Grid Raises Pricing Questions

Oracle users have licensing concerns.

As Oracle Corp. talks up the flexible computing infrastructure afforded by the grid capabilities of its Oracle 10g database and application server, users are wondering if they are going to be pinched by the companys inflexible licensing policy.

Oracle, based in Redwood Shores, Calif., charges for its software by CPU or by named user, but the supposed benefit of the grid is that a company can add or subtract CPUs as its workload changes (for instance, when it needs more processing power at the end of the quarter to close its books).

Officials at Oracle declined to comment on 10g pricing, although CEO Larry Ellison said at the OracleWorld conference earlier this month that the company might move to an annual subscription model. Despite Ellisons remarks, Jacqueline Woods, Oracles vice president of global pricing and licensing strategy, told eWEEK there wont be any change to licensing fees with the advent of grid computing.

"The only way youd pay more is if you were to increase CPUs or named users," Woods said. "Then youd buy more licenses, same as today."

Carl Olofson, an analyst with International Data Corp., in Framingham, Mass., said Oracles attitude has to change if it wants to more effectively address the needs of midsize companies and others with tight budgets. As an illustration, Olofson said an organization thinking of a grid in terms of a flexible cluster of servers may want to add a couple of four-CPU servers during busy periods.

"I go from 16 to 24 processors total. Do I need a perpetual-use license for 24, even though I only use [the extra eight processors] one month per year?" Olofson said. "Customers are going to expect that if the configuration will be flexible, then the licensing should be as well. The way it stands now, youd have to license for the high-water mark."

Oracle database users get the point. Ian Abramson, chief technology officer of Red Sky Data Inc., agreed that a grid complicates licensing. After all is said and done, however, Abramson said he trusts that Oracle will not price itself out of competition.

"The grid does confuse things," said Abramson, in Toronto. "It complicates pricing because of the ability to add additional CPUs. But they have to stay consistent, and they have to stay competitive. If they price themselves out of the market, thats not a good thing. Hopefully, the grid will make it more affordable. As long as my licensing costs stay the same or get better, everybody will be happy."

Packaging is another issue Oracle has to work on with 10g, said IDCs Olofson. He asked how the company will map features in the 10g database, due by years end, to its current Standard and Enterprise editions.

A preferable path for 10g would be to put out editions that offer a more graduated path from entry-level to enterprise-level than is now offered, Olofson said. This would let Oracle match the low cost of entry for IBMs DB2 and Microsoft Corp.s SQL Server databases.