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Oracle Enters Hardware Market

September 25, 2008

Oracle Corp, one of the world’s largest software makers, announced it would begin selling hardware for the first time in its 31-year history.

Chief Executive Larry Ellison announced that Oracle would be offering two hardware products: a “database machine” and a smaller storage product. Both are made by Hewlett-Packard Co, and they are made to help companies gather information stored on Oracle’s database software without using space corporate data centers.

The new products have been in development for three years. Ellison unveiled them at a customer conference of about 43,000 attendees.

The database machine will sell for $650,000 and store up to 168 terabytes – “1,400 times larger than Apple’s largest iPod,” Ellison said.

Oracle is aiming to undercut other hardware makers like Netezza Corp. (NZ) that sell so-called “data warehouse appliances.” The Oracle-HP partnership conceivably could also siphon sales from storage providers like EMC Corp. (EMC) and IBM Corp.

“If Oracle is going to get bigger as a company they aren’t going to do it with software, they’re going to have to do it with hardware,” said Donald Feinberg, an analyst at tech-research company Gartner Inc.

Oracle also hopes to appeal to corporate customers who want to buy as many programs as possible from a single vendor. The company has spent more than $35 billion to acquire about 50 other software makers in the last four years.

Oracle’s gains have increased by 29 percent to $5.5 billion in its last fiscal year.

Just last week, the company reported its earnings rose by another 28 percent to $1.08 billion in the first quarter of its new fiscal year.

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