Oracle 2015 Annual Report Download - page 20

Table of Contents
this Annual Report. A summary of our domestic and international revenues and long-lived assets is set forth in Note 16 of Notes to Consolidated Financial
Statements included elsewhere in this Annual Report.
We also market our product offerings worldwide through indirect channels. The companies that comprise our indirect channel network are members of the Oracle
Partner Network. The Oracle Partner Network is a global program that manages our business relationships with a large, broad-based network of companies,
including independent software and hardware vendors, system integrators and resellers that deliver innovative solutions and services based upon our product
offerings. By offering our partners access to our product offerings, educational information, technical services, marketing and sales support, the Oracle Partner
Network program extends our market reach by providing our partners with the resources they need to be successful in delivering solutions to customers globally.
The majority of our hardware products are sold through indirect channels including independent distributors and value-added resellers.
Seasonality and Cyclicality
Our quarterly revenues have historically been affected by a variety of seasonal factors, including the structure of our sales force incentive compensation plans,
which are common in the technology industry. In each fiscal year, our total revenues and operating margins are typically highest in our fourth fiscal quarter and
lowest in our first fiscal quarter. The operating margins of our businesses (in particular, our cloud software and on-premise software and hardware segments) are
generally affected by seasonal factors in a similar manner as our revenues as certain expenses within our cost structure are relatively fixed in the short term. See
“Selected Quarterly Financial Data” in Item 7 of this Annual Report for a more complete description of the seasonality and cyclicality of our revenues, expenses
and margins.
Competition
We face intense competition in all aspects of our business. The nature of the IT industry creates a competitive landscape that is constantly evolving as firms
emerge, expand or are acquired, as technology evolves and as customer demands and competitive pressures otherwise change.
Our customers are demanding less complexity and lower total cost in the implementation, sourcing, integration and ongoing maintenance of their enterprise
software and hardware. Our enterprise cloud and on-premise software and hardware offerings compete directly with some offerings from some of the largest and
most competitive companies in the world, including Microsoft Corporation (Microsoft), International Business Machines Corporation (IBM), Intel, Hewlett-
Packard Enterprise, SAP SE and Amazon.com, Inc. and smaller companies like salesforce.com, inc. and Workday, Inc., as well as many others. In addition, due to
the low barriers to entry in many of our market segments, new technologies and new and growing competitors frequently emerge to challenge our offerings. Our
competitors range from companies offering broad IT solutions across many of our lines of business to vendors providing point solutions, or offerings focused on a
specific functionality, product area or industry. In addition, as we expand into new market segments, we face increased competition as we compete with existing
competitors, as well as firms that may be partners in other areas of our business and other firms with whom we have not previously competed. Moreover, we or our
competitors may take certain strategic actions—including acquisitions, partnerships and joint ventures, or repositioning of product lines—which invite even greater
competition in one or more product offering categories.
Key competitive factors in each of the segments in which we currently compete and may compete in the future include: total cost of ownership, performance,
scalability, reliability, security, functionality, efficiency, speed to production and quality of technical support. Our product and service sales (and the relative
strength of our products and services versus those of our competitors) are also directly and indirectly affected by the following, among other things:
• the adoption of cloud-based IT offerings including SaaS, PaaS and IaaS offerings;
• ease of deployment, use and maintenance of our products and services offerings;
• compatibility between Oracle products and services deployed within on-premise IT environments and public cloud IT environments, including our Oracle
Cloud environments;
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