We maintain a $64.85 price estimate for SAP stock, which is about 15% higher than market price.
Leveraging the in-memory technology is a software known as HANA (High Performance Analytic Appliance) that SAP released a few months back. HANA uses a different method of storing and retrieving data by storing it on computer’s CPU rather than the traditional way of reading and writing on storage disks. Can SAP’s in-memory become a disruptive technology and benefit SAP by gaining application software market share?
SAP Setting High Benchmarks with HANA
In the past, the company has highlighted the prospects of HANA and mentioned how HANA will help extend its leadership in analytics software or the Business Intelligence software.  We also highlighted how HANA could help SAP reinforce its leadership in the Business Intelligence market in our note titled SAP Widening its Lead in Business Intelligence.
Recently, SAP and IBM tested HANA’s capability of handling a large number of queries for a huge database.  According to the press release, HANA dramatically outperformed the traditional disk-based systems such as Oracle. According to another report, SAP is introducing a number of new applications leveraging its in-memory technology. These applications will facilitate real-time business and help its customers make better strategic decisions by simulating outcomes. 
Can SAP Threaten Oracle Through In-Memory?
Oracle is the largest player in the database software market and a potent competitor to SAP in the applications software market. However, as discussed above, SAP’s in-memory technology has the potential to threaten Oracle by producing faster transactions. We believe that Oracle has also made great strides over the last year or so through the introduction of faster Exadata machines capable of producing millions of transactions quickly. With superior performance, SAP would gain market share at Oracle’s expense, a topic we discussed in a note titled Oracle’s Exadata & Software Give Oracle 20% Upside.Notes:
- Watch the Webcast replay of SAP Q4 2010 earnings conference call
- See SeekingAlpha: SAP Q3 2010 earnings conference call, November 2010
- SAP Press Release, March 2011
- SAP press release: SAP announced new generation of In-memory applications, March 2011
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