HERE’S How Oracle Makes Money in 2022 [Full Business Model]

The advent of personal computers gave way to the establishment of software development companies such as Microsoft. It dominated the market from the beginning until it no longer became the industry’s sole major player.

Oracle, a known beast in the industry, became the second-largest software company despite being established only two years after Microsoft.

It has developed some of the most impressive software programs in the industry. But how does it make money? What is the Oracle Business Model that inspires new companies?

Keep on reading to learn how Oracle emerged as one of the best players in the software industry!

oracle business model

What is Oracle?

The USA-based software company, Oracle Corporation, is the leading database management company in the world.

It does so by providing a selection of software and database solutions such as top-notch database software, enterprise software products, cloud engineered systems, human capital management (HCM) tools, enterprise resource planning (ERP) tools, and customer management software.

Businesses of all sizes trust Oracle’s supply chain management software and enterprise performance management tools.

The company offers all the important tools and technologies that businesses need for the modernization of operations to acquire a competitive edge.

Oracle continues to sell licensed software products up to this day. It may switch to adopting cloud-based subscription sales to offer monthly or yearly subscriptions for its products.

Oracle History

Larry Ellison, Ed Oates, and Bob Miner co-founded Oracle Corporation in 1977 which was initially called Software Development Laboratories (SDL).

Ellison later developed a product that could compete with IBM’s System R database after being inspired by Edgar Codd’s paper on relational database management systems (RDBMS) in 1970.

However, Elision’s idea to devise a program failed since IBM did not release the error codes for their product.

The company name became Relational Software, Inc. in 1979. Four years later, it was changed again to Oracle Systems Corporation after the release of Oracle Database.

It finally adopted the Oracle name after getting inspiration from the name of CIA’s 1977 project, which was the first big project Oracle had worked on. Bob Miner was the program’s senior programmer that time.

Since most operating systems during that time were supporting the C programming language, Oracle similarly used the language during its early years for developing and implementing its flagship products.

This made it easier for Oracle to install its products on most computers. In 2005, Oracle acquired PeopleSoft which was an Enterprise Resource Planning software developer.

A year later, it bought Siebel for provision of customer resource management programs. In 2008, Oracle acquired BEA systems to deliver cutting-edge enterprise infrastructure software.

Two years later, Sun Microsystems, an IT company, merged with Oracle. Oracle recently bought Cerner in 2021. It later acquired Federos, an AI and automation tool developing company.

The company also currently offers a variety of software solutions and tools such as CRM, ERP, and HRM which thousands of business organizations use. It may allure more clients through its subscription-based business model.

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What Products and Services Do Oracle Sell?

Oracle customizes and produces a selection of products for business organizations, government agencies, and other users. It provides both software and products along with complementary services such as financing, training, and hosting.

Its acquisition of many other software companies has built an extensive product portfolio for the company. It’s most widely used are the following:

1. Software

Users can buy and download the software from the company’s official website. Oracle’s E-delivery service also delivers the latest software programs with documentation.

2. Database

The company has been offering this product following a multi-model database management system since 1979. Oracle has been constantly enhancing its database solutions to answer the rapidly growing needs of businesses.

The majority of its clients adopt Oracle’s database for data warehousing, online transaction processing, and handling database workloads. Several service providers also offer Oracle database on cloud, on-prem, and as a hybrid cloud installation.

The Oracle hardware or third-party servers may be used to run the database. It is a very advanced solution for improving the safety and performance of modern companies.

3. Secure Enterprise Search (SES)

SES assists users in exploring content from different websites, file servers, enterprise resource planning systems, XML files, content management systems, CRM systems, and business intelligence systems.

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4. Oracle Fusion Middleware

A package of middleware software products that contain system integration, business process management, application server, content management, user interaction, business intelligence, and identity management systems.

5. Applications

Oracle’s procurement of other software and technology companies, in 2003, helped improve the company’s application portfolio.

The Java language is widely used by the company in developing its applications. PL/SQL is also another known language used for Oracle Forms, Reports, etc.

