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April 1, 2011

Oracle’s Cloudy Path to Growth

Nicole Hemsoth

Industry and investment analyst firm Zacks recently provided some information that indicates how Oracle’s positions on the hardware, software, and cloud sides of the market are expected to play out over the coming year.

The report was prompted by a recent announcement that the Bank of Lao PDR, which is the central bank of Lao People’s Democratic Republic, was modernizing its sytems using Oracle’s Flexcube Universal Banking product. This is a platform designed to manage nearly every aspect of banking operations and is at the heart of other Asian nation’s banking systems, including those in Cambodia and Vietnam.

Outside of its traction in financial services and physical software, Zacks analysts expect strong growth for Oracle over the coming year due in part to their emphasis on cloud computing. More specifically, the possibilities that their software and middleware present when delivered via a hosted or remote model.

While it will continue to thrive with the Sun hardware and their own software double-punch, the analysts claim that “Oracle, through its Exadata and Exalogic product lines, provides the infrastructure for companies to move toward cloud computing” and that their recent partnership with Amazon Web Services to support their enterprise-class hosted database and middleware products will give the company an advantage going forward.

Zacks notes that since companies can launch “entire enterprise software stacks from Oracle on Amazon EC2, this improves scalability, reliability and cost-effectiveness…we expect this partnership to help Oracle increase penetration in the cloud market as AWS has significant market share of more than 45%.”

Other companies, including IBM, Cisco, HP and Red Hat have also been on board with this movement to the clouds, however, thus Oracle (and others) are going to need to find key differentiation factors to stay ahead.

Beyond the investment logic, the review of Oracle’s fate due to their cloud penetration is worth noting, especially in comparison with some of its competitors.

Full story at Zacks

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