Cloud computing could be key for Oracle's (NASDAQ:ORCL) future and the company's recent acquisition of RightNow implies it is making the right moves in this space.
While we would characterize Oracle's initial cloud strategy as murky, we believe it is becoming more refined and is emerging as a much higher priority, FBR Capital Markets analyst David Hilal wrote in a recent note to clients.
Fusion Apps are the company's biggest foray into Software-as-a-Service (SaaS) and will be augmented by the acquisition of RightNow.
Oracle Fusion Apps are a portfolio of software products including Financials, Human Capital Management, Customer Relationship Management and Supply Chain Management. They were envisioned and pitched as an Enterprise resource planning suite: a combination of features and functionalities taken from Oracle E-Business Suite, JD Edwards, PeopleSoft and Siebel product lines.
We believe Oracle has the appetite for other similar SaaS acquisitions that will eventually fold into the Fusion product family. We think Fusion will be a multiyear, not a multiquarter, product cycle, Hilal said.
The key advantage is Oracle's ability to run Fusion in the cloud or behind the firewall as the same code base is used for both. Customers will have the flexibility to migrate easily from one to another, depending on their requirements.
The analyst also expects Oracle to continue to take share in its core database and application markets as it leverages its software and hardware portfolio and industry-specific applications.
Hilal said database and application market share gains were to come at the expense of IBM and SAP, respectively, both of which cannot match Oracle's integrated software and hardware portfolio.
We also expect Fusion Applications to provide a boost to Oracle's application business because of its modular architecture, which allows co-existence, and flexible deployment options, the analyst said.