Oracle Pricing Called Into Question

The Meta Group is advising its clients to fight attempts by Oracle to seek extra license fees for its database in a dispute over how to count users when database applications use batch feeds.

A leading IT market researcher is advising its clients to fight attempts by Oracle Corp. to seek extra license fees for its popular database in a dispute over what constitutes a user in its licensing contracts.

Meta Group Inc. announced the move Tuesday after its analysts have spent the past four weeks attempting to get Oracle to justify attempts to seek additional license fees from clients, said Charlie Garry, a senior program director at Meta.

The Stamford, Conn., firm has received about nine complaints from clients who say that Oracle is expanding its definition of what constitutes a named user, forcing them to either pay for additional users or switch to a more costly per-processor license. The extra costs can run into millions of dollars.

The Meta clients have told analysts that Oracle is considering batch feeds from other applications as "multiplexing." The IT term typically refers to software, such as Web server or TP Monitor software, that pools connections to a back-end database to acts as a smaller number of physical connections. In such instances, a customer would typically have to pay for the actual number of front-end users or switch to per-processor licensing. But, in the experience of Meta clients and analysts, Oracle had never applied multiplexing to batch feeds of data from applications that typically are used in generating reports and analysis in data warehousing.

The change means that all the end users of an application, even though they didnt directly access the database, could be counted as database users.

Oracle, for its part, said in a statement that there has been no change in the way it handles the named user licensing for such types of data feeds.

"Oracle pricing and licensing policy, with respect to the treatment of multiplexing and batch processing, has been consistent and in effect for several years," the statement read. "The Meta Group note represents what we believe are a handful of misunderstandings about the policy, and we encourage these customers to get in contact with Oracle Pricing and Policy department at Oracle Headquarters in Redwood Shores [Calif.] for further clarification and resolution."

Garry said he doesnt know how widespread the problem is, but that he recently has begun hearing about the licensing issue from Meta analysts overseas. Nine client complaints is an unusually large number, since each complaint often represents far more clients experiencing the problem, he said.

Oracle has often touted, and been noted, for providing a less expensive alternative for data warehousing because of its named user licensing option, something not offered by the other top database vendors, Garry said.

At the same time, the company has been pushing customers to switch to per-processor licensing, which charges customers for the number of CPUs running database software, Garry said. Oracle fully embraced per-processor licensing with its release of its 9i database in June of 2001, after previously coming under fire from customers for its "power unit" pricing introduced in 1999. That scheme combined both the number of processors and their speed to determine license fees.

"Its just another example of pricing missteps by Oracle if, in fact, its wide scale," Garry said.

The impact on customers of counting all the users of applications from which data for batch feeds comes is severe. In one case, a Meta client was told by Oracle to pay an additional $2.2 million to stay in license compliance, which was later dropped to $500,000 after the customer balked, Garry said. The customer is refusing to pay any additional charge.

In another case, a utility company client of Metas runs a proprietary application on a mainframe that collects metering information from homes and businesses. The application doesnt link directly into the Oracle database, but once a week the company downloads a subset of the data into the database as part of its data warehousing efforts. But, the utility, if forced to pay for each user of the application from which the data comes, would have to add millions of Oracle users to its named user license, Meta explained.

"It seems clear to us and clients and their attorneys when they read this [contract] that a batch feed, a machine-to-machine connection, would simply have to be licensed as a single named user," Garry said.

Meta urges it clients not only to ignore Oracles calls to pay more, but to seek court action if needed to avoid the costs. But many clients are considering simply looking to Oracle competitors for their database and data warehousing needs.

"Definitely clients have expressed to us that theyre looking to move (from Oracle), that theyre so upset by this theyre looking to move," Garry said.