Oracle 2010 Annual Report Download - page 25

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Table of Contents
revenues for a number of quarters following the acquisition, and potentially longer with respect to our acquisition of Sun Microsystems, Inc. (Sun). Conversion
rates post-acquisition may be quite different from the acquired companies’ historical conversion rates. Differences in conversion rates can also be affected by
changes in our business practices that we implement with our newly acquired companies that may affect customer behavior.
A substantial portion of our new software license revenue contracts and hardware systems products contracts is completed in the latter part of a quarter and a
significant percentage of these are large orders. Because a significant portion of our cost structure is largely fixed in the short-term, revenue shortfalls tend to
have a disproportionately negative impact on our profitability. The number of large new software license transactions, and to a lesser extent hardware systems
products transactions, also increases the risk of fluctuations in our quarterly results because a delay in even a small number of these transactions could cause our
quarterly revenues and profitability to fall significantly short of our predictions.
Our success depends upon our ability to develop new products and services, integrate acquired products and services and enhance our existing products and
services. Rapid technological advances and evolving standards in computer hardware and software development and communications infrastructure, changing
and increasingly sophisticated customer needs and frequent new product introductions and enhancements characterize the enterprise software and hardware
systems markets in which we compete. If we are unable to develop new or sufficiently differentiated products and services, or enhance and improve our products
and support services in a timely manner or to position and/or price our products and services to meet market demand, customers may not buy new software
licenses or hardware systems products or purchase or renew software license updates and product support or hardware systems support contracts. Renewals of
these support contracts are important to the growth of our business. In addition, IT standards from both consortia and formal standards-setting forums as well as
de facto marketplace standards are rapidly evolving. We cannot provide any assurance that the standards on which we choose to develop new products will allow
us to compete effectively for business opportunities in emerging areas.
We have recently released Oracle Fusion Applications, the next generation of our applications software offerings, which are being designed to unify the
best-of-business functional capabilities from all of our applications on a modern Internet-based middleware technology foundation. We have also recently
designed and built the Exadata Database Machine, a fast database warehousing machine that runs online transaction processing applications, and the Exalogic
Elastic Cloud, an integrated “cloud” machine which has server hardware and middleware software that have been engineered together. If we do not continue to
develop and release these or other new or enhanced products and services within the anticipated time frames, if there is a delay in market acceptance of a new,
enhanced or acquired product line or service, if we do not timely optimize complementary product lines and services or if we fail to adequately integrate, support
or enhance acquired product lines or services, our business may be adversely affected.
If we are unable to compete effectively with existing or new hardware systems or software competitors, the results of operations and prospects for our
business could be harmed through fewer customer orders, reduced pricing, lower revenues or lower profits. Our hardware systems business will compete
with, among others, (i) systems manufacturers and resellers of systems based on our own microprocessors and operating systems and those of our competitors,
(ii) microprocessor/chip manufacturers and (iii) providers of storage products. Our hardware systems business may also cause us to compete with companies who
historically have been our partners. These competitors may have more experience than we do in managing a hardware business. A large portion of our hardware
products are based on our SPARC microprocessor and Oracle Solaris operating system platform, which has a smaller installed base than certain of our
competitors’ platforms and which may make it difficult for us to win new customers that have already made significant investments in our competitors’
platforms. Certain of these competitors also compete very aggressively on price. A loss in our competitive position could result in lower revenues or profitability,
which could adversely impact our ability to realize the revenue and profitability forecasts for our hardware systems business.
Many vendors develop and market databases, middleware products, application development tools, business applications, collaboration products and business
intelligence products that compete with our software offerings. In addition, several companies offer Software-as-a-Service (SaaS) or cloud computing and
business process
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Source: ORACLE CORP, 10-K, June 28, 2011 Powered by Morningstar® Document Research