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Oracle guns for Microsoft in database market

It has slashed prices on the base version of its next-generation 10g database

By Marc L. Songini
February 3, 2004 12:00 PM ET

Computerworld - Taking aim at Microsoft Corp.'s perceived dominance at the lower end of the database market, Oracle Corp. has slashed the prices on the base version of its next-generation 10g database.
The company announced that the cost of the 10g Standard Edition One has been cut by $1,000 to $4,995 per processor, and it is also doubling the CPU maximum to two per machine. The Standard Edition One, which caters to small-business and branch or departmental needs, will also sell under a named-user license for $149 per user, down from $195 per user, with a five-user minimum. Oracle will also throw in its Real Application Cluster (RAC) clustering technology for purchasers of the Standard Edition.
"The price points are just extremely competitive," said Jacqueline Woods, Oracle vice president of global practices, global pricing and licensing strategy. "We're including RAC for free in the Standard Edition. This is very big news when you consider RAC wasn't even available for Standard Edition before."
In addition to bringing the Standard Edition One database cost in line with Microsoft's SQL Server product, 10g comes with a simplified management interface that makes it easier for database administrators to work with, she said.
Microsoft downplayed the pricing move. Even if Oracle lowered the cost of the database to nothing, the maintenance and support costs would still outweigh the costs of SQL Server, said Tom Rizzo, director of SQL Server product management at Microsoft. "What about reporting, OLAP and data mining? That's all included in SQL Server [licensing]," he said. "Just wait six months; they'll change the pricing again. It's confusing to users."
Oracle President Chuck Phillips began divulging details about the company's intentions in the low end of the market last week at the Oracle AppsWorld show in San Diego (see story). "This is the first time ever we've had the same list price per processor as Microsoft," Phillips said at the event.
The move will probably help Oracle compete against both Microsoft and IBM's low-end DB2 offerings in the small-business market, said Pat Dues, project officer for the manager of the city of Las Vegas. Dues is also president of the Oracle Applications Users Group and said that the organization's pricing council had to get feedback from its members before reaching that conclusion.
The city, which is planning to upgrade to Version 11i.10 of the Oracle E-Business Suite next year, will consider using the new database pricing as a way to save money as its adds new modules. Currently, it runs the Oracle 11.0.3 suite supported by an Oracle8i database on Unix. "Wethink it's a very positive announcement," Dues said. "Everybody wants to look at ways to save money."
In itself, list price is "relatively unimportant," since nearly everyone discounts as needed; what really counts are the annual revenues from maintenance, said Mike Schiff, an analyst at Current Analysis, a Sterling, Va.-based research firm. He noted that Oracle is giving away RAC technology, which, in the higher-end Enterprise Edition, costs about half the price of the database, making it a good bargain.

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