Oracle Zaps SAP's Apps Slump - InformationWeek

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Commentary
9/17/2009
10:01 AM
Bob Evans
Bob Evans
Commentary
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Oracle Zaps SAP's Apps Slump

Oracle president Safra Catz said Oracle's database revenue grew more slowly than normal in Q1 in large part because of slumping sales via some Oracle resellers, "most notably SAP, who is selling less database because its applications business is down 40%." Yikes-you don't often see Oracle spank its own customers, but then again SAP is no doubt a very special case.

Oracle president Safra Catz said Oracle's database revenue grew more slowly than normal in Q1 in large part because of slumping sales via some Oracle resellers, "most notably SAP, who is selling less database because its applications business is down 40%." Yikes-you don't often see Oracle spank its own customers, but then again SAP is no doubt a very special case.And in case the financial analysts on the conference call for Oracle's first-quarter financial results didn't get Catz's message, Oracle president Charles Phillips (yes, the company has two presidents) reiterated Oracle's claim that it was a bad quarter for SAP applications, according to the SeekingAlpha.com transcript:

In the application area, we actually did pretty well in the scheme of the entire market. Our main competitor was down 40% last quarter and if you look at how we did, our industry applications actually grew in double-digit and that's not including the drag of supporting technology and middleware products.

Yes indeed, it's hard to think of Oracle and SAP having anything like a typical lovey-dovey seller-buyer relationship, and Phillips seemed perfectly eager to continue focusing on SAP's role as a global competitor instead of its less-significant role as a customer/reseller. Here's Phillips again:

I think we are definitely taking share from SAP in the Americas and even in Europe, to some extent. They don't have a vertical strategy that was up in strong double-digits, that drags along some of the other applications and infrastructure as well, and so I just think a lot of the things we've been telling you over the last year or so are now coming to fruition, a lot of the integrations we mentioned are shipping now, so they are not things we are just talking about.

And Oracle did have a very strong quarter for applications relative to the claims it made about SAP's applications revenue being down 40% over the past three months. As noted in my colleague Charlie Babcock's coverage of Oracle's quarterly financial results:

In North America, Oracle application business grew 8% in the quarter, while SAP's declined 50%, Oracle president Charles Phillips said. In Europe, Oracle grew its business 3% while SAP, based in Germany, experienced "a negative 39% for SAP's most recent quarter," Phillips claimed.

Oracle's results also showed some very interesting trends with regard to how its revenue breaks out across applications, databases, technology, and annual fees-more on that later.

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