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Mark Hurd on Oracle fighting back

Hardware business not necessarily in trouble.

Enterprise applications firm Oracle president Mark Hurd says the firm’s hardware business will grow this fiscal year, reversing a downward trend that saw the hardware systems business lose $166m between Q3 2011 and Q3 2012.

Speaking to NS, Hurd refuted the idea that at that run rate the hardware business is in deep trouble – it made $869m in hardware systems revenue for Q3 2012 which was down 16 per cent year on year.

"You’ve got some currency effects in there," Hurd said, although according to Oracle’s financial statement currency effects made a difference to software revenue, services revenue and total revenue but did not impact hardware sales – they were down exactly 16 per cent at constant currency too.

Hurd went on to explain the factors that led the hardware business to be down year on year. "Inside the hardware business there are several factors at play," he told us. "There were businesses that Sun [Microsystems] did that were OEMed from third parties, and some of those we began to phase out, for example storage. So that revenue was on the decline. But our Engineered Systems lines are growing, from zero to relatively big numbers."

Oracle’s Engineered Systems are preconfigured hardware and software systems that Oracle says helps to increase time to value and reduce the total cost of ownership. For example it has an Exadata Database Machine that it says is suited for both data warehousing and online transaction processing applications, and the Exalogic Elastic Cloud, which is described as offering extreme performance for Java applications, Oracle Applications or other enterprise applications. There’s also a Database Appliance, Big Data Appliance, Storage Appliance and SPARC SuperCluster.

However some of the more mainstream server business that Oracle spent $5.6bn buying Sun Microsystems for in April 2009 – making it a hardware as well as a software business – is performing less well. "Some of the Sun server base is slightly down to flat," Hurd told NS. "But we’ve been pretty clear that we expect revenue [from that business] to grow in the next fiscal year. We’ve been working to get out of things that we don’t have IP in to those that we do."

This week trade title Computer Business Review (CBR) reported Hurd’s view [ that Oracle’s hardware business should not, and will not, build an iPad competitor.

Jason Stamper is editor of Computer Business Review