Oracle Could Lead In Cloud Business Apps Within Year
By Richard Lefebvre on Jul 06, 2012
Below is the reprint from an article, writen by By Pete Barlas, Investor's Business Daily, published on Investorscom:
Oracle (ORCL) is all but destined to become the largest seller of cloud business-software applications, analysts say, and perhaps within a year.
What that means in the long run is much debated, though, as analysts aren't sure whether pricing competition might cut into profit or what other issues might develop in the fast-emerging cloud software field.
But the database leader, which is either No. 1 or 2 to SAP (SAP) in business apps overall, simply has the size and scope to overtake current cloud business-app leader, Salesforce.com (CRM), analysts say.
Oracle rolled out its first full suite of cloud applications on June 6. Cloud computing lets companies store data and apps on the Internet "cloud" and access it quickly and easily.
The applications run the gamut of customer relationship management software to social networking sites for employees, partners and customers.
For longtime software giants like Oracle, the cloud is a big switch. They get the great bulk of revenue from companies and other enterprises buying or licensing software that the customers keep on their own computer systems. Vendors also get annual maintenance fees.
Analysts estimate Oracle is taking in a mere $1 billion or so a year from cloud-based software sales and services now. But while that's just a sliver of the company's $37 billion in sales last year, it's already about a third of the total sales for Salesforce, which is expected to end this year with some $3 billion in revenue.
Operates In 145 Countries
Oracle operates in more than 145 countries vs. about 70 for Salesforce. And Oracle has far more apps than Salesforce.
Revenue doesn't equate to profit, but it's inevitable that huge Oracle will become the largest seller of cloud applications, says Trip Chowdhry, an analyst for Global Equities Research.
"What Oracle has is global presence," he said. "They have two things driving the revenue: breadth of the offering and breadth of the distribution. You put those applications in those sales reps' hands and you get deployments not in just one country but several countries."
At the June 6 event, Oracle CEO Larry Ellison emphasized that his company could and would beat Salesforce.com in head-to-head battles for customers.
Oracle makes software to help companies manage such tasks as customer relationships, recruiting, supply chains, projects, finances and more. That range gives it an edge over all rivals, says Michael Fauscette, an analyst for research firm IDC.