Although the company made a late entry into the cloud market only last year, it is still growing strong and possesses huge cash in hand. A 25% market share in the middleware space makes it second to IBM. To make its application software available as an on-demand cloud-based offering, it recently launched Fusion Apps. It is a complete suite of ERP and CRM applications that could help Oracle Corporation (NASDAQ:ORCL) gain additional share in those markets where it competes with Microsoft and SAP.
The graph below shows the increase in quarterly revenue for both Red Hat and Oracle Corporation (NASDAQ:ORCL), as well as fellow competitor VMware, Inc. (NYSE:VMW):
RHT Revenue Quarterly data by YCharts
As seen above, Oracle Corporation (NASDAQ:ORCL) is financially very sound at the moment. It is also restarting its dividend earlier than planned and increasing its quarterly dividend to $0.12 per share. With this recent pull back and partnering with its former rivals, Oracle’s biggest product lines, databases and enterprise resource management solutions can earn quite a handsome return for investors. All this makes Oracle stay competitive and I would suggest a buy, sensing brighter future prospects in cloud offerings.
VMware, Inc. (NYSE:VMW) another giant in the race, provides virtualization infrastructure solutions in the United States and internationally. It has a dominant position in the server virtualization market, ranging from software-defined data centers, client management of mobile devices, to the hybrid cloud.
The company is presently hitting a transition and 2013 looks like a slow year for it. But future years look strong for the company in terms of growth. It is already a world leader in virtualization and also a top player in the cloud. Currently, VMware, Inc. (NYSE:VMW) is 80% owned by EMC, which has plans for working on an organization called The Pivotal Initiative. It combines the assets from both the companies and will be 69% owned by EMC, while 31% owned by VMware, with tools coming from VMware and cash from EMC. The Pivotal Initiative will be the company’s cloud software zone, so it makes sense to sell out your positions in VMware, Inc. (NYSE:VMW) and move to EMC as soon as possible.
Now, having seen this, Red Hat, EMC and VMware, Inc. (NYSE:VMW) look like smaller players providing virtualization solutions to enable organizations to aggregate multiple storage infrastructures, servers and networks together. But for the ones looking out for the complete cloud industry, Oracle Corporation (NASDAQ:ORCL) seems to be the best pick.
Into the future
Looking at the bigger picture and comparing the pros and cons of the moves taken by the company, it looks like a good play for the long term. Red Hat’s revenue continues to grow and it has been seen getting more diversified. Earlier its revenues were derived completely from a subscription model, but as of now the company is focusing more on its cloud computing sector. Red Hat’s OpenStack and OpenShift technologies are its future, and promise handsome rewards for these investments for Red Hat. This will be an early stage to invest, owing to their cloud businesses, but this could prove to be quite fruitful in the future.
