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How Does Oracle Make Money? The Oracle Business Model In A Nutshell

Oracle is a behemoth software company, founded in 1977 by Larry Ellison, Bob Miner, and Ed Oates. The company primarily followed the on-premise software model, but it mostly successfully transitioned to the cloud model. In fact, by 2020, cloud services represented most of its revenues. Indeed its lineup of software products comprises MySQL, Java, Middleware, Oracle Linux, and many others.

Origin Story

Oracle is a multinational computer technology corporation, founded in 1977 by Larry Ellison, Bob Miner, and Ed Oates.

Originally known as Software Development Laboratories (SDL), it was Ellison in particular who became inspired by a 1970 paper written by Edgar F. Codd on database management systems. Thirteen years later, SDL became Oracle Systems Corporation – a name in more alignment with the flagship Oracle Database product.

Oracle had early success in using the C programming language to implement its products. Its products and services were expanded following the successful acquisitions of PeopleSoft, NetSuite, and BEA Systems to name a few.

The company now sells database software and technology as well as cloud-engineered systems and enterprise software products. It currently occupies position 82 on the Fortune 500 list and employs over 136,000 people.

Glance At The Oracle Business Model

As the company highlights in its financials:

Oracle provides products and services that address enterprise information technology (IT) environments. Our products and services include applications and infrastructure offerings that are delivered worldwide through a variety of flexible and interoperable IT deployment models. These models include on‑premise deployments, cloud‑based deployments, and hybrid deployments (an approach that combines both on-premise and cloud‑based deployment) such as our Oracle Cloud at Customer offering (an instance of Oracle Cloud in a customer’s own data center). Accordingly, we offer choice and flexibility to our customers and facilitate the product, service and deployment combinations that best suit our customers’ needs. Through our worldwide sales force and Oracle Partner Network, we sell to customers all over the world including businesses of many sizes, government agencies, educational institutions and resellers.

Oracle therefore is a behemoth which software business ranges across the old and the new way (from on-premise to cloud and a hybrid between the two).

Oracle three primary lines of business comprise:

  • Cloud and license: representing 83% of the company’s total revenues for 2020. This operating segment sells and delivers a broad spectrum of applications and infrastructure technologies through our cloud and license offerings.
  • Hardware: it represented 9% of the company’s revenue in 2020 and it provides a broad selection of hardware products including Oracle Engineered System.
  • And services: which represented 8% of the company’s revenue in 2020, primarily focused on helping customers and partners to use at the best the suite of Oracle products.

Oracle revenue generation

Oracle Revenue Model moves around three primary lines of business. Cloud services are either based on license and support or on-premise model. And the remaining lines of business (Hardware and Services), which represent a smaller part of the company’s revenues.

Oracle makes money by designing, manufacturing, and selling hardware and software products. More specifically, revenue comes from software subscriptions, license fees, hardware fees, and service fees.

Through its numerous acquisitions, it also offers extensive complimentary services in consulting, hosting, financing, and training. Ultimately, Oracle sells enterprise-level technology to large enterprises.

Let’s take a look at some of the major products and services.

Oracle Cloud Infrastructure

Oracle Cloud Infrastructure (OCI) delivers high-performance, on-premise computing power for cloud-native and enterprise IT workloads. Some of the more notable organizations utilizing OCI are Zoom, 7 Eleven, and FedEx.

Given that this is an enterprise solution, prices are available on request. Alternatively, a business can estimate its potential costs using a simple unit cost model.

Software

Central to the Oracle software offering is their flagship product Oracle Database 19c. This gives organizations cost-efficient access to the most reliable, scalable, and secure database technology in the industry.

Other on-premise products include:

  • MySQL.
  • Java.
  • Middleware – a cloud platform for digital businesses.
  • Oracle Linux – guiding leveraging Linux OS to deploy enterprise applications more rapidly.
  • Engineered Systems – designed to integrate, test, and optimize software and hardware products.
  • GraalVM – enabling interoperability between programming languages in a shared runtime.
  • Analytics Server – for detailed customer analytics.
  • Oracle Autonomous Database – a product allowing enterprises to reduce operating costs by 90% through an automated, machine learning database for full lifecycle management.

Prices are available by contacting an Oracle expert.

Hardware

Oracle Hardware is a suite of scalable and engineered systems, storage, and servers. This hardware delivers many benefits to enterprises, including lower costs, better cloud integration, optimized performance, and more robust data.

Again, prices are available upon request. Current Oracle Hardware customers include Toyo, Halliburton, and Exelon.

Key takeaways

  • Oracle is a multinational computer technology company for large enterprises. Co-founder Larry Ellison was inspired to create Oracle after reading a paper on database management systems.
  • Oracle makes money by selling an extensive range of products and services to large enterprises. Acquisitions of related organizations also enable it to sell complementary services in hosting, training, and consulting.
  • Oracle is best known for selling its database management system. It also sells cloud infrastructure and scalable systems, storage, and server hardware.

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