Microsoft to Prolong Database Pricing Battle with SQL Server 2008

Updated: Microsoft will continue its long-standing strategy of pricing SQL Server to undercut database rivals Oracle and IBM.    

Microsoft is banking on more than functionality to make SQL Server 2008 stand out when it hits the scene-the company is also relying on pricing.

Slated to be launched at a public event in February and be released in the second quarter of 2008, SQL Server 2008 will enter the market with a pricing strategy aimed at dislodging database rival Oracle.

The retail price per processor will remain at $24,999 for the Enterprise Edition, the same as with SQL Server 2005, as compared with Oracle's starting retail price of $40,000 per CPU for the 11g database Enterprise Edition, a price tag that was also unchanged from the previous version.

According to Francois Ajenstat, director of product management for SQL Server, Microsoft officials hope the lower price will help them undercut the 11g. In addition, Microsoft is seeking to lower the total cost of ownership by not charging for, and in some cases not offering, certain capabilities. For example, though the company has included new support for spatial data in SQL Server 2008, it has chosen to rely on its partners to build spatial applications as opposed to charging extra for the option as Oracle does with Oracle Spatial 11g.

"We really think that is a differentiator for Microsoft compared to Oracle, who continues to charge extra for all that new functionality," Ajenstat said.

The argument may prove to be crucial for Microsoft, which is releasing the next generation of its database months after the releases of Oracle's 11g and IBM 's DB2 9.5.

"Microsoft's argument that customers often have to pay additional license costs to get the additional features from its rivals is a valid one," said Matt Aslett, an analyst with The 451 Group. "However, while Microsoft can be expected to focus on pricing simplicity as a benefit for SQL Server, it faces its own challenges on that score, not least from open-source databases."

Gartner analyst Donald Feinberg said except for Oracle Real Application Clusters, the big three database vendors- IBM , Microsoft and Oracle-are about equal.

Oracle has a solid second quarter. Read more here.

"Some features [in SQL Server 2008] are catch-up-others are leap-frog," he said. "Partitioned aligned index views, for example. Although File Streams are like Oracle's Secure Files, that only came out in 11g in August and 2008 with Microsoft. That would not be catch-up."

But there is still the matter of cost, he said, noting Microsoft has row and column compression in 2008 at no charge, while Oracle's Advanced Compression is a chargeable option in 11g.

The lower pricing and integration with Windows and other Microsoft products have allowed Microsoft to make headway with its rivals despite being behind its rivals in terms of depth and breadth of features, Aslett said. In a report released earlier this month, he predicted BI (business intelligence) would likely become a major battleground given IBM 's purchase of Cognos and Oracle's purchase of Hyperion Solutions.

"It is no coincidence that Microsoft will be launching Windows Server 2008, SQL Server 2008 and Visual Studio 2008 together, even though the availability of the products will be staggered throughout the year," he said.

Ajenstat acknowledged the company is interested in promoting what he calls the value proposition between all the three products. The integration between SQL Server and tools such as Office SharePoint Server is a key part of its BI approach, he added.

Editor's Note: Oracle does not charge customers for Secure Files in Oracle Database 11g. A previous version of this story incorrectly reported that Oracle charged for the offering.