Oracle-Dell Deal Strikes Blow at Microsoft

With Tuesdays announcement that Oracle will package Oracle Database 10g on Dell servers, the database price wars got a whole lot more interesting.

If theres one advantage Microsoft has had over Oracle in this war, its been on the channel side. Try as it might to grab small to midsize business (SMB) market share away from Microsoft by cutting the price of its standard edition, Oracles databases have never been the bedrock upon which ISVs built their applications. Microsofts advantage was that when SMB customers went out to buy specific applications, SQL Server was usually the relational database running beneath it.

All that may well have changed with the Dell deal. Dell is a huge distributor of hardware, particularly in the SMB market. Now, Oracle cant take on the SMB market by itself. Its attack doesnt depend only on database sales. Nor does it have to promulgate that attack via software. Hardware provides another avenue for entering that space, and Dell has the keys to the gate when it comes to low-cost servers.

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Click here to find out how Microsoft responded to the Oracle-Dell announcement.

One obvious and oft-stated component of Oracles strategy is to shift away from the high-end, high-dollar server components that it long associated with (think Sun and the packaging deals Oracle used to strike up with its one-time favorite partner) and focus its efforts on low-cost commodity servers, a la Dells two-processor configurations.

Industry watchers interpret the fact that Oracle persuaded Dell to stay at the two-processor level as indicating that Oracle is indeed gaining traction at the level of lower-end servers. After all, as pointed out to me by Wayne Kernochan—formerly of Aberdeen Group and currently president of Infostructure Associates, an affiliate of Valley View Ventures—there must be something in it for Dell. The company must recognize that Oracle is finally getting taken seriously in this space and therefore will be successful in helping Dell to move product.

But its not necessarily SMBs that are listening to the low-cost commodity server message. Mark Shainman of META Group Inc. told me that from what he sees, 10g and grid are appealing to organizations that are looking to migrate off proprietary Unix operating-system/hardware platforms and onto Linux/commodity server scenarios. In many cases, such organizations are already Oracle shops.

Kernochan basically agrees with that assessment and said that among his clients, Oracles grid message is ringing true for larger businesses that have blade servers, which are kicking the tires of grid computing and also tend to have rooms full of spare PCs that can be linked together.

In other words, Oracles SMB rhetoric is really just that. Its not persuading SMBs to move off SQL Server. Rather, its preaching to the choir, persuading smaller departments in large, Oracle-occupied enterprises to give 10g a spin.

So, who are the winners in the Oracle-Dell announcement? Its good news for Dell, since selling more hardware is always a good thing. Its bad news for Sun, since it confirms that Oracle is moving ever deeper into the low-end space.

As for Microsoft? It still has a solid product that appeals to the needs of the SMB market, and time will tell if Oracle manages to convince anybody otherwise.

Write to Lisa Vaas at lisa_vaas@comcast.net.

eWEEK.com Database Center Editor Lisa Vaas has written about enterprise applications since 1997.

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