Oracle users cautious about pricing changes

Users are applauding Oracle Corp.'s move to cut database software prices and discontinue the controversial power-unit pricing, but they're taking a wait-and-see approach to Oracle's new cost-conscious view of the world.

Oracle CEO Larry Ellison announced the move to per-processor licensing last month, when he unveiled the company's Oracle9i database. The change came after a third-quarter earnings shortfall and a year of negative publicity that was fueled by user discontent with Oracle's power-unit pricing model, which many characterized as exorbitant.

Now, with per-processor based fees that reduce costs for some configurations by as much as 15 percent to 18 percent compared with the power-unit approach, users said they're optimistic about their futures as Oracle customers.

However, most said the economy must improve before they can buy more software.

"The new pricing is much more acceptable and competitive," said Doug Cummings, manager of new technologies at Andover-Mass.-based Vicor Corp. "I think that the overall reaction to the policy change is positive. [However], with the economy like it is, we are just not spending like we were in the past."

Rich Niemiec, president of the International Oracle Users Group-Americas, a Chicago-based organization that represents Oracle's database users, said users are telling him that the price changes came at the perfect time. "The main things that I'm hearing is that pricing is much simpler to understand [and] the price reductions come at a great time when times are tougher," Niemiec said. "It keeps people on Oracle and thinking about Oracle9i and when to move to it."

Other users, like Michael Karaman, vice president and chief technology officer for product development at The Medstat Group Inc. in Ann Arbor, Mich., agreed that the price changes are welcome but said it's too early to see any impact. "This is certainly a move in the right direction," said Karaman.

Oracle's pricing spokesperson was unavailable for comment last week because of the holiday, and attempts to speak with someone else were unsuccessful.

Yet, while Oracle's move to per-processor pricing resulted in price reductions for users, some still say the US$40,000 per-processor price tag for the enterprise software edition is a little high compared with the $22,000 IBM charges for a DB2 enterprise license. John Chadwick, a U.K. government Oracle user, said the price of an Oracle database could still put off small and medium-size clients in the U.K., where funds are even harder to come by.

"Customers are still very much in 'Let's digest this all before we go ahead with anything' mode," said James Governor, an analyst at Illuminata Inc. in Nashua, N.H. Users are weighing what the changes will mean for them in practice, he said. "I don't think Oracle can escape the premium-pricing tag overnight. I would say it's still a little too early to call."

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