ORACLE: IoT CLOUD SERVICE

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1 COMPANY PROFILE ORACLE: IoT CLOUD SERVICE AHMED ALI Analysys Mason Limited 2018 analysysmason.com

2 Company summary Oracle is an enterprise database and business application provider. The company offers hardware and software IT solutions and is known for its own trademark database products in addition to owning the Java platform, following the acquisition of Sun Microsystems in Oracle s innovation strategy relies on a combination of internal development and acquisitions. Oracle s spend on research and development (R&D) was USD6.2 billion, equivalent to 16% revenue, in the fiscal year ending in May The company has employees in its R&D division. Oracle entered the IoT market in 2013 when it launched a version of its Java platform, Java ME Embedded, as a software stack for resource-constrained hardware such as microcontrollers. The company introduced the Oracle Cloud Integration Platform portfolio in 2015, which included the Oracle IoT Cloud, the Oracle Integration Cloud, the Oracle SOA Cloud, and the Oracle API Manager Cloud. Among other services, the portfolio was offered to support enterprises requirements for IoT device management and for integration with existing IT systems. Figure 1: Oracle company facts Founded 1977 Offices Headquarters in Redwood Shores, California Employees (May 2017) Regional focus Revenue Selected IoT customers Selected IoT Partners Global USD37.7 billion (FY2017) GEMÜ, Lochbridge, Mitsubishi Electric, Noble Plastics, SoftBank, VINCI Advantech, Aricent, Bosch Connected Devices and Solutions, Bosch Rexroth, Cisco, Cisco Jasper, Dell, Deloitte, Eurotech, Fathom, Freematics, Fujitsu, Gemalto, Greenwave, Huawei, OSISoft, Primal Sensors, relayr, Texas Instruments, Windriver, Zentri Analysys Mason Limited

3 (USD billion) Oracle: IoT cloud service Company summary: financials Oracle generated USD37.7 billion in FY2017 (Figure 2). The revenue grew by 2% YoY due to growth in its cloud business, software updates and support. Net income grew by 5% YoY reaching USD9.3 billion in Oracle breaks its revenue into three business segments; cloud and on-premise software, hardware, and services. The cloud and on-premise software business includes cloud IaaS, PaaS and SaaS offerings in addition to on-premise licenses, software updates and product support. This is Oracle s largest revenue segment and has been growing at 2% CAGR since The hardware business includes on-premise appliances and the related support and services while the services business includes consulting, advanced customer support, training and certification programmes. Revenue from both the hardware and the services businesses have declined by 6% and 4% respectively between 2013 and In FY2017, sales in the company's largest region; the Americas, (where the USA makes 85% of the region s revenue) grew by 3% YoY, offsetting the decline in hardware and services. However, in Europe, sales declined across all businesses resulting in a total 2% YoY drop in the region. Asia-Pacific saw the highest growth with 6% YoY mainly because of the higher software and services sales. More than quarter of the revenue in the region came from Japan. Figure 2: Oracle s revenue and net income, worldwide, FY2013 FY Figure 3: Oracle s revenue by region, worldwide, FY FY13 FY14 FY15 FY16 FY17 Services revenue Hardware revenue Software revenue Net income 28% 16% Total revenue: USD37.7 billion 56% Americas EMEA Source: Oracle Asia-Pacific Source: Oracle Analysys Mason Limited

4 Revenue (USD billion) Oracle: IoT cloud service IoT business overview Oracle Internet of Things (IoT) Cloud Service platform is available as PaaS offering hosted on its own cloud. The company also offers IoT SaaS applications for asset, fleet, worker and production monitoring. Oracle s cloud business has seen a significant growth in the recent years, rising from USD2.1 billion in 2015 (5.5% of the total revenue) to USD4.6 billion in 2017 (12% of the total revenue) (Figure 4). Oracle offers its platform as a bundle of device and data management services including lifecycle management, messaging, event store and management and visualisation. It also supports integration with the enterprise systems as well as other Oracle cloud services to execute more advanced tasks such as analytics and application development (Figure 5). Oracle IoT Cloud operates on top of Oracle Database Cloud Service and Oracle Storage Cloud Service. Supporting clouds include Oracle Big Data Cloud Service and Oracle Event Hub Cloud Service for advanced IoT analytics and machine learning capabilities. Oracle licenses the service on either a usage-based pricing model (Universal Credit Services) or on a discounted monthly subscription-based model (Non-Metered Services). Both methods are charged based on the number of the allocated Oracle CPUs (OCPU) per hour. Figure 4: Oracle s cloud revenue, global, FY2015 FY Figure 5: Oracle s roles in the IoT value chain Applications Analytics & BI Application enablement Data management Device management Connectivity & connectivity mgmt. Hardware FY15 FY16 FY17 Cloud IaaS & PaaS Fleet Monitoring Analytics Cloud Key Asset Monitoring Production Monitoring Business Intelligence IoT Cloud Cloud SaaS Connected Worker Cellular, LPWA, Management platform Devices, Sensors, Modules, Hardware Source: Oracle Partners Apps Big Data Preparation API Catalog Java App Integration Database Big Data Event Hub Oracle s Core IoT cloud Oracle s supporting clouds Partners Analysys Mason Limited

