Ellison responds on database pricing

Oracle Corp. last week announced its Oracle9i database and a new pricing scheme that does away with a capacity-based licensing model built around a system performance measure called the Universal Power Unit (UPU). The capacity-based pricing had been criticized as exorbitant by many users ever since it was implemented a year ago. Larry Ellison, Oracle's chairman and CEO, spoke with Computerworld about the pricing change and other issues after the announcement.

Q: Is your move away from power unit pricing meant to counter IBM Corp., or is it about responding to users who said they were finding it hard to justify the higher sticker prices?

A: I think it's both. Our [new] pricing was designed to make it as easy as possible to compare our pricing to IBM's pricing. IBM wants to compare prices. Let's compare prices.

Q: Is this going to be the final word from Oracle on the pricing issue? Will this solve the perception problem you say you've been battling?

A: I think so.

Q: When you moved to the UPU-based pricing last year, you claimed that it was to streamline pricing and make it more equitable for all users. Now that you're abandoning the UPU approach in favor of per-processor pricing, do you feel that you're still maintaining an equitable and streamlined licensing model?

A: IBM has made such a big stink about this. I keep reading in the newspaper about how we're four, five and six times more expensive [than IBM's DB2 database], and that's just preposterous. The only issue that IBM has is the pricing issue, so let's get this issue behind us. You want processor-based pricing? We'll give you processor-based pricing.

We want to make a comparison between Oracle and IBM as easy as possible. It's simple. This is our price, US$40,000 per processor. They're priced at $20,000 per processor, but look at all of the things that [DB2] doesn't include. They're getting you for every little thing. You start adding all [that] stuff up, and they're actually more expensive than we are.

Q: You're the only database vendor that also offers an integrated suite of business applications centered on your database software. Are you concerned that your database sales could be hurt by what analysts have called a potential backlash from users who may not be ready to put all of their software eggs in the Oracle basket?

A: No. We're by far the most popular database with SAP, PeopleSoft or Siebel users. We've achieved the Holy Grail of database computing. Maybe the single most important thing to all of our customers is the issue of fault tolerance. The idea is that these applications just won't go down. All high-end customers want that.

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