Oracle gave the lowdown to analysts on what kind of customer upgrade cycle it expects for its Fusion apps.
Although Fusion applications were largely overshadowed Exadata and Exalogic at Open World, Oracle's next generation enterprise software is arguably way more important financially and from a customer perspective.
Analysts were busy penning their recaps of Oracle's Wall Street powwow Thursday. Here are a few of the key takeaways:
- Oracle executives said they think half of its customers will upgrade to Fusion applications within 5 years of the release.
- Oracle has 93 percent of its E-Business Suite customers on the two most recent releases.
- The company has had success selling modules. Oracle said that 44 percent of JD Edwards customers bought a new module in the last 12 months with 46 percent of E-Business Suite users buying new modules. Sixty-seven percent of PeopleSoft and 45 percent of Siebel customers bought new modules over the last 12 months.
- Fusion pricing wasn't formally released, but Oracle said "if customers are active on support they will get "like for like" credit and customers won't have to pay again, although new modules will of course be extra," according to JMP Securities analyst Patrick Walravens. Oracle also said subscription pricing will be available.
- There will be traditional perpetual licenses and subscriptions.
- Oracle is working to qualify 60 to 100 customers to adopt Fusion apps in the first 6 to 8 months of launch, according to William Blair analyst Laura Lederman.
- Based on those tidbits, Walravens reckons that Fusion apps will deliver an additional $130 million in revenue in fiscal 2011 and $530 million in fiscal 2012. "Our model starts with 65,000 Oracle applications customers and has 80 percent of them upgrade to the Fusion Applications over a period of six years and 60 percent over 5 years," said Walravens.
What's notable here is that Oracle gave more details about Fusion in a few hours with analysts than it did all of Open World. Keynotes at the conference were mostly hardware focused.
Other odds and ends from Oracle's analyst day:
- 85 percent of service requests are handled over the Internet. Sun used to take 85 percent of sales requests over the phone. Sun customers now pay extra for more extensive support.
- CEO Larry Ellison seemed to indicate that Oracle would go shopping for intellectual property driven businesses, including semiconductor and software companies. Ellison shot down the idea that it would buy a large services business.
- Oracle remained very upbeat about its hardware prospects.
However, some analysts said Oracle would face challenges. Cowen analyst Peter Goldmacher said in a research note:
We continue to view Oracle as the best horse in the glue factory, but remain concerned that Oracle is not a net share gainer in the paradigm shift to the cloud. Oracle will continue to dominate in the areas its always dominated in and continue to grow via M&A, but enterprise IT is consolidating and the major players continue to compete aggressively on price. Real growth in computing is coming from a wide variety of non mission critical workloads being deployed away from Oracle in massively efficient low cost data centers. Cloud computing pricing is far too low to drive total growth in IT spend by expanding the market opportunity.
Ellison would disagree.