Oracle

Oracle rises on plan to sell computer hardware

The move is seen as another bold shift for Oracle , which moved aggressively beyond the database that it has long dominated into the broader, but rapidly consolidating, market for business software applications.

The computers are being built by Hewlett-Packard Co and will carry both Oracle's and H-P's brands. Oracle shares were up about 3.5% in midmorning action, while H-P was ahead more than 1%.

Analyst Ross MacMillan of Jefferies & Company speculated that Oracle's move could signal more partnerships and possible mergers among the dominant players in the corporate technology market."The biggest question is if this is just a new first step between hardware and software companies," MacMillan told clients in a research note. "As the software industry has been consolidated by Oracle, IBM and HP, there are fewer ways to continue to drive returns via M&A."
"We think the next logical step in a world of limited growth for large-enterprise tech players, who all benefit from economies of scale, would be for more tie-ups and even ultimately M&A across hardware and software companies," MacMillan said.

Long time coming

Oracle Chief Executive Larry Ellison said during a joint public appearance with H-P Chief Executive Mark Hurd that the product is the result of roughly three years of development, adding that customers have been testing the machines for about a year.

"This product Mark and I have been talking about for a long time is culminating today," Ellison said. Ellison said Oracle's machines should be able to refine and retrieve data for businesses more efficiently and faster than competing machines from companies including Teradata Corp.and Nettezza Corp.

Ellison said another key difference is that the machines come with Oracle's database software, which is already widely used by businesses.Ellison, who turned Oracle into the world's No. 1 maker of database software, had said his company plans to lead the consolidation of the market for software used by businesses to perform such tasks as monitoring financial transactions and managing inventory.

Over the past few years, Oracle has gobbled up other players in that arena, including PeopleSoft Corp., Siebel Systems and BEA Systems, and has intensified competition with market-leader SAP of Germany. Analyst Tim Klasell of Thomas Weisel Partners said he doesn't see Oracle's initiative as "as a broad entry into server storage systems."

But he said the company was pushing into an "interesting high-end niche." "We view this as an interesting niche supporting certain very large and very performance-sensitive applications and where a highly tuned appliance type of approach fits," he said in a research note”