Oracle Corp. (ORCL) announced a new data center hardware strategy that lowers the prices of its products to increase adoption of its software.
Chairman Larry Ellison announced the fifth generation of the company’s suite of engineered systems products on Wednesday at an event at Oracle’s headquarters in Redwood City, California. The new products, pairing Oracle’s self-designed hardware and software, will compete with systems from traditional vendors such as Cisco Systems Inc. (CSCO) and EMC Corp. by being priced lower than the competition, Ellison said.
“Our new strategy is highest performance, lowest list price, best cost performance,” Ellison said.
The new products continue Oracle’s strategy of tightly coupling hardware with software to foster long-term customers. While the hardware division produced just 14 percent of Oracle’s $38.3 billion in 2014 fiscal year revenue, the company typically uses the machines to bundle in its enterprise software, providing a boost to total sales.
“Customers are just more satisfied when they run our engineered systems, so that will tend to produce repeat customers both on the hardware and the software side,” Juan Loaiza, senior vice president of Oracle’s Systems Technology division, told analysts and reporters after the event.
Cisco said its alliance with EMC in the “converged infrastructure” market has made it the No. 1 vendor.
“Oracle has a lot of catching up to do,” said Paul Perez, a vice president at Cisco. A representative for EMC didn’t respond to a request for comment.
Oracle has invested in more products that tie its hardware to software, creating a loose classification of “engineered systems.” Sales of those systems rose in the “double digits” last quarter, Chief Executive Officer Mark Hurd said in a December conference call.
Oracle is the world’s largest database software company and one of the biggest providers of business programs. Today’s event is the company’s first substantial new product unveiling since Ellison stepped down as CEO last September. Hurd and Safra Catz were promoted to CEOs.
Oracle declined about 1 percent to $43.49 at the close in New York before Ellison’s presentation and was little changed in extended trading. The shares gained 14 percent in the past 12 months.
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