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Oracle expands datacentre capacity, prepares huge cloud push

Oracle has expanded its datacentre capacity hugely, the company has revealed, as it tries to drive more cloud business.

The news that the company wants to push its SaaS and PaaS (software as a service and platform as a service) offerings hard came with Oracle's latest fiscal results, with the firm saying its datacentre footprint had expanded close to a hundredfold, from 0.5 megawatts to 45 megawatts.

Computer Weekly reported that CTO (and former CEO) Larry Ellison commented: “We have installed over 40,000 physical devices, a 100,000 virtual machines and over eight petabytes of storage. We now have in place the physical infrastructure to dramatically expand our cloud customer base. We are adding thousands of new SaaS, PaaS, IaaS and data customers to our existing datacentres.”

Oracle CEO, Safra Catz, noted that new SaaS and PaaS annual recurring cloud subscription contracts tripled in fiscal Q1 2016. She added: “As our cloud business scales-up, we plan to double our SaaS and PaaS cloud margins over the next two years – starting from 40% this just completed Q1, to approximately 60% this coming Q4, and then on up to 80% two years from now. Rapidly growing cloud revenue combined with a doubling of cloud margins will have a huge impact on EPS growth going forward.”

In the Q1 results, Oracle reported a total revenue of $8.4 billion (£5.4 billion), down 2 per cent in terms of US dollars, but up 7 per cent in terms of constant currency.

Cloud plus on-premise software revenues hit $6.5 billion (£4.2 billion), which again was down 2 per cent in US dollars, but up 6 per cent in constant currency.

SaaS and PaaS revenues climbed to $451 million (£290 million), up very strongly by 34 per cent on the previous year.

Ellison said that Oracle is on target to book between $1.5 billion (£970,000) and $2 billion (£1.3 billion) of new SaaS and PaaS business this fiscal year, meaning that his company would sell at least 50 per cent more new cloud business than is planning to sell, and perhaps as much as double.

He observed: “Oracle is the world’s second largest SaaS and PaaS company, but we are rapidly closing in on number one.”