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Systems and software giant reports 2% revenue growth for its latest quarter, thanks to a 14% drop in hardware sales

Oracle has reported revenue growth of just 2% for its most recent financial quarter, thanks to a steep drop in hardware sales.

Overall revenues edged up to $8.8 billion for the three months ending 30 November 2011, but sales for hardware systems fell 14% to $953 million.

A recent study from market analyst IDC found that Oracle's share of the worldwide server market shrank from 6.5% in the third quarter of 2010 to 6% in the same period of this year. The market as a whole grew by 4% to $12.7 billion over that period.

The drop in hardware sales suggests that buyers are turning away from former Sun Microsystems products now that they are owned by Oracle.

The company insisted, however, that sales of its engineered systems – the high-end integrated stacks of Sun hardware and Oracle software that are now the centrepiece of its strategy – are growing quickly.

Oracle sold over 200 of its Exadata and Exalogic engineered systems during the quarter, CEO Larry Ellison revealed in a conference call with financial analysts, driving "triple digit" revenue growth for the products.

Customers included the University of Melbourne, the US Food and Drug Administration, manufacturer Amway and Korean carmaker Hyundai.

Ellison added that the company hopes to sell over 300 systems in the next quarter, and over 400 in the fourth quarter, by which time the products would be generating around $250 million per quarter. That suggests that the average selling price for an Exadata / Exalogic system is roughly $625,000.

Oracle's software sales rose 7% to $6.0 billion, including a 2% rise in new license sales to $2.0 billion.

The company was at least profitable during quarter – net income rose 17% year-on-year to $2.2 billon during the quarter.