Oracle wants to proclaim it far and wide: it knows all about supporting business operations. The leader in enterprise software (almost 75% of its sales), it also provides hardware and services to help companies improve their processes. Best known for its focus on databases, it offers aid in areas such as managing business data, collaboration and application development, customer relationship management, and supply chain management. In recent years the company has aggressively used acquisitions to expand, such as its entry into the hardware business with the purchase of Sun Microsystems.
Oracle has global operations. No single country outside the US accounts for more than 10% of sales, but combined, international customers represent nearly 60% of sales.
While rival Microsoft started as an operating system (OS) software company before horning in on the business process applications business, Oracle has, for the most part, avoided doing the reverse. Its forays into OS territory, with Solaris and Linux, focus on servers and workstations rather than PCs, as a support to its core business.
Oracle's software generally starts above the OS level, going from database to middleware and finally on to user applications. Middleware consists of applications such as Java, virtualization software, and service-oriented architecture that form the bridge between operating systems and user applications. On the front lines are its user applications, which have grown with major brands such as Siebel (customer relationship management), PeopleSoft (human capital management), and JD Edwards (financials).
Formed in 2010 with the Sun acquisition, Oracle's entry into the hardware business was a strategic move to provide a differentiated product by engineering hardware and software that are optimized to work together. Oracle increases its competitive advantage, however, by also working to ensure its hardware systems work easily even with competitor software, like those from Germany-based rival SAP. Hardware offerings mainly consist of servers and storage products, and includes the Solaris OS as well as Linux systems that also support its focus on database, middleware, and applications.
Finally, Oracle's services business offers consulting in a variety of related areas such as business and IT alignment and enterprise architecture, as well as helping customers not only choose, but implement, integrate, and enhance the products they need. The company hasn't been left in the dust on cloud services, either, offering monitoring, security, management, and more, whether remotely through its data centers or onsite.
Sales and Marketing
The company uses direct and indirect channels to market and sell its products and services. The companies that comprise Oracle's indirect channel network are members of the Oracle Partner Network.
Oracle's advertising expenses, which are included within sales and marketing expenses, were $85 million in fiscal 2013.
The company's strong licensing sales and distributed geographic presence have allowed Oracle to grow sales and net income year over year through the global economic downturn while many competitors faltered.
Oracle's revenues increased 0.2% and its net income increased 9% in fiscal 2013 compared with fiscal 2012. Net cash outflow decreased by $866 million in fiscal 2013 compared with fiscal 2012. The increase in revenues was attributed to an increase in Oracle's software business revenues. The software business enjoyed growth in its software license updates, product support, new software licenses, and cloud software subscriptions revenues.
In mid-2013 Oracle announced major partnerships with two rivals in an effort to enhance its cloud-based offerings. Under an agreement with Microsoft, the world's top software maker will run Oracle database software in its Windows Azure cloud platform; the collaboration also calls for other mixing of software. Under a nine-year agreement with salesforce.com, Oracle will integrate some of its programs with salesforce.com products and salesforce.com will increase its own use of Oracle products.
Most of Oracle's products are developed internally. The company spends billions of dollars each year on R&D. Much of its R&D goes into ensuring its core database products continue to dominate that market, as well as toward investments to ensure that technology from various acquisitions is successfully integrated into its sprawling landscape of products. Still, acquisitions are not a passing fad at Oracle, but an integral part of its strategy.
Mergers and Acquisitions
The company has spent billions acquiring complementary businesses and products, with the majority occurring in the US. In mid-2014 it announced plans to acquire MICROS Systems, which makes hardware and software for the hospitality and retail industry. (Think point-of-sale terminals and software for central reservations and inventory.) Oracle proposed $5.3 billion for MICROS, which would be its largest purchase since the 2010 acquisition of Sun Microsystems for $7.4 billion.
In late 2013 it bought marketing software provider Responsys for $1.5 billion. That came on the heels of its 2012 acquisition of Eloqua, another marketing software company, for which it paid some $871 million. Both the Responsys and the Eloqua platforms became part of the Oracle Marketing Cloud.
Earlier in 2013 Oracle bought Nimbula, a provider of private cloud infrastructure management software. Nimbula's product is complementary to Oracle, and is expected to be integrated with Oracle's cloud offerings. It also bought Tekelec, a leading provider of network signaling, policy control, and subscriber data management solutions for communications networks. By combining Tekelec with leading capabilities from Oracle Communications and Acme Packet, Oracle expects to provide the most complete communications offering that will enable service providers to engage with customers, improve operations, control network resources and deploy innovative communications services. (Oracle bought Acme Packet in 2013 for some $1.7 billion.
Acme Packet's Net-Net line of products allow companies to send data securely across the Internet. It was the company's biggest push into the market for equipment that transports Internet data and moves it into the IP networking space (where Cisco is dominant).
In 2012 Oracle bore down on social media and the cloud, looking to combine its sales, service, commerce, data management, and analytics tools with social media software acquisitions to create a comprehensive social relationship management platform. The company bought Collective Intellect, a developer of cloud-based software used to monitor, understand, and respond to consumer conversations on social media platforms such as Facebook and Twitter. The purchase complements another 2012 acquisition, that of Vitrue, a developer of a cloud-based social marketing campaign application.
Also in 2012 Oracle bought Skire, a provider of cloud-based management of capital projects, facilities, and real estate. In another 2012 acquisition, Oracle bought SelectMinds, which provides social talent sourcing and corporate alumni management applications to organizations looking to use the Web to tap into the social connections of employees for new hire referrals.
The company is also looking to expand its network virtualization products through acquisitions. In 2012 it bought Xsigo Systems, a provider of networking technology used by enterprise customers to simplify infrastructure in the cloud using software to connect any server to any network and storage. The purchase extended Oracle's VM for server virtualization product line with Xsigo's network virtualization to give the company a more complete offering of virtualization capabilities for cloud environments.
Co-founder and CEO Larry Ellison owns more than 22% of the company, a holding that (along with other assets) routinely places the flashy and outspoken billionaire among the world's richest people.