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Oracle lowers database prices

Tags:
Cut,
Small Business,
Cheaper,
Price

Martin LaMonica CNET News

Published: 04 Feb 2004 16:00 GMT

Oracle has cut the price of its entry-level database, in an effort to gain more customers among midsize businesses.

As previously reported, Oracle released the Unix and Linux versions of its Oracle 10g database. It also dropped the price of its entry-level database to about $5,000 (£2,720) per processor, matching the cost of Microsoft's SQL Server 2000 database. A Windows version of Oracle 10g is slated for completion in a "few weeks," according to company executives.

The database giant also dropped the entry price point for the Real Application Clusters (RAC) feature to $15,000 per processor, which is the price of Oracle's midlevel database offering, called Oracle Standard Edition. Clustering software, used to run an application across many connected servers, was previously only available as a $20,000 option for the high-end Oracle Database Enterprise Edition product, according to the company.

Oracle 10g, a significant upgrade to the company's flagship product, introduces "grid" capabilities to lash several hardware servers together for better performance and reliability. The clustering software of RAC serves as the basis of the grid features in Oracle 10g.

With the price cuts and product enhancements designed to simplify management of the Oracle 10g database, Oracle is aiming for a bigger share of the midsized-business market. The company considers smaller organisations an important area for potential growth.

"We have a multipronged approach to enter into the lower end of the market, which we felt we weren't penetrating before," said Jacqueline Woods, vice president of global pricing and licensing at Oracle.

In October of last year, Oracle introduced a new product called Oracle Standard Edition One, which it sold for $5,995 per processor for servers with only one processor. The pricing change that comes with the introduction of Oracle 10g will bring Oracle's cheapest database cost to $4,995 per processor for up to two processors.

IBM, too, in October of last year added a pricing option for its DB2 Express, offering its database for about $4,000 per processor on a server with up to two processors. Oracle, IBM and Microsoft dominate the market for corporate databases, garnering the majority of dollars spent.

IBM and Oracle's licensing changes were a direct assault on Microsoft's SQL Server database and its base of customers in midsized companies and departments of larger businesses. Microsoft's database sales also rely heavily on partners such as value-added resellers and system integrators, which build packaged applications on SQL Server.

Oracle, which traditionally sells its database through a direct sales force, said it is boosting its efforts to improve its relations with partners. It is recruiting independent software providers and other partners with incentives to embed Oracle's database in applications sold to medium-sized businesses, said Robert Shimp, vice president of technology marketing.

The technology improvements in Oracle 10g will make Oracle's database more attractive to partners and medium-sized businesses as well, Shimp said. In particular, he said features that ease administration, configuration and ongoing maintenance of the database will help shed Oracle's reputation as a powerful yet complex database.

"We can compete with virtually any database product out there in the market on ease of use and ease of management," Shimp said.

Oracle 10g will introduce a "configuration management pack," or a bundle of tools for setting up a database system. The new pack will complement the three other existing enterprise management packs for diagnostics, tuning and change management. All packs cost $3,000 each.

Easier management is a key enhancement for Cisco Incorporated, a software developer based in Iowa, which uses Oracle's database to build custom applications. Engineers have had a difficult time learning the clustering features, said Mike McDermott, the company's chief operating officer.

"[Oracle] 10g is making a lot of the clustering a lot easier to use by taking a lot of the burden away in terms of configuration and setup," McDermott.

Although Oracle dropped its price to match Microsoft's entry-level database, Microsoft said it has no plans to go even lower. In practice, database license costs are regularly discounted from their list prices.

"[Oracle] could lower its price to zero, and customers will still find that the total cost of ownership for SQL Server is better than Oracle," said Thomas Rizzo, director of product management for SQL Server at Microsoft. "We feel no pressure to lower prices… They're scared."

Oracle's Wood said the company is not feeling any price pressure from open-source database alternatives, notably MySQL and PostrgreSQL. But Mark Shainman, a database analyst at Meta Group, said customers, particularly among small and medium-sized businesses, are considering open-source databases.

"Oracle is trying to penetrate Microsoft's stronghold, which is small and medium-sized businesses. But they have to understand that [these companies] are looking to leverage open source," Shainman said.

He said many of the base functions in corporate databases for processing transactions are becoming a commodity and are difficult to differentiate from one database to another. Database providers will increasingly compete on add-on features for doing data analysis with business intelligence and data-warehousing tools, he said.