Oracle's third quarter earnings conference call will have a healthy dose of Exadata hardware chatter, but a survey indicates that a little more elaboration on the cloud computing story is in order.
The fiscal third quarter will be an interesting one for Oracle. The company had a rare stumble in the second quarter and analysts are looking to see if sales execution issues were a mere blip or something more worrisome. Wall Street is looking for third quarter earnings of 56 cents a share on revenue of $9.02 billion.
Meanwhile, Oracle has gone cloud computing happy with the purchase of RightNow as well as Taleo. Oracle is also expected to gobble up more software as a service companies. What's unclear is whether Oracle's acquisition strategy will work as well in the cloud as it did for on-premise enterprise applications. Oracle's girth largely comes from acquiring companies like PeopleSoft, Siebel and BEA Systems to name just a few.
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The outlook for Oracle's cloud strategy so far is mixed, according to a Piper Jaffray survey of partners, which are tasked with selling the software giant's wares.
In a research note, Piper Jaffray analyst Mark Murphy noted that 47 percent of Oracle partners noted that the company's cloud computing strategy hasn't gained tractions. Another 38 percent said there was limited traction. The problem? Oracle is seen as late with its cloud strategy and is trailing amid tough competition.
That cloud story is one to watch going forward. According to Piper Jaffray's survey, Oracle is likely to deliver an in line quarter. Forty nine percent of Oracle partners say they were above plan for the February quarter with 29 percent at plan. In addition, 56 percent of partners are seeing a better pace of Oracle business. That outlook may mean Oracle's quarter is on target.
But future quarters may hinge on two wild cards: Oracle's cloud strategy and its hardware plans.
On the former, partners said that Oracle is slowly mobilizing firepower for its cloud wares. Partners, however, appear to be confused about Fusion applications and the cloud strategy behind them.
A few choice quotes from Murphy's survey:
There's some confusion out there now with the Fusion applications actually being available. I think customers are taking a little more time to make decisions on their best options. Oracle is on the right track here when it comes to cloud computing and needs to stay on the right path.
We have seen no sincere movement toward cloud computing from an Oracle Application point of view.
Oracle's Cloud Computing is gaining traction as clients are struggling to secure and retain IT talent with the necessary skill sets to manage these environments. In addition, clients are intimidated to move these complex environments onto a cloud themselves without the endorsement of their vendor.
It is complicated and a pain in the ass. Most people don’t even know who to go to, to figure out pricing.
I believe most customers still do not understand Oracle's Cloud Computing strategy. Most customers associate Cloud Computing with a SaaS model. From an applications perspective, Oracle makes it clear that Siebel is available as SaaS. However most are not aware that other applications can be available in a SaaS solutions as well, albeit sometimes through business partners.
Bottom line: Oracle's cloud fortunes could change, but partner enthusiasm---or lack of it---indicates that the company needs to outline the plan better.