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Will In-Memory Switching Make ORCL a Buy?

The tech is new for Oracle, but not entirely new

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Oracle (ORCL), the world’s largest database company, has had problems hitting its revenue targets in recent years, resulting in some pretty unhappy shareholders.

ORCL has tanked by double digits several times this year after disappointing quarterly reports — CEO Larry Ellison saw $3 billion shaved from his personal worth after the March dive. At roughly $34 per share, ORCL is well off its 2000 peak and nearly 7% lower than its 2013 high.

However, at the Oracle OpenWorld World 2013 conference, the company touted two major initiatives it hopes will turn things around: In-memory switching that Ellison says would make Oracle database queries 100 times faster, and a suite of new cloud services targeting Salesforce (CRM) and Amazon (AMZN) Web Services.

Larry Ellison has a well-deserved reputation for bombastic pronouncements and hyperbole — especially during conference keynotes — but is there a possibility that ORCL has room to climb based on these new developments?

The New Tech

Let’s look at in-memory switching first. Existing Oracle database users will be able to “flip a switch” to forgo traditional indexing (which has to be constantly updated, slowing things down) and use in-memory processing for a massive speed gain on queries, possibly doubling transaction speeds.

This isn’t exactly new technology, and Ellison’s announcement that Oracle was adopting it elicited a “welcome to the party” retort from rival SAP (SAP).

Oracle hasn’t said what the cost might be (in-memory switching is likely to incur a license fee increase), but expect it to be priced attractively enough to make Oracle customers think twice about jumping ship to SAP’s HANA, a rival database (also featuring in-memory switching) that has been booking impressive sales.

The second part of the in-memory switching announcement is new hardware to make installation even faster. The new M6-32 has 32 terabytes of DRAM memory. ZDNET covered the announcement and noted that Ellison told the crowd that the new M6-32 has double the system bandwidth of IBM’s (IBM) biggest system while coming in at less than a third of the cost.

It’s no secret that Oracle has had challenges in selling expensive Sun servers since buying that company in 2010.

Oracle’s new M6-32 servers are purpose-built (optimized for the task); they should be faster, more efficient, save space and be cheaper to run than the lower-cost generic systems that many data centers have been turning to instead of Sun hardware. If in-memory switching takes off for Oracle, customers will be tempted to invest in equipment like the M6-32 to maximize their performance gain, possibly goosing Oracle’s flagging hardware sales.

As for web services, Oracle is seriously upping the ante against rivals like Salesforce and AWS that have been signing up customers for their cloud services at the expense of running Oracle business applications on Oracle hardware.

Article printed from InvestorPlace Media,

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