IBM Sets Price Increases on Enterprise Version of DB2

Says new features justify database's cost

IBM is adding a variety of features to the next version of its flagship DB2 relational database, which is due for release in November. But it's also adding to the price of the software's enterprise edition.

IBM officials last week disclosed that Version 8 of DB2 Universal Database will ship on Nov. 21 for Unix, Linux and Windows systems. As part of the rollout, they said, IBM plans to consolidate its DB2 Enterprise Edition and DB2 Extended Enterprise Edition packages into one offering priced at $25,000 per CPU—$5,000 more than what the company now charges for the base version of the software.

In addition, database clustering support will now be sold as an add-on feature costing $7,500 per CPU. Clustering is currently included in the extended version of the enterprise edition, which costs $25,000.

But IBM isn't just raising prices: The per-CPU cost for the workgroup version of DB2 will be cut from $14,000 to $7,500, the company said. And IBM officials pointed to the new functionality that's coming in Version 8, in an attempt to justify the price increases at the enterprise level.

"There's a little bump in price for the enterprise version, but we added 432 new features to this release," said Jeff Jones, director of strategy at IBM's data management solutions unit. "This is a major, major upgrade for us."

DB2 Version 8, which was announced two months ago without pricing details, includes new self-managing tools, a redesigned user interface, a built-in configuration adviser and other enhancements .

Despite the price increases, an IBM spokeswoman said DB2 will still cost users less than the $40,000 per CPU that rival Oracle Corp. charges for the enterprise version of its Oracle9i database.

But Jacqueline Woods, vice president of global pricing and licensing strategy at Oracle, said via e-mail that DB2 still falls short of Oracle9i on functionality. "As such, no one should expect the price to be the same," she said.

Oracle last week reported that database revenue fell 9% year to year in its first quarter ended Aug. 31. But IBM claimed that it has had 21 consecutive quarters of database revenue growth as of this year's second quarter.

David Beulke, president-elect of the Chicago-based International DB2 Users Group, said he doesn't mind the price increase, given the new features IBM is promising. "The total cost of ownership for DB2 continues to be cheaper than competing platforms," said Beulke, a consultant and developer at Pragmatic Solutions Inc. in Alexandria, Va.

"I expect they need to pay for development, and the features are worth it," said Martin Hubel, a database consultant in Toronto who uses DB2 Version 7.2 to run a Web site and plans to upgrade to Version 8 as soon as the software is available.

But Mike Schiff, an analyst at Current Analysis Inc. in Sterling, Va., said some users may choke on any price increase in the current IT spending environment. "I can see Larry Ellison having a field day," Schiff said, referring to Oracle's CEO. Nevertheless, he added that price often "is a relatively small consideration" in database purchases.

James Niccolai of the IDG News Service contributed to this report.

Data Costs

IBM's current DB2 pricing vs. what it will charge for Version 8:

NOW DB2 v8
DB2 Enterprise Edition $20,000 per CPU for standard version; $25,000 for extended $25,000 per CPU, plus $7,500 for clustering as an add-on option edition with clustering support
DB2 Workgroup Server $14,000 per CPU Unlimited Edition $7,500 per CPU
DB2 Workgroup Server Edition* Not available $969 per database server, plus $249 for each named user

* For companies with 24 to 36 end users

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