Oracle Layoffs in 2017 Devastate Hardware Unit as Company Refocuses on Cloud Computing
Oracle Corporation (NYSE:ORCL) has struggled mightily throughout 2017 to adjust its hardware business to the industry realities. The Oracle layoffs in 2017 have numbered in the thousands, with many employees being let go from the units assigned to the “Solaris” operating system and the “SPARC” microprocessor for high-end servers.
The IT layoffs from the Oracle hardware divisions represent the company’s continuing troubles in balancing hardware, software, and cloud computing. The Oracle job cuts in 2017 amount to the biggest drop-off in the company’s employee headcount in years.
Oracle has only added 2,000 jobs worldwide so far in 2017, versus 4,000 in 2016 and 10,000 in 2015. The slowdown in hiring can be attributed to many factors, but the massive IT layoffs certainly have not helped the job numbers.
The company may be dramatically resetting its plans, with a potential refocus on its roots as a software company if the hardware business cannot be salvaged.
Oracle has found it difficult to compete in the hardware business against industry mainstays like Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOG). The war for server dominance seems to have long since left the company behind, as evidenced by the many Oracle layoffs in 2017 in the hardware division.
Oracle Cut 441 Employees from Hardware Division in Santa Clara
This year began on a low note for the company, with a round of Oracle hardware layoffs in January. These Santa Clara layoffs numbered around 450. The spike in the Oracle January layoffs were the result of the company’s previously-mentioned struggles with hardware sales. This event marked the company’s first turn toward cloud computing, in an attempt to better compete.
All of the layoffs in January were from the hardware systems division, according to a letter sent to the California Employment Development Department. The employees who were cut from the company included hardware and software developers, technicians, managers, and administrative assistants.
“The Santa Clara facility is not closing as part of this reduction in force,” wrote the company. “Rather, Oracle is refocusing its Hardware Systems business, and for that reason, has decided to lay off certain of its employees in the Hardware Systems Division.”
The job cuts in 2017 demonstrate that the company is intent on leaving behind what was turning out to be a rough investment for the company—hardware—and instead pushing toward one of the faster-growing areas of its business, cloud computing.
While Oracle made its bones in the IT industry by selling equipment and enhancements for on-site data centers, cloud computing has begun to put that side of the business on the back burner as more companies are turning to third-party providers to store and operate their business applications on cloud platforms.
As a result, Oracle’s revenue from hardware fell 13% from September through November 2016, compared to the same period the year before. New software license revenue similarly plunged 20%.
Despite the bad news that the company has received on the hardware side of things, it managed to recoup lost revenue via its cloud service offerings. The company built data centers and offered cloud products to companies, selling software that is rented out over the Internet, as opposed to being delivered in a physical box.
Revenue from the company’s cloud side of the business grew by 81% in the most recent earnings report, which preceded the Santa Clara layoffs.
“This year we are selling more enterprise SaaS (software as a service) than any cloud services provider in the world,” wrote Oracle co-CEO Mark Hurd in December 2016. “We expect to book over $2 billion in new annually recurring cloud business this year alone.”
Oracle Also Let Go 2,450 Employees in California, Texas, Colorado, and Massachusetts
The Oracle job cuts in 2017 continued, with another major culling in the hardware division, this time with about 2,500 employees losing their jobs in early September.
The Oracle layoffs in 2017, starting in the beginning of the year, did not bode well for the company’s Solaris and SPARC offerings. Later, the Oracle September layoffs were the company’s biggest response yet to the difficulties that it had with the Solaris operating system and SPARC microprocessor.
A blog post by a former Oracle executive, Bryan Cantrill, detailed that these latest rounds of job cuts were, according to current Solaris team members, “so deep as to be fatal: The core Solaris engineering organization lost on the order of 90% of its people, including essentially all management.”
Oracle’s focus on servers and the Solaris project were direct results of the company’s acquisition of Sun Microsystems, Inc. in 2010, a deal that ran the company $7.4 billion. Sun and Oracle had been long-time partners before the acquisition, but Oracle had primarily focused on software, specializing in database and financial applications.
The company’s forays into computer servers and microprocessors have proved to be a bridge too far, and have culminated in the recent large number of IT layoffs.
The major changes at the company have been felt across the country, with California layoffs, Texas layoffs, Colorado layoffs, and Massachusetts layoffs comprising the biggest round of Oracle layoffs in 2017.
“Oracle laying off hundreds in Santa Clara,” The Mercury News, January 20, 2017.
“Oracle Cuts More Jobs in Its Hardware and Solaris Units,” Fortune, September 5, 2017.
“Number of employees at Oracle worldwide between 2007 and 2017 (in 1,000s)*,” Statista, last accessed November 1, 2017.