CTXS Citrix Systems Inc

Oracle Corp.(ORCL) in a bid to strengthen its desktop virtualization portfolio has launched the Oracle Virtual Desktop Client App for Apple Inc.’s (AAPL) iPad. Users can get the application from Apple’s App stores for free. It can also be downloaded from the company’s iTunes website.

Oracle Virtual Desktop Client App will be managed by Oracle’s Sun Ray Software and Oracle Virtual Desktop Infrastructure, thereby enabling the iPad users to efficiently and easily virtualize and manage software and hardware data by eliminating location constraints.

Oracle Virtual Desktop Infrastructure offers solutions and support to organizations by enabling them to move from a traditional desktop environment to a virtual desktop architecture. This virtualization process benefits the organization by simplifying administration, reducing operating costs, facilitating the optimal utilization of existing IT assets and strengthening its security standards.

Additionally, Oracle Virtual Desktop Infrastructure supports a variety of client devices, virtual desktop operating systems, and virtualization platforms, to meet its data security, user experience and Total Cost of Ownership (TCO) goals.

We note that Oracle faces stiff competition from Citrix Systems Inc. (CTXS) and VMware Inc. (VMW) in the desktop virtualization market.

Recommendation

We believe that Oracle will benefit from its innovative product pipeline, improving margins, high recurring revenues, strong growth from Exadata and Exalogic and increasing adoption of cloud computing over the long term.

Moreover, Oracle is expected to gain significant market share from SAP AG (SAP) in the Applications market going forward. Oracle is also expected to edge out its prime competitor International Business Machines Corp. (IBM) in the database market.

Oracle remains well positioned with Sun hardware and Oracle software. The fact that both the Sun hardware and Oracle software are relatively higher-margin businesses is an added bonus for Oracle. Additionally, we expect Oracle to come out on top in its legal battle with Google Inc. (GOOG), over the use of Java technology in the Android OS. This should generate significant recurring revenue for the company. Hence, we believe that the company will hugely benefit from these products going forward.

However, Oracle is expected to face strong competition from Hewlett Packard Co. (HPQ), IBM, Cisco Systems Inc. (CSCO) and Red Hat Inc. (RHT) in the cloud computing market that may act as a headwind over the long term.

We maintain a long-term (6–12 months) Outperform recommendation on Oracle shares. Currently, Oracle has a Zacks #3 Rank, which implies a Hold rating on a short-term basis.

 
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