Oracle Corporation (NYSE:ORCL) currently has around 65% of its products operating on cloud based platforms; however, the company has announced plans to raise that figure to 95%. Oracle specializes in giant database management and with the infinite space available to each user on the cloud, the move is very feasible. The announcement came from co-CEO Mark Hurd, with the deadline for this move being October this year.
The move has been an anticipated one, since the company’s cloud segment is the fastest growing part of the company. Oracle’s SaaS and PaaS had registered a 30% in the last quarter, with IaaS growing by 28%. However, despite the growth, it still accounted for just 6% of the total revenue. Cloud based technologies have also been a reason for the downfall of Oracle, as more and more businesses go for cloud based solutions, making it hard for Oracle to grant new software licenses. The last quarter reported just 25% revenue from sale of new software licenses.
Additionally, cloud based technologies are much cheaper, yet flexible. Most of these technologies operate on a running monthly fee, while software licensing demands a very large onetime fee. However, the company has assured its investors that it is not going to move to the cloud by transferring on premise software users. This means that Oracle is going to keep making software licenses, but will just be more focused on marketing its cloud technologies to new clients.
The approach that Oracle is using for its transition is quite different than expected. The company has been acquiring a number of companies, including MICROS, which it plans to integrate into its SaaS systems. This is saving the company time and resources needed to build everything from square one. Additionally, the recent financial reports have indicated that the company’s cloud segment is growing at a faster pace, than the slowing of its software licenses.
Oracle Corporation (NYSE:ORCL) closed at $43.62 after losing 2.48% on April 30. The company has 4.37 billion shares being traded in the market, with a 52-week range of $35.82-$46.71.
