Oracle Finally Embraces the Cloud with ‘Oracle Public Cloud’

October 7th, 2011 by Trefis Team
+11.01%
Upside
117
Market
130
Trefis
ORCL: Oracle logo
ORCL
Oracle

While Oracle (NASDAQ:ORCL) has occasionally flirted with the cloud in the past, it has focused primarily on on-premise software offerings. However, with Salesforce.com‘s (NASDAQ:CRM) success in the enterprise cloud market, many traditional enterprise software makers like Oracle, SAP (NYSE:SAP), Microsoft (NASDAQ:MSFT) and IBM (NYSE:IBM) have been launching cloud versions of their enterprise apps. At the OpenWorld conference, Oracle finally announced plans to let businesses use the Internet to access applications from Oracle via the cloud as a service. [1] Oracle will offer its database, middleware and other Fusion applications as a subscription based cloud offering. [2]

Enterprise databases, middleware and software account for nearly 80% of the $40 Trefis price estimate for Oracle, which is nearly 30% above its current market price.

Cloud May Replace On-Premise as Oracle’s Major Revenue Source

Relevant Articles
  1. Up 11% In The Last Trading Session, What To Expect From Oracle Stock?
  2. Up 6% YTD, What To Expect From Oracle Stock In Q3?
  3. Oracle Stock To Top The Consensus In Q3?
  4. Oracle To Edge Past The Street Expectations In Q2?
  5. What To Expect From Oracle Stock?
  6. Oracle Stock To Beat The Consensus In Q4?

The Oracle Public Cloud will include Oracle Fusion CRM, Oracle Java Cloud Service, Oracle Database Cloud Service, Oracle Social Network and other services. It will run on Oracle engineered systems, enabling customers to run the same apps on-premise or in the cloud with minimum deployment issues. Oracle has stated that it will use standards based technology, so customers can transfer their data between systems easily without any lock-in.

Currently, most of Oracle’s revenues come from traditional on-premise software which runs on the customers’ own servers. In the future, as the cloud gains traction in the enterprise, Oracle could begin to make more money from its new cloud offerings.

According to a report by Gartner, the cloud computing market is expected to be worth $150 billion by 2014. [3] If Oracle is able to translate its success in the traditional enterprise market to the cloud, it could capture a major portion of the enterprise cloud computing market.

Check out our complete analysis for Oracle.

Notes:
  1. Oracle’s Ellison Embraces Cloud Craze, WSJ [↩]
  2. Oracle Unveils Oracle Public Cloud, Press Release [↩]
  3. Gartner Says Worldwide Cloud Services Market to Surpass $68 Billion in 2010, Gartner [↩]