Ellison Answers Financial, Technical Questions - Page 2


The conversation moved over to Oracles new 10g database. It took two years for 50 percent of Oracles customers to move to 9i, how will the company accelerate the transition to 10g?

"Our ability to automatically manage the disk farm in 10g is so good that a lot of DBAs [database administrators] will want to get there as soon as possible. Were letting them say, Here are 50 spindles, you Oracle figure out how to spread the data. Its a manual process in DB2 and SQL Server. Its tedious and fraught with danger as you move data around. That feature alone will cause people to migrate to 10g.

"Its also much faster. Weve seen something like a 50 percent performance increase on our applications. Big [performance] increases on the query optimizer too. Were the only database that can usefully employ multiple machines on real-world applications. The only ones with greater clusters that work. Were the fastest on one machine. We work on a grid. We have lower cost of ownership.

"But that feature to automatically manage your disk pool is so compelling. Dont believe me, all the DBAs say it is so compelling and it just works.

Ellison repeatedly emphasized Oracles lower cost of ownership.

"This is an enduring theme. Youll see us continue lowering the cost of ownership. Get rid of third-party software and get rid of labor. Wherever you have labor, you have errors. Automating the labor out is absolutely crucial, because you get paid twice. And thats the best way to compete with Microsoft going forward, a much better cost of ownership."

Oracle has built a number of components into 10g that are also provided by enterprise software companies like Veritas, Cognos and other vendors. Ellison spent a significant part of the Q&A talking about why they now offer those tools, and the companys strategic plan—which seemed to borrow heavily from Microsoft.

"Oracle 10g operates better without Veritas than with Veritas. The backup part aside. Using the Veritas file system and volume manager is an unnecessary cost when using 10g. Its more expensive, more complicated and we dont recommend it. Our goal is to provide the most reliable and simplest system at the lowest possible cost.

"By getting rid of the [Veritas] volume manager it lowers the cost to our customers. I think we have a much better volume manager. Its simpler and free. We think the same thing is true of our management system. Having them tightly coupled makes it more secure and more reliable. And its less expensive from a software cost and a labor cost. We are trying to eliminate the requirement for expensive software add-ons. Were doing the same with business intelligence. That lowers the cost, and makes the system faster and more reliable. On our application servers, we built business intelligence into the database to eliminate the need for Cognos or Business Objects. We have to continue to lower the cost of our system, by eliminating the price of costly add-ons.

"We have to maintain our advantage of performance over Microsoft, and reliability over Microsoft, but also lower the cost of ownership and make our system more secure. We dont require Business Objects. We dont require Veritas. Well be adding our own grid control too, making our system more reliable, more secure and at a lower cost.

"Whats Oracles ambition? To do some of the things that Microsoft has done, to sell products at a lower price against the competition. Veritas charges a lot of money for volume management. Our product is free. When you assess the size of the market, you realize we are selling at a much lower price point than the competition. We are trying to sell a higher volume of product at a lower price. We compete with Tibco, Cognos, Business Objects, Web Methods and Veritas. We sell at a much lower price, not unlike what Microsoft has done with PC software."

But what about the new Real Application Cluster (RAC) service, which manages the array of servers and storage devices in 10g? Why is Oracle charging for that?

"Short answer, because we thought wed make more money charging for it than not.

"We charge for options based on performance and reliability, we dont charge for features. We decided to charge for RAC because it is so new and highly differentiated. Maybe at some point we wont charge for it, but for now its such a unique feature that it wont slow adoption.

"Weve got so many customers that have bought all the Oracle theyll ever need, and we need some database technology to sell them that they dont already own. Its so different, so unique, no one else has it, so we thought we could make some money on it. Id rather lower the price of the database and still charge for RAC."

Ellison continued to discuss the challenges in bringing 10g to market, and how RAC evolved.

"One of the things about grid computing thats important is not the database software, but the management software. Weve had to come out with a whole suite of management software to manage the grid. When you go from one mainframe to 64 machines and you have a bug, how do you patch 64 machines? How do you start up 64 machines? We had to build a whole set of management software called Grid Control to help deal with a large number of small machines, as opposed to a small number of large machines.

"Weve been working on RAC for a very long time, and now we have much better management software. In the old RAC days, a typical RAC would be two to four machines; now its 64 or more. Its that much more important to have the right management tools. Are we developing management tools to go after the companies in the tools industry? Yes. But we had to. Are we going after Veritas? Yes, but we had no choice. When were doing innovative things, sometimes you have to go beyond what we think of as a database, both up and down the line—a complete system from high-level management tools to the volume manager itself."

Ellison spent a long time in his keynote describing the concept of a "customer hub," where all customer data resides in one place. He used the example of a new worldwide credit verification application—which tracks every person in the world capable of receiving credit—as just one of the customer hubs Oracle is helping to build. But what about hubs beyond the customer?

"The customer data hub is just a bit misleading. Its really a customer/product data hub that answers the question, Who are my customers and what do they own? But theres personnel data in there too. You have to know all your salespeople, all your customers and all your products. You have to include territories, your entire sales force, who is supporting those customers and whos the credit person. When we say global customer database, its a huge percentage of your business database.

"The next one is supplier, and then employee, and I cant think of what else there is."

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