Oracle share price down, cuts price to boost software sales

Oracle Corp. announced a new marketing strategy on Wednesday that focuses on lower hardware prices in order to attract a wider area of clients.

Chairman Larry Ellison unveiled the latest generation of the companys server systems at an event at Oracle’s headquarters in Redwood City, California.

Mr. Ellison said the new addition to the companys arsenal of products would be priced around half of the value of comparable electronics provided by rivals, while at the same time delivering better speed.

The X5 system will be sold for around $562 000 versus the $912 000 a company would have to pay to get an equivalent system powered by components provided by Cisco Systems and EMCs joint venture, Mr. Ellison said.

“Our new strategy is highest performance, lowest list price, best cost performance,” Ellison said.

The new system would enable Oracle to reach wider area of clients for the first time in company history, rather than providing services to a specific number of consumers, who need additional computing power.

“We’ve never really competed for the data-center core,” Mr. Ellison said. “Now we have a new strategy.”

The X5 systems follows a plan paved from it predecessors to bundle up hardware with software in order to build long-lasting partnerships with clients. Although hardware sales accounted for only 14% of Oracles $38.3 billion revenue generated during the financial 2014, they are used to create a strong foundation for software sales.

The alliance between EMC and Cisco actually established the “converged infrastructure” system market, a Cisco spokesman said. He also added that the companies are not worries because they have a significant advantage and “Oracle has a lot of catching up to do”.

However, Mr. Ellison noted that Oracles X5 system is superior to competitors machines in both price and performance. The company specializes in designing specific hardware and software that works best when utilized together and deliver a clear edge over rivals.

Todays announcement was the first introduction of a new product since Mr. Ellison passed the CEO position to Mark Hurd and Safra Catz in September.

Oracle lost 0.93% on Wednesday and closed at $43.49 in New York, marking a one-year increase of 13.82%. The company is valued at $190.98 billion. On Thursday the stock slid 0.41% to $43.31 during after-hours trading.

According to the Financial Times, the 34 analysts offering 12-month price targets for Oracle have a median target of $47.00, with a high estimate of $52.00 and a low estimate of $34.00. The median estimate represents a 8.02% increase from the last close price.