Oracle 2012 Annual Report Download - page 42

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations with an
overview of our key operating business segments and significant trends. This overview is followed by a summary
of our critical accounting policies and estimates that we believe are important to understanding the assumptions
and judgments incorporated in our reported financial results. We then provide a more detailed analysis of our
results of operations and financial condition.
Business Overview
We are the world’s largest provider of enterprise software and a leading provider of computer hardware products
and services. Our software, hardware systems, and services businesses develop, manufacture, market, host and
support database and middleware software, applications software, and hardware systems, with the latter
consisting primarily of computer server and storage products. Our businesses provide products and services that
are built upon industry standards, are engineered to work together or independently within existing customer
information technology (IT) environments and run securely on a wide range of customer IT environments,
including cloud computing environments.
Cloud computing environments provide on demand access to a shared pool of computing resources in a scalable,
self-service manner, delivering advantages in speed, agility and efficiency. Cloud computing has evolved from
technologies and services that Oracle has provided for many years, including clustering, server virtualization,
Service-Oriented Architecture (SOA), shared services, large-scale management automation, and more recently,
engineered systems. Our secure, reliable and scalable product offerings are designed to improve business
efficiencies at a low total cost of ownership. We seek to be an industry leader in each of the product offering
categories in which we compete and to expand into new and emerging markets.
We believe our ability to offer our customers choice and flexibility in the manner in which they deploy our
products and services—while maintaining enterprise-grade reliability, security and interoperability based upon
industry-standards—is important to our corporate strategy. Oracle Fusion Applications, for example, offer
customers a choice of deployment models to run our standards-based software applications in on-premise or
cloud computing IT environments. Oracle Cloud, a family of our cloud-based software subscription offerings,
provides access to select Oracle software applications and software platforms on a subscription basis in a secure,
standards-based cloud computing environment. Oracle Cloud includes software applications as a service, such as
Oracle Fusion Human Capital Management Cloud Service and Oracle Fusion Customer Relationship
Management Cloud Service, and software platform services such as Oracle Database Cloud Service and Oracle
Java Cloud Service, among others.
We believe our internal growth and continued innovation with respect to our software, hardware and services
businesses are the foundation of our long-term strategic plans. In each of fiscal 2012 and 2011, we invested $4.5
billion and in fiscal 2010 we invested $3.3 billion in research and development to enhance our existing portfolio
of products and services and to develop new products and services. We continue to focus the engineering of our
hardware and software products to make them work together more effectively and deliver improved computing
performance, reliability, and security to our customers. For example, Oracle Engineered Systems, which include
our Oracle Exadata Database Machine, Oracle Exalogic Elastic Cloud, and SPARC SuperCluster products,
amongst others, combine certain of our hardware and software offerings to provide engineered systems that
increase computing performance and reduce storage requirements relative to our competitors’ products, creating
time savings, efficiencies, and operational cost advantages for our customers.
We also believe that an active acquisition program is an important element of our corporate strategy as it
strengthens our competitive position, enhances the products and services that we can offer to customers, expands
our customer base, provides greater scale to accelerate innovation, grows our revenues and earnings and
increases stockholder value. In recent years, we have invested billions of dollars to acquire a number of
companies, products, services and technologies that add to, are complementary to, or have otherwise enhanced
our existing offerings. We expect to continue to acquire companies, products, services and technologies to further
our corporate strategy.
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