Some of its application products are Oracle E-business site, Siebel, PeopleSoft Enterprise, JD Edwards World, JD Edwards, JD Edwards EnterpriseOne, Store Operations, and Merchandise Operations Management.

6. Enterprise Management

The Oracle Enterprise Manager (OEM) provides users with online management and monitoring tools that may be used for database, middleware, application, hardware, visualization, and cloud management work.

7. Software Development Tools

Oracle sells a selection of tools that support developers in designing and creating polished programs. This allows many software development companies to rely on these tools created by the company.

It also offers File Systems, Hardware, and cloud services. Therefore, Oracle operates as a multinational software company offering products that many developers and companies rely on.

Oracle Business Strategy

Acquiring other recognized software companies has helped Oracle to improve its application portfolio.

It’s most notable acquisitions that helped in marking its dominance in the industry include NetSuite, BEA Systems, and PeopleSoft. Its primary business strategy expands its range of services to draw in more clients.

Oracle also has remarkable initiatives for technology absorption such as collaborating with other companies for the optimization of its products and services to work efficiently. It has even worked with its rivals to attract more clients!

The company is now working on migrating its infrastructure to a sophisticated cloud platform. If successful, this move can reduce carbon footprints and save the company a large sum of money on infrastructure space and cost.

As the world’s second-largest software company, Oracle invests significantly in creating disruptive technologies. It works on becoming the top choice for excellent technological solutions by developing valuable solutions for its clients.

How Does Oracle Generate Revenue?

The company’s sources of stable and recurring revenue come from selling applications, software, database solutions, and offering cloud infrastructure. 

Oracle also creates innovative solutions to draw in more clients to streamline their business operations. A regular license or subscription fee is also required from users to be able to use its products.

The majority of medium and large business organizations utilize the backend software support provided by the company. In turn, Oracle charges them for using these backend tools, services, and technologies.

Oracle also serves multinational businesses by giving them high-quality software programs for their growing demands. These multinational companies are vital for the growth of Oracle’s revenue.

How Does Oracle Generate Revenue from Oracle Cloud?

Java is widely used for developing several applications and software programs since it is an object-oriented programming language.  James Gosling developed Java at Sun Microsystems. The company was bought by Oracle in 2010.

It used to be open source before the acquisition. In 2019, Java became Oracle’s premium product. Oracle later announced that Java SE 8 will not have any public updates.

Users with commercial licenses for the product got new updates for commercial and production use.

Oracle was distributing Java for free which was aligned with Red Hat’s business model. Charges only came with the Java SE support.

Oracle also sold Java Middleware servers at a high cost when Java was still an open-source project. It is currently a premium product that ad companies are paying for.

Oracle Corporation Challenges

Many businesses are still stuck with legacy systems while cloud migration became increasingly popular among business organizations.

However, the complexity of migration made it hard for businesses to advance through their plans. Oracle also sees it as a challenge to draw in more clients to use its cloud computing platform.

Cloud migration can use costly internal infrastructure, which is why most businesses refuse to adopt this technology. 

It would be hard for decision-makers to waste a significant amount twice after already spending a large sum on their internal infrastructure.

Oracle continuously convinces its clients that transitioning early to Oracle Cloud will be very advantageous for them since future database management will rely on cloud technology.

Data security is also a concern for clients since information is stored on servers in remote locations. Therefore, better strategies are needed for Oracle Corporation to convince its clients that the safety and security of data will be maintained on the cloud platform.

Once it succeeds in assuring data security, many enterprises might switch to Oracle Cloud Infrastructure. Developing the next innovative technology is similarly a big challenge for Oracle.

The company constantly delivers improved versions of its existing tools and buys businesses that develop revolutionary technology and services. It has enough resources and manpower to advance innovation as it becomes the leader in the software industry.

Conclusion

Oracle Corporation has proved itself to deliver impressive innovative software programs and database management solutions.

It is currently set to offer high-class cloud infrastructure as it entertains more clients using cloud computing services. However, Oracle still challenges in becoming the best software and cloud computing company.