5 IoT strategic direction Oracle s major acquisitions in the recent years such as Apiary (2017), Palerra (2016) and NetSuite (2016) allowed the company to enhance its cloud computing capabilities with several components including application development, integration and security. However, Oracle has not made any IoT-specific acquisitions. The Oracle IoT Cloud Service builds on Oracle s cloud components to meet the IoT services providers requirements for device management and data storage. Through a single integrated cloud platform, Oracle s IoT proposition is suitable for customers in the early stages of IoT projects or are prioritising ease of use over modular platform design. Oracle s partner ecosystem encompasses a range of connectivity, device, gateway and networking partners to complement the company s cloud solution with edge-related components. Partners include Cisco Jasper, Dell, Eurotech, Windriver and Bosch. However, Oracle has fewer partners in the higher levels of the IoT value chain such as the application enablement, advanced analytics and artificial intelligence platforms. The company wants to promote its own capabilities and presence in these areas. To reflect its strengths in these technologies, Oracle has introduced integrated AI and machine learning within its IoT Cloud. It has also added support for emerging technologies such as digital twin and digital thread. The interest in industrial IoT is rising and Oracle has taken several steps to secure its place in this market and counter growing competition. The company relies on building strategic partnerships and expanding its product portfolio by adding advanced platform services and applications. In terms of industrial IoT partnerships, Oracle is collaborating with companies that have operational technologies and digital transformation expertise such as Bosch and GE. A significant partnership in 2017 was with Mitsubishi Electric. With Mitsubishi providing connectivity at the edge and access to manufacturing customers, Oracle handles data processing in the cloud and provides access to application developers. Oracle is also targeting the industrial IoT market with its prepackaged applications. The company has developed its own digital supply chain software, combining elements from its Supply Chain, Big Data and IoT Clouds. The solution allows Oracle to target existing customers with siloed sets of data within Oracle Supply Chain cloud and also target new customers that are looking for a supply chain solution that is ready to deploy. Furthermore, Oracle has developed more inclusive industrial solutions such as the Digital Field Service and the Smart Connected Factory. These solutions go beyond asset monitoring to offer comprehensive digital platforms with features such virtual reality to simulate the manufacturing floor and help with worker remote training. Analysys Mason Limited

6 Product summary Figure 6: Oracle s IoT Cloud Service components Service Function Description Device Virtualization High Speed Messaging Endpoint Management Device connectivity Telemetry Communication Device management Gateway management Abstracts the complexity of device connectivity by creating a set of resources with data properties and message formats for every connected device. It standardises the way devices are integrated with the enterprise. Applications can directly communicate with the device regardless of the connectivity protocol. Device monitoring and control can be preformed using the client software library API or through the REST calls made to those devices. The service uses a number of extensible device protocol adapters to enable reliable bidirectional communications between the connected devices in the network and the Oracle IoT Cloud Service. It also supports communication with all other backend elements that connect to the Oracle IoT Cloud Service. Provides secure endpoint management through the APIs and the Management Console. An endpoint can be a gateway, a programmable device, device software running on the Oracle IoT Cloud Service Gateway device, a device adapter, or an enterprise application. The service can also deliver device software updates and managing the security policies. Event Store Data storage Offers data storage services for different types of messages sent to and from the devices with storage duration configured between 1 month and forever. The types of data stored include the entire device repository, configuration information, the device software repository, the log files from devices, device data and alert messages. Stream Processing Enterprise Connectivity Stream analytics Device and application integration Provides real-time processing capabilities and basic analytics such as event aggregation, correlation and filtering for the ingested data streams that are sent to Oracle Cloud. Users have access through a graphical interface to a range of predeveloped and built-in analysis patterns. Uses can build their own analysis applications and visualise their data. Allows enterprise applications to integrate with the Oracle IoT Cloud Service using the Cloud Service Client Software Enterprise Library and REST APIs. Enterprise applications have a secure channel to acquire data from the devices or send commands to them. Analysys Mason Limited

