Limited financial success hides customer indifference to their long-term supplier.

11. 07. 2018

Oracle Results 2018: Software companies are losing market power in their core businesses

Despite laying out over US$35bn on business acquisitions since 2012, Oracle’s turnover has only edged forward by 7% in 6 years and its profits are still lower than in 2012-2014.

How can a business with such dominance in the database technology market- and massive financial firepower – allow such dominance to slide?

The answer may relate more to the perceptions of customers, who feel little loved, as opposed to the technical attributes of Oracle’s software.

The most intense touch-points between Oracle and its customers are its regular audits (software license reviews). But these are often seen as unfair and oppressive – a constant and anxious experience for Oracle users. It is these which define the customer relationship with Oracle and determine whether, in time, they stay or go.

It is indeed a pity that a business with considerable opportunity to create a loved and loyal client base is seeing that client base drift away. At the heart of Oracle’s legacy business is stagnation or atrophy.

Gartner estimates global cloud revenues to be US$186bn in 2018. Oracle only has a 3% share and this proportion is falling. Despite, therefore, an exploding cloud market, Oracle’s US$35bn spending spree is not returning the revenues and profits that could be expected from its huge customer base. And if these customers are going elsewhere, then maybe there’s a cultural rather than a product reason for that.

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