not, AFAIK, tricker a lot of POWER hardware sales today. When I look at the AS400 stuff we have still standing around from the premerge of p and i, then I can see that most of the solution is actually internal disks and tape drives etc. and then a little iSeries box.

      So I guess that the majority of iSeries revenue for IBM have turned into revenue for their storage division, and only a little part have made it into the POWER 'division'.

      // Jesper

  20. Anonymous Coward
    Go

    @HP: Just make this available on HP9000

    http://www.hp.com/products1/evolution/e3000/mpeix/operating/allbasesql_specs.html

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