Oracle bets on Sparc with new releases next week

CEO Larry Ellison has little interest in selling commodity x86 systems and is blunt about it

Oracle next week will announce a new Sparc processor and a high-end server, as it continues to try to make the best of its acquisition of Sun Microsystems last year.

Oracle plans to detail its Sparc T4 processor, an eight-core processor optimized for Oracle applications, with a performance the company says is five times faster than its predecessor, the T3. It will be part of its high-end server called Sparc SuperCluster, which was initially announced last year.

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Oracle's emphasis will be on delivering high-end systems that lead to higher profits, said company officials in a conference call Tuesday with financial analysts.

Oracle CEO Larry Ellison was blunt about the shift and what it may mean for some of the x86 products that it inherited from the Sun acquisition.

"I don't care if our commodity x86 businesses goes to zero," said Ellison, on the conference call. "We don't make any money selling those things."

Ellison said the company has no interest in selling the intellectual property of other firms, including Intel and Microsoft.

"Sun sold that stuff and we are phasing out that business," said Ellison "We have no interest in it whatsoever," he said.

By the numbers, hardware sales have been lagging at Oracle. In the call with analysts to discuss its latest quarter, the company said that new software license sales revenue grew by 17 percent, but hardware sales were down 5 percent.

Overall, the company's revenue for its fiscal first quarter was up 12 percent to $8.4 billion.

Although the company doesn't breakdown sales figures for its high and low-end servers, it said its high-end server sales, which include Sparc systems, were up double digits for the quarter.

Jean Bozman, an analyst at IDC, said Oracle uses x86 chips to build some of its high-end systems, and says she believes Ellison is drawing a distinction between the x86 low-end systems sold alone and those used to build high-end platforms.

In the broader economic picture, Oracle's quarterly report was in line with Forrester Research's report on worldwide tech spending, also released Tuesday.

Worldwide IT spending will increase 11.5 percent this year, but next year it will be half that, at 5.5 percent, as the effects of the global economic turmoil take hold, said Andrew Bartels, an analyst at Forrester.

Bartels said he was expecting good results this quarter from companies whose quarters ended in August, and Oracle's is in line with it.

There is typically a quarter or two lag between when economies slow and companies take action on their IT budget in response, Bartels said.

"Given that lag, we have been expecting that the momentum that started in the first half of the year would continue until Q3," Bartels said. He isn't expecting to see significant slowing appear until the fourth quarter, but Oracle may do better because its quarter ended in August.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His email address is pthibodeau@computerworld.com.

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This story, "Oracle bets on Sparc with new releases next week" was originally published by Computerworld.

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