Oracle Corporation

Summary

Oracle Corporation offers products and services that address enterprise information technology environments worldwide. Its Oracle cloud software as a service offering include various cloud software applications, including Oracle Fusion cloud enterprise resource planning (ERP), Oracle Fusion cloud enterprise performance management, Oracle Fusion cloud supply chain and manufacturing management, Oracle Fusion cloud human capital management, Oracle Advertising, and NetSuite applications suite, as well as Oracle Fusion Sales, Service, and Marketing. The company also offers cloud-based industry solutions for various industries; Oracle application licenses; and Oracle license support services. In addition, it provides cloud and license business' infrastructure technologies, such as the Oracle Database, an enterprise database; Java, a software development language; and middleware, including development tools and others. The company's cloud and license business' infrastructure technologies also comprise cloud-based compute, storage, and networking capabilities; and Oracle autonomous database, MySQL HeatWave, Internet-of-Things, digital assistant, and blockchain. Further, it provides hardware products and other hardware-related software offerings, including Oracle engineered systems, enterprise servers, storage solutions, industry-specific hardware, virtualization software, operating systems, management software, and related hardware services; and consulting and customer services. The company markets and sells its cloud, license, hardware, support, and services offerings directly to businesses in various industries, government agencies, and educational institutions, as well as through indirect channels. Oracle Corporation was founded in 1977 and is headquartered in Austin, Texas.

Mission

Oracle's mission revolves around enabling individuals and businesses to envision data from fresh vantage points, unearthing invaluable insights, and unlocking a realm of boundless possibilities. Through their comprehensive suite of software, hardware, and cloud services, the company empowers its customers to make data-driven decisions, drive innovation, and embrace a future brimming with endless opportunities. By providing cutting-edge technologies, Oracle seeks to revolutionize the way people perceive and harness data, paving the way for transformative growth and success across various industries.

Business Analysis

Oracle Corporation offers a range of products and services designed to cater to the needs of enterprise information technology (IT) settings. Oracle's business is divided into four different segments: Cloud services and license support, Cloud License and on-premise license, Hardware, and Services.

Oracle cloud services encompass a wide array of offerings, such as Oracle Software-as-a-Service and Oracle Cloud Infrastructure, all of which are delivered in the form of a cloud-based model. Clients can conveniently access there services using their preferred web browser. Oracle cloud services have been strategically crafted to allow customers to swiftly implement them, resulting in reduced time to achieve innovation. These services boast a user-friendly interface, catering to both novices and seasoned users alike. They are designed to be easily maintained, minimizing the effort required for upgrades, integration, and testing. Additionally, these services can seamlessly connect across various deployment models, promoting flexibility between different IT environments. They ensure compatibility, making it effortless to migrate workloads between the Oracle Cloud and other IT setups. Moreover, these services are cost-effective, requiring lower initial customer investments. Above all, they prioritize security, adhere to standards, and offer unwavering reliability.

Oracle applications technologies is a part of cloud services and license support business segment. It includes the company's SaaS offerings, which are used from a large number of corporations worldwide, as well as the license support, which is generally purchased by all of Oracle's customers. The support offerings provided by the company serve to safeguard and enhance the investments made by its customers in Oracle applications. These offerings include proactive and personalized support services, such as Oracle Lifetime Support, as well as unspecified license enhancements and upgrades throughout the support period. They are designed to ensure that customers receive comprehensive assistance and protection for their Oracle products, optimizing the value and longevity of their investments. Oracle applications technologies and license support revenues accounted for 47%, 42%, and 41% of the total cloud services and license support revenues during years 2023, 2022, and 2021.

Oracle offers its infrastructure technologies to customers both through its cloud and license business segment and its hardware business segment. Within the company's cloud and license business segment, the infrastructure technologies comprise the renowned Oracle Database, widely recognized as the most popular enterprise database globally. Additionally, it includes Java, which stands as the most widely-used software development language in the computer industry, along with various middleware tools and development resources. These infrastructure technologies can be accessed through subscription to Oracle Cloud Infrastructure (OCI) offerings or via the purchase of a license, along with related license support, giving customers the option to run these technologies within the Oracle Cloud, as part of on-premise cloud services, or in other customer IT environments. The company's infrastructure cloud services and license support revenues represented 53%, 58% and 59% of total cloud services and license support revenues during years 2023, 2022 and 2021.

