Oracle 2014 Annual Report Download - page 44

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Table of Contents
we did not recognize software license updates and product support revenues related to software support contracts that would have been otherwise
recorded by the acquired businesses as independent entities in the amounts of $11 million, $3 million and $14 million in fiscal 2015, 2014 and
2013, respectively. To the extent underlying software support contracts are renewed with us following an acquisition, we will recognize the
revenues for the full values of the software support contracts over the respective support periods, the majority of which are one year.
Hardware Systems Business
Our hardware systems business is comprised of two operating segments: (1) hardware systems products and (2) hardware systems support. Our
hardware business represented 14% of our total revenues in fiscal 2015, 2014 and 2013. We expect our hardware business to have lower
operating margins as a percentage of revenues than our software and cloud business due to the incremental costs we incur to produce and
distribute these products and to provide support services, including direct materials and labor costs. We expect to make investments in research
and development to improve existing hardware products and services and to develop new hardware products and services.
Hardware Systems Products:
We provide a broad selection of hardware systems and related services including Oracle Engineered Systems,
servers, storage, networking, workstations and related devices, industry specific hardware, virtualization software, operating systems, and
management software to support diverse IT environments, including cloud computing environments. We engineer our hardware systems with
virtualization and management capabilities to enable the rapid deployment and efficient management of cloud and on-premises IT
infrastructures. Our hardware products support many of the world’s largest cloud infrastructures, including the Oracle Cloud.
Our hardware systems products are designed to be easier to deploy, manage and maintain for our customers and to improve computing
performance relative to our competitors’ offerings. We design our hardware products to seamlessly connect on-premises and cloud IT
environments to further enable interoperability, interchangeability and extendibility and to work in customer environments that may include
other Oracle or non-Oracle hardware or software components. Our flexible and open approach provides Oracle customers with a broad range of
choices in how they deploy our hardware products, which we believe is a priority for our customers.
Oracle Engineered Systems are core to our hardware offerings and are important elements of our data center and cloud computing offerings
including the Oracle Cloud. These pre-integrated products are designed to integrate multiple Oracle technology components to work together to
deliver improved performance, availability, security and operational efficiency relative to our competitors’ products, to be upgraded effectively
and efficiently and to simplify maintenance cycles by providing a single solution for software patching. Oracle Engineered Systems are tested
before they are shipped to customers and delivered ready-to-run, enabling customers to shorten the time to production.
We offer a wide range of server systems using our SPARC microprocessor. Our SPARC servers run the Oracle Solaris operating system and are
designed to be differentiated by their reliability, security, and scalability. Our mid-
size and large servers are designed to offer better performance
and lower total cost of ownership than mainframe systems for business critical applications, for customers having more computationally
intensive needs, and as platforms for building cloud computing IT environments. Our SPARC servers are also a core component of the Oracle
SuperCluster, one of our Oracle Engineered Systems.
We also offer enterprise x86 servers. These x86 servers are based on microprocessors from Intel Corporation and are compatible with Oracle
Solaris, Oracle Linux, Microsoft Windows and other operating systems. Our x86 servers are also a core component of many of our Oracle
Engineered Systems including Oracle Exadata Database Machine, Oracle Exalogic Elastic Cloud, Oracle Exalytics In-Memory Machine and the
Oracle Big Data Appliance.
Our storage products are designed to securely manage, protect, archive and restore customers’ mission critical data assets and consist of tape,
disk, flash and hardware-related software including file systems software, back-up and archive software and storage management software and
networking for mainframe and open systems environments.
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