Conor O'Mahony's Database Diary

Your source of IBM database software news (DB2, Informix, Hadoop, & more)

Oracle Reduce their Exadata Projections

with 5 comments

In June of last year, during Oracle’s FYQ4 2011 earnings call, Larry Ellison claimed that Oracle expect more than 2,000 Exadata systems to be installed in fiscal year 2012. His exact quote follows. You can read the full transcript on SeekingAlpha at Oracle’s CEO Discusses Q4 2011 Results.

Today, more than 1,000 Exadatas are installed, and we plan on tripling that number this year.

He noted that more than 1,000 systems had been installed at that time. Tripling this number yields more than 3,000. This implies that there would be more than two thousand new systems installed in FY2012.

Last month, during Oracle’s FYQ2 2012 earnings call, Larry Ellison said:

This past Q2, Oracle sold over 200 Exadata and Exalogic engineered systems. In Q3, we plan to sell over 300 Exadata and Exalogic engineered systems. In Q4, we plan to sell over 400 Exadata and Exalogic engineered systems.

Again, the full transcript is available on SeekingAlpha at Oracle’s CEO Discusses Q2 2012 Results. There is no reference to Q1 sales, but Oracle projects that Q2 + Q3 + Q4 sales of both Exadata and Exalogic will be more than 900.

A couple of things stand out here. The first is that these latest projections from Oracle are for both Exadata and Exalogic systems combined, whereas the original projection was for Exadata systems only. The second is that these latest projections from Oracle are significantly down (more than 2,000 has been revised down to whatever business they did in Q1 + more than 900 in Q2, Q3, and Q4 combined). And this significant downward revision in projections has happened in the space of just 6 months.

If you read the Q&A segment from the Q2 earnings call, it is quite interesting. An analyst asks Oracle about the downward revision in projections. There are some semi-coherent responses from Ellison and Hurd, before Hurd claims that instead of 3x growth in engineered systems, they are on track for 2.5x growth. Hmmm, unless they had a monster Q1, that doesn’t quite add up either :-)

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Written by Conor O'Mahony

January 30, 2012 at 1:17 pm

Posted in Oracle Exadata

Tagged with ,

5 Responses

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  1. Conor,
    Its nice that you are pointing out the fact that you are tracking Exadata sales so closely. You must be either concerned or amazed by the figures. Haven’t seen anyone from Oracle blog about Power 795, Netezza or Watson system sales so well but maybe its because IBM doesn’t report out unit #’s like Oracle does, If IBM doesn’t report out expected unit growth, it could never be wrong. Reporting revenue #’s instead of unit #’s can be really misleading – if you increase system costs, increase margin (lower discounts), you can have unit volume decreases while still showing revenue growth.

    But, here, you are mixing actuals versus predictions/forecasts. As you state “In June of last year, during Oracle’s FYQ4 2011 earnings call, Larry Ellison claimed that Oracle expect more than 2,000 Exadata systems to be installed in fiscal year 2012″. Well, FY2012 isn’t over yet so you’ll have to see whats reported after May 2012.

    Till then, its all speculation and not worth the grains of salt remaining on the table. What I find more interesting is that while Oracle is indeed showing great growth on Exadata/ Exalogic / SPARC SuperCluster, theres no reports from IBM to the contrary. So how are those Netezza, Power 795 or Watson sales going? And last I saw, IBM didn’t do so well on Mainframes during Q4 with a 31% drop in revenue http://bit.ly/Ako0Z7. Not a good sign when Q4 is IBM’s strongest quarter.

    Phil

    January 31, 2012 at 9:07 am

    • Hi Phil,

      As Program Director for database software at IBM, I closely track my primary competitors. Its only natural that I would. And when the occasion warrants it, I provide my perspective on Oracle claims. I think its healthy for both sides of any story to be told. In this specific instance, I found these developments to be interesting, and I knew that many readers of this blog would too.

      I agree that we will have to wait until the end of the fiscal year to see if Oracle hit their revised estimates. Who knows, they may even exceed them. We’ll see in a few months. But nonetheless, I still think it interesting to see the significant downward trend in expectation-setting by Ellison and Oracle. Perhaps they are reacting to their recent poor financial reportings, and playing it safe with their expectation setting. Again, we’ll see soon.

      If we want to cut through the noise being made on earnings calls and the obtuse references to “sales” and “installations”, we should probably look at server share as reported by independent third party analyst firms.

      Regards,
      Conor.

      Conor O'Mahony

      January 31, 2012 at 9:57 am

  2. In the first week of Oct 2011 at OOW (more than half way through Q2FY12) the projections were a supposed 3,000 units “this year” : http://youtu.be/jAmgVbuFZwY We know now that only 200 units moved in Q2FY12 so I wonder what all that 3,000 stuff was about?

    There just a little more than a full day left in this leap year and to the end of Q3FY12. We’ll see about the 300.

    kevinclosson

    February 28, 2012 at 5:41 pm

    • Hi Kevin, Thanks so much for your comment. I am a long-time fan of your writings.

      Does anyone reading this blog post happen to know what constitutes a “unit” for Exadata? Does a “unit” correspond to an actual physical shipping system? Or does a “unit” correspond to something else?

      Conor O'Mahony

      February 28, 2012 at 6:07 pm

      • Thanks for the kind words, Conor. You and I share a bit of IBM heritage (Sequent acquisition).

        I too would like to see someone lend credence to the use of the term “units.” Considering the offerings range from quarter to full rack the term is too nebulous to have value. The quote from the transcript is “In Q3, we plan to sell over 300 Exadata and Exalogic engineered systems.” I do believe they’ll hit that number because Exalogic sells well and clumping the more disruptive Exadata into the less disruptive Exalogic numbers makes for simpler smoke and mirrors.

        Kevin Closson

        February 28, 2012 at 6:56 pm


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