7 IoT use cases Figure 7: Oracle s selected IoT use cases Customer/Partner Country Scope L&T Infotech (LTI) India LTI is a global IT technology and service provider that supports more than 500 customers around the world in areas such as manufacturing, utilities, banking and insurance. The company used Oracle IoT Cloud to develop a number of end-to-end IoT solutions that target customers in the industrial sectors with sensors, connected assets, data visualization and advanced analytics. The released solutions include: Visual Cargo for fleet and shipment tracking Smart Water Processing for monitoring and maintaining water filtering systems Time out of Environment for monitoring the refrigerating conditions for stored products Heavy Assets Management for tracking heavy assets and their energy consumptions Industrial Pump Optimization for management and control of industrial pumps in remote locations. SoftBank Japan SoftBank, the Japanese mobile operator, launched a personal mobility service to support tourists in the island of Teshima in Japan. The small and remote island is popular among tourists for its landscape and its international art festival. However, the art exhibits are scattered across the island which is not well-connected with public transportation. SoftBank s solution was to introduce an electric motorcycle sharing service named Setouchi Karen. Visitors can rent scooters during their stay in the island. SoftBank is using Oracle IoT Cloud to remotely monitor the scooters and collect data about the scooter locations and usage patterns. Through the platform, SoftBank is offering extra features for customers such as sending notifications about ferry departure times. The platform also analyses the driving patterns and the excessive use of the brakes to provide suggestions to drivers on how to drive more efficiently to save battery. VINCI Facilities France VINCI Facilities is a European facility management and building solution service provider supporting businesses across a range of industries including healthcare, education, local authority, retail and social housing. The company has around 8000 employees and operates in more than 18 countries. The company was looking for a solution to reduce the cost of its maintenance services and to improve staff interaction with customers. Using Oracle IoT Cloud, VINCI remotely monitors different equipment and assets inside the buildings it manages. The platform helped the company to gain real-time insights into the building conditions and to create service requests automatically. As a result, VINCI was able lower the repair times and increase workforce utilisation. Analysys Mason Limited

8 Analysis: strengths, weaknesses, opportunities and threats STR ENGTHS Oracle offers a comprehensive set of device and data management features that are integrated into a single IoT Cloud platform. This simplifies IoT deployment for customers that want an uncomplicated device management solution. Oracle also provide access to other cloud services such as big data, analytics and business intelligence to support its IoT Cloud. Oracle has an extended ecosystem of partners, especially in the IoT edge space. These include major hardware and gateway providers and system integrators such as Bosch, Cisco, Dell and Huawei. OPPOR TUNITIES Oracle has a solid background as an enterprise application provider with a growing SaaS business. Introducing IoT applications builds on these strengths and extends the IoT capabilities to various types of customers. The strong focus on digitalising the supply chain and supporting the industrial sectors allows for faster product development and targeted customer acquisition strategies. Oracle is a trusted brand with an extremely large customer base to sell to. WEAKNESSES Oracle does not promote integration with other public cloud providers which can be considered limiting for customers that want more flexible deployment options and operate across multiple clouds. Oracle is less visible in the IoT-related markets of AI and machine learning than other cloud providers such as IBM and Microsoft Azure. THR EATS Oracle lacks device connectivity expertise, has not acquired any IoT device connectivity and its enterprise hardware business is declining. As a result, the company relies strongly on its edge partners to ingest and aggregate device data and send it to the cloud. Given its device management approach, Oracle needs to secure its position in the edge market. Strong competition from cloud and enterprise software providers such as AWS, IBM and Microsoft Azure. These competitors are expanding rapidly in the IoT stack, introducing new features, expanding partnerships and experimenting with pricing more frequently than Oracle. Analysys Mason Limited

9 About the author Ahmed Ali (Senior analyst) is the lead analyst for Analysys Mason's IoT Platforms and Technology research programme. His research covers IoT software, applications and solutions used by service providers to enable their IoT offerings. Prior to joining Analysys Mason, Ahmed worked as a senior analyst at ABI Research for more than 3 years, where he was part of the next-generation mobile network research programme, covering wireless and core mobile markets like small cells, in-building solutions, network virtualisation, unlicensed spectrum, and other 4G and 5G technologies. Ahmed holds a master's degree in Electronics Communications and Computer Engineering from the University of Nottingham and a bachelor's degree in Electrical Engineering from the University of Khartoum, Sudan. Analysys Mason Limited

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