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Oracle Engineered Systems Strategy Pays Off

Oracle dodged declining server sales last year, and now it's going after Cisco and EMC. Is the software-meets-hardware strategy winning?

"You'll pay less, but you'll have to be willing to accept better performance."

That's the claim Oracle executive chairman and CTO Larry Ellison kept repeating throughout his unveiling of the fifth generation of Oracle Engineered Systems on Wednesday. It's the product line led by Exadata and other "Exa" products that feature software preintegrated with compute, storage, and networking hardware.

"We do the integration so you don't have to," said Ellison at the outset of a 45-minute keynote.

[Want more on hardware trends? Read IBM Slides, Dell Gains In Gartner Server Report.]

Oracle says it has shipped more than 10,000 Engineered Systems, and Ellison pointed to recent server shipment statistics as proof of success. Gartner's Q3 server revenue and unit shipment report from December actually shows that Oracle was flat on overall server revenue in Q3. But in the RISC/Itanium market, where Oracle offers M-series Sparc Servers and Supercluster engineered systems, Oracle had a 2% gain in Q3 revenue and whopping 6-point gain in market share. Rivals IBM (with Power servers) and HP (with Itanium servers) posted 29% and 10% declines, respectively.

Ellison clearly noticed that Cisco is growing much faster than Oracle in the server business. Gartner's numbers show Cisco grew 31% in revenue in Q3. No surprise, then, that Oracle is now targeting Cisco and storage partner EMC with new engineered systems in the market for standard two-socket servers that provide core data-center capacity. The Oracle Virtual Compute Appliance (VCA) X5 targets Cisco UCS servers. The VCA combines compute, networking, and multiple Oracle storage options with built-in operating system and virtualization software.

"We're right around half the cost of Cisco UCS ... and that's our list price compared to their discounted price," said Ellison dryly. "And we will negotiate and we will discount off of our list price."


Oracle's VCA price comparison versus Cisco UCS server capacity.

Ellison also cited lower price and superior performance for the Oracle FS1 Series Flash Storage System, a storage area network device aimed at EMC. Ellison shared detailed prices showing the FS1 costing one-third the price of EMC's VNX 8000.

Beyond VCA and FS1, Oracle's entire lineup moved onto Intel's latest chips and new storage with the X5 series, so the Oracle Database Appliance, Oracle Big Data Appliance, and Oracle Exadata are all packing more processing power and greater storage capacity. Exadata also gained an Extreme flash storage server option for high-end performance.

The key point that Ellison kept returning to is that the "engineered" in engineered systems is about integrating and optimizing the software to work with the hardware. Oracle controls everything in this equation -- compute, networking selection (Infiniband), storage, and software (operating system and virtualization on the VCA) -- so it can integrate, optimize, and test everything in sync, eking out greater performance in the bargain.

Oracle didn't invent these preintegrated machines, Ellison granted, crediting Teradata for pioneering data warehousing appliances and Cisco with pioneering converged servers with UCS. But Oracle can beat these pioneers, he said, by delivering better performance at a lower cost. The lower-price claim is new to Oracle's strategy, Ellison said, and it's a tack it's taking because "we're tired of having the argument" that better performance translates into lower total cost of ownership.

Indeed, control over database, middleware, and plenty of applications does give Oracle huge advantages, and it's a key reason why IBM PureData systems have not matched the success of Oracle's Exa products. IBM lacks the applications and its databases are losing ground to Oracle and Microsoft SQL Server. (Warning: Would-be buyers should check the cost of licensing the software that comes with engineered systems, as that's not always included in Oracle price listings.)

Oracle, Gartner, and IDC don't really break out Oracle Engineered Systems with hard, public numbers, so we're left with squishy claims. Are those gains Oracle CEO Mark Hurd always trumpets tied to low-cost products, like the Oracle Database Appliance, or to high-end products like Exadata, Exalogic, and Supercluster? We can't really know for sure, but the move away from roll-your-own approaches and consulting and integration services is being validated by Cisco, HP, and others.

To Ellison's point, Oracle controls more software and, in many cases, more popular software, than its hardware competitors, so it's playing the right card in promoting engineered systems.

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