Oracle infrastructure technologies also includes products offered through the company's hardware business segments. This part of the business is divided into:

• Oracle servers (e.g. servers consisting of Oracle SPARC microprocessor or x86 microprocessor)
• Oracle storage
• Oracle industry-specific hardware offerings (products designed for particular industries such as food and beverage, hotel and retail)
• Oracle operating systems (e.g. Oracle Linux, Oracle Solaris)
• Oracle hardware support (provides support for oracle systems though software updates of the hardware products, repairs, and technical support)

The fourth business segment, which is Oracle Services, provides consultation and training to help customers effectively utilize Oracle's applications and infrastructure technologies.

The revenue contribution for of the four business segments can be seen in the following table:

Business Segment	Revenue (2023)	% of Total Revenue
Cloud services and license support	35,307	71%
Cloud license and on-premise license	5,779	12%
Hardware	3,274	7%
Services	5,594	11%

Main Products

Oracle's widely used SaaS products include, among others:

• Oracle Fusion Cloud Enterprise Resource Planning (ERP), which is a comprehensive and unified ERP solution that aims to enhance organizational decision-making and workforce efficiency while streamlining back-office operations. It is designed to be a fully integrated and global platform, enabling businesses to benefit from a shared data and security model, along with a consistent user interface. By adopting Oracle Fusion Cloud ERP, organizations can optimize their processes and achieve improved productivity on a global scale.
• Oracle Fusion Cloud Enterprise Performance Management (EPM), which is a purpose-built solution aimed at evaluating financial performance, facilitating precise and flexible financial planning, enhancing the efficiency of financial close and consolidation procedures, simplifying account reconciliation, and meeting the reporting needs of organizations.
• Oracle Fusion Cloud Supply Chain and Manufacturing Management (SCM), which is a tailored offering intended to support organizations in establishing, enhancing, and digitalizing their supply chains while enabling swift product innovation.
• Oracle Fusion Cloud Human Capital Management (HCM), which is a specialized solution crafted to assist organizations in sourcing, nurturing, and retaining their workforce.
• Oracle Cerner healthcare, which is a purpose-built system intended to empower healthcare professionals in providing enhanced medical services to patients.

Oracle's widely used infrastructure products include, among others:

Well-known databases, such as Oracle Database and MySQL, as well as Oracle Autonomous Database, which relies heavily on machine-learning in order to eliminate human errors that otherwise would go unnoticed.

Market

Total Addressable Market (TAM)

The total addressable market (TAM) for Oracle is defined as the global information technology market. According to research reports, the global information technology market grew from $8,179 billion in 2022 to $8,852 in 2023 at a CAGR of 8.2%. In 2027, the market value is expected to be around $11,995 billion, growing at a CAGR of 7.9%. The main driver behind this projected growth is going to be cloud computing.

Serviceable Available Market (SAM)

The serviceable available market (SAM) for Oracle is defined as the global cloud computing market. According to research reports, the cloud computing market is expected to climb from $581 billion in 2023 to $1,243.42 billion by 2028, growing at a CAGR of 16.4%. This is due to technology disruption in field such as Artificial Intelligence and Machine Learning. Furthermore, another reason for this type of growth is the pandemic. After the end of the pandemic, a percentage of people are still working from home, thereby making cloud computing essential for every day tasks.

Serviceable Obtainable Market (SOM)

The cloud computing market share of Oracle Corporation sits around 2%. The market share of the company in the SaaS segment is close to 5%, whereas in the IaaS segment is insignificant, according to Statista. There is a huge opportunity for Oracle to raise its Infrastructure as a Service market share in the following years, given the strategic alliances with Intel and Red Hat, as well as the adoption from companies such as Uber, FedEx, Toyota and Zoom among others. Oracle's OCI is expected to be widely adopted by several other companies looking to train AI models like ChatGPT, because of its low cost (compared with competitors) and high value. Therefore, the company is expected to erode the market share of its competitors and increase its own moving forward. Since it has a significant market share in the SaaS segment, increasing its market share in the IaaS segment is expected to double its total cloud cloud computing market share in the next 5 years (resulting in market share of 5% approximately).

Competition

The global cloud computing market is a really fragmented market. As such, there is fierce competition among established companies, such as Amazon, Microsoft, SAP, IBM, Salesforce, as well as start-up companies that are looking for ways to innovate and gain market share. This increasing competition along with the AI disruption is expected to increase market share, as mentioned above. Consequently, Oracle faces intense competition from both established and newly created companies. Since Oracle has an aggressive acquisition policy and is looking to expand in new areas, such as healthcare software, it is going to face even broader competitors (e.g. Epic Systems Corporation, Allscripts Healthcare Solutions, Inc., Arcadia Solutions, athenahealth, Inc. and InterSystems Corporation, among others). Below is the table of the most important competitors of Oracle Corporation: