First of all, kudos to Oracle for a great quarter and overall, the year. When application revenues jump 83% year over year, you have to say "Wow!".
But the NY Times extrapolates that to say "Oracle's shopping spree finally pays off". Shades of BusinessWeek saying 12 months ago ""That means Oracle pulled off quite a smooth merger (PeopleSoft/JDE) in short order." I called it a premature celebration then. I think it still it premature to celebrate too much - may be a glass of cheap champagne.
Viewed against the lens of the fact that Oracle has invested $20 billion in acquisitions like PeopleSoft, Siebel and Retek in the last couple of years, the $ 500 million increase in application revenues is not that overwhelming (especially since it had a substantial application business to begin with). Which means Oracle is still very dependent on retaining the maintenance revenues of its acquisitions over the next decade to make the investment pay off. Far more complex than Oracle would have you believe.
Fusion is an ambitious project and an even more ambitious migration for its customers. For many going off maintenance is an attractive near term option even if they have to re-license when Fusion is stable. SAP continues to chip away at Oracle customer base. (At Sapphire last month, Oracle customers representing sales in excess of $ 100 billion were being wined and dined). Third party maintenance options continue to proliferate.
Oracle disclosed during its earnings call that it has 8,600 employees in India and the number keeps growing. That is already almost 20% of its employee base. It is naive to think it will be able to keep those shrinking costs to itself. As I have written before, customers are not chumps about global sourcing efficiencies.
So Oracle should celebrate its strong year - but as I said before with cheap champagne.
