Oracle Upbeat About Cloud Prospects in India
Global software giant Oracle Corp. (NYSE: ORCL) recently announced that it is witnessing an unprecedented surge in demand for its cloud computing solutions in India. [1] The world’s second biggest provider of cloud computing solutions stated that adoption of its Software-as-a-Service (SaaS) solutions is growing at the fastest pace to date, while adoption of its Platform-as-a-Service (PaaS) solutions is catching up quickly.
According to Oracle, the record uptick in adoption rates in India is led by the Oracle Customer Experience (CX) Cloud, which includes its Sales, Service, Marketing, and Social clouds. The Oracle CX Cloud accounts for over half of the company’s customer base and is witnessing the highest customer adoption rate among Oracle’s cloud offerings. Oracle claims that the success of its cloud computing solutions in India is due to its comprehensive portfolio of “best-of-breed” SaaS applications. [1] The company further stated that nearly 50% of its SaaS customers are net new, rather than existing on-premise customers transitioning to cloud computing solutions.
We have a price estimate of $47 for Oracle Corp., which is about 10% higher than its current market price.
See our complete analysis for Oracle Corp. here
Indian Cloud Market Set to Grow at Over 30% Through 2018
According to Gartner, the public cloud services market in India was valued at an estimated $556.8 million in 2014. It is expected to expand at a clip of over 30% and reach $1.7 billion by 2018. [2] In comparison, the global cloud market stood at $153 billion in 2014 and is expected to grow at a CAGR of 18% through 2020. [3]
The rapid expansion of cloud computing in India is expected due to rising awareness and increasing use of mobile devices. India is home to around 47 million small businesses, of which only about 1% are online. This indicates a huge untapped potential for adoption of cloud computing in the country. The immense scope for adoption of cloud computing in India is further underscored by an IDC survey last year, which showed “huge willingness” by companies to adopt cloud technology. [4]
As the second biggest provider of cloud computing services in India, Oracle is perfectly positioned to take advantage of the impending boom in the cloud market in the country. In fact, the company is aiming at becoming the leading cloud vendor in India as well as globally within a year. [1]
Asia-Pacific High on Oracle’s List of Priorities
Oracle’s cloud business has outperformed the market growth rate so far. In the third quarter of fiscal 2015, its cloud business expanded at an impressive 29% year on year. The company does not report revenues from India separately. The broader Asia-Pacific region accounted for 15% of Oracle’s revenues in the third quarter of fiscal 2015, which is the least among the three regions that Oracle operates in. [5]
However, the company is planning to capitalize on the relatively nascent status of cloud computing in Asia-Pacific. Accordingly, last month it announced that it will add 1,000 new members to its sales team in the region. Of these, 300 will be hired in India alone, which emphasizes the importance of the country for Oracle. (Read: Weekly Software Notes: Oracle)
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
Notes:- 50% of SaaS customers in India are net new additions: Oracle India, Firstpost, April 6, 2015 [↩] [↩] [↩]
- Gartner Says Indian Public Cloud Services Market on Pace to Total $557 Million In 2014, Gartner, April 28, 2014 [↩]
- Global Cloud Services Market, Allied Market Research, July 1, 2014 [↩]
- Cloud computing in India is set to explode, CNBC, May 4, 2014 [↩]
- Oracle Fiscal 2015 Third Quarter SEC Filing [↩]