Oracle: Partners Drove Half Of Our $1B Middleware Sales

Oracle President Charles Phillips met with financial analysts Tuesday in New York to update them on the company's strategy and tout Oracle's growth, particularly in its middleware business.

Oracle's middleware revenue for its 2006 fiscal year, which ended May 31, topped the $1 billion mark, a first for the Redwood Shores, Calif.-based software giant, Phillips noted. Oracle reported that its middleware license revenue for the year jumped 35 percent.

However, Oracle doesn't break out its middleware revenue in its financial reports. Those sales are lumped with database revenue, which makes it difficult for analysts to gauge how Oracle's Fusion middleware products are selling against offerings from competitors like IBM and BEA Systems.

"We've caught BEA, after starting way back four years ago," Phillips said. "I would say BEA is almost in our rearview mirror at this point."

Oracle said partners are essential to its market-share push. The company reported that "nearly half" of its 2006 middleware revenue came from partners, and Phillips highlighted the growing ecosystem around Oracle's middleware stack. The software vendor said it now has 4,500 VARs and 4,780 ISVs focusing on its middleware.

Oracle's middleware push has prompted some internal reorganization. The company is doubling its staff of middleware specialists and creating a dedicated Fusion middleware sales force, a change from its earlier practice of giving its sales staff quotes for database and middleware sales, according to financial analyst Peter Goldmacher of Cowen and Co.

"We believe middleware considerations are increasingly important to IT buyers, and by aggressively setting the agenda with its middleware sales reps, Oracle can define the argument in its favor," Goldmacher wrote in a recent research note.

But not all on Wall Street are won over by Oracle's middleware evangelism. BEA is drawing applause from analysts for its ongoing product-line overhaul and from partners for its renewed focus on the channel.

"BEA, in particular, has made [the] channel a strategic focus for the company and in the past seven quarters has gone from 12 VAR partners to nearly 90," UBS analyst Heather Bellini said in a recent report on software channel trends. Though Oracle is doing well with its Fusion message, it continues to struggle with channel conflicts, particularly in the SMB market, Bellini wrote.