Oracle is globally growing its footprint in the server and hardware market. The company has acquired several customers for its engineered systems in all geographies including India. Because of this, the company has shipped more than 10,000 engineered systems globally. But Oracle faces a fresh challenge from players such as Cisco in the server market. In order to get the company’s stand on the recent developments, mainly in the hardware market, Dataquest spoke to John Fowler, Executive Vice President of Systems at Oracle. Fowler ranks equal to Mark Hurd at Oracle. He takes us through Oracle’s strategy to counter the market challenges, especially posed by Cisco’s sudden rise in the server market. Excerpts
How has Oracle’s strategy of ‘software-meets-the-hardware’ paid off, given the company has shipped more than 10k Exadata machines?
Just to give you some context, when Larry Ellison had bought Sun Microsystems, it was merely an R&D investment. The purpose was to make the server better, to make the storage better, and then work on engineered systems. But the engineered system journey began much before the Sun acquisition. Larry tried to build the earlier version of engineered systems with HP, but he discovered that it was really hard.
The idea of engineered system is very straight forward. It is not a packaging exercise. Oracle has made changes to the software and the hardware so that it runs together. In the case of Exadata we have actually designed the hardware and software storage to participate in the database transactions.
Plus, customers are able to run just any application much faster on Exadata. Whether they are using SAP or any other application, the system allows them to work seamlessly. Our focus has been to enhance speed, performance, and agility. The 10,000 machines is just an indication of how customers are happy to adopt the systems. We don’t have fine prints for Exadata. We just tell customers that any application they have today would work better with Exadata. This is the reason of rapid adoption.
Your competitors, and sometimes, peers accuse Oracle of locking-in customers. How would you respond to these charges?
In the case of hardware, we are focused on ensuring that all applications run fast. Many of our customers use SAP, SAS or Finacle on Exadata. There would be no business if our customers only run Oracle applications. Even Oracle has many other applications that we buy or use. Since the database in the middleware is not changed, customers have the choice to move to any competing vendor for applications. This is a big difference in our strategy and others. Even SAP requires you to rewrite the application for HANA. HANA doesn’t run in existing applications.
Your competitors often claim that Oracle Exadata systems include lengthy code-writing process which consumes a lot of time and hence delays the implementation time. Do you buy these claims?
That’s not true. We put Exadata through the same testing as we do for the database. These are false things spread out. It is easy to deploy and actually simplifies the management without breaking the applications.
Oracle’s hardware business is growing at a time when the hardware is becoming a commodity globally. How do you see your growth in times like this?
It’s interesting. We are growing because we are innovating. Most competitors have nothing to innovate on the hardware front. We do have. For example, cars and mobiles are not a commodity as their manufacturers continue to compete with innovative models and designs. What we are doing is innovating to run the database 10 times faster than you can run today, and make your storage more efficient. The reason we are growing is that we have ably improved the hardware. And actually I think we can do a lot more on the hardware side.
As far as market growth is concerned, specifically in India, if we see Oracle’s last year Exadata numbers or customer acquisitions, most of them were from your competition.
First of all, the reality of business is, you grow by taking market share from somebody else by building a better mouse trap and you have to go find new customers and new opportunities. So, we have been doing a really good job in taking the market share. You need to understand that the initial buyers of engineered systems tend to be the mid-sized enterprises and up. Organizations buying Exadata today are not the entry-level businesses, they are mid-sized enterprises.
It took a while for people to get used to the idea of engineered systems. For example, for a large enterprise, there often is a storage group, a networking group, and a server group. Who do you talk to? We deliver something that has all of them built-in. With engineered systems, enterprises can have organized managerial systems. They become easy to talk to as there is one person to take care of all that.
In the server space, Oracle has grown because HP and IBM have lost significantly. But more than you, Cisco seems to be the primary beneficiary of the market shift.
Cisco is selling servers with its integrated systems which include computer networking and storage. But what the other guys are doing is fundamentally a packaging exercise. They are selling their systems through their networking portfolio. Their systems are not capable of delivering built-in storage, built-in database compression or inscription and pre-acceleration. This is the reason that for us, the distinction for the engineered system goes deeper than just networking and compute. If you look at Cisco UCS, or HP’s product in the space, they all have some variation of integrated systems.
But, how do you plan to counter the challenge offered by Cisco, because it is growing rapidly?
We will have a two-pronged strategy. The first strategy is what you already see, which is the software integrated systems, like the Oracle database appliances, Exadata and others. Cisco is not able to counter this since it doesn’t have any software. Secondly, we just recently launched our fifth generation of lower cost systems. With this, we intend to compete with UCS in the value market. Right now, UCS is largely unopposed in that kind of market. We are stronger than Cisco since we have database in the middleware and other applications. We are expanding our portfolio, so we will go head-to-head with those. That’s the long-term competition strategy.
The other part of the strategy is to invest heavily in storage. One of our continually growing products is CFS storage appliances.