Report: Oracles Price Cuts Should Have Been Deeper

Oracle's recent attempt to lure SQL Server users away by lowering the price of its entry-level database will stumble once customers read the fine print, according to a new research note from AMR Research.

Oracle Corp.s recent attempt to lure SQL Server users away by lowering the price of its entry-level database will stumble once customers read the fine print, according to a new research note from AMR Research Inc.

Oracle, of Redwood Shores, Calif., earlier this month slashed $1,000 off the price of Standard Edition One, its entry-level database, to $4,995 per processor. That price is the same as the list price for Microsoft Corp.s SQL Server Standard Edition.

Meanwhile, Oracle President Chuck Phillips last month touted Oracle Database 10gs ease of use as yet another way it will compete with SQL Server; he installed 10g on a laptop in 10 minutes at Oracles Financial Analyst Day at Oracle AppsWorld.

/zimages/5/28571.gifOracle may be making aggressive steps into the mid-market. However, Microsoft and its partners doubt that Oracle can play nice with resellers, ISVs and integrators in the space. Click here to read more.

Simplicity aside, anyone considering purchasing Oracles Standard Edition One over Microsofts SQL Server Standard Edition should keep a few points in mind, according to Boston-based AMRs recent report:

  • Oracles Standard Edition One is limited to two processors, while SQL Server Standard Edition can be used with four-CPU servers.
  • Microsofts Standard Edition includes free licenses for its business-intelligence software, Reporting Services. Oracles BI capabilities must be purchased separately.
  • Regardless of initial product costs, total costs will likely be different because of the costs of ongoing technical support.

/zimages/5/28571.gifOracle, heady after its success with the "Unbreakable Linux" campaign, has declared war on Windows, with SQL Server being target No. 1. Click here to read Oracle President Chuck Phillips war cry.

For example, Oracle has implemented a Safe Switch program that offers trade-in credits of up to 100 percent on database licenses for those customers who migrate from IBM DB2, SQL Server, Informix or Sybase Inc. databases. However, the report points out, even customers who dont pay initial license fees could still face steep prices due to ongoing technical support, future licenses, porting of custom code, and the retraining and replacing of database administrators.

The rise of open-source databases, database commoditization, customers who balk at high costs and a stagnant worldwide market for relational databases are prompting the major database vendors to cut prices and/or expand the scope of their licenses, the report said.

For its part, IBM in June released DB2 Express, a version of its DB2 Universal Database aimed at the SMB market.

Microsoft has introduced a free, scaled-down version of SQL Server.

Oracle, meanwhile, has dragged its feet in joining the price war because of its heavy reliance on databases as a source of revenue.

According to the report, Oracle should lower prices more dramatically to alter customers perceptions that it represents the priciest database option. Since Oracles Enterprise Edition is the most common version of its database and is the object of most customers pricing complaints, Oracle should cut the price of this version, AMR said.

/zimages/5/28571.gifMicrosoft says "Nuts!" to Oracles attempt to grab SQL Server customers. Click here for the story.

The report advised that another smart step would be for Oracle to diversify. Instead of relying so heavily on database revenue, the company should look to packaged applications, "which transcend commodity products like databases, hardware and operating systems," it reads.

Finally, AMR suggested that Oracle deliver more bang for the buck by, for example, packaging BI functionality with its database, a la Microsofts Reporting Services/SQL Server pairing.

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