Oracle revamps pricing with 9i release

Oracle Corp. launched a new version of its flagship database Thursday morning, a product that includes high-end features designed to help Oracle shore up its narrow lead against arch rival IBM Corp. The company also said it has revamped a controversial pricing scheme that had come under fire from some customers.

Called Oracle 9i, the database includes a new clustering feature designed to make it easier for customers to add new servers as demand increases. It also includes business intelligence tools for analyzing data, and new manageability features designed to cut costs for users and make its product easier to use, Oracle officials said.

Perhaps more interesting for Oracle's current users is that the vendor has introduced a new pricing system. The new scheme, based on the number of processors a customer uses, replaces Oracle's "power unit" model, a more complicated system that took into account the speed of each processor, and required users with faster chips to pay more.

"We're trying to make it comparable to IBM," said Larry Ellison, Oracle's chairman and chief executive officer, of the new pricing system at a press conference here. IBM has criticized Oracle for being five to six times more expensive than IBM's own database, and so switching to a similar pricing model to IBM's will make it easier for customers to compare prices, he said.

Oracle's existing 8i customers will be able to switch to the new pricing scheme, Ellison said. The company will publish a "simple conversion formula" in the next few days that will allow customers to calculate how much they will be paying under the new system, he said. Meanwhile, it wasn't immediately clear whether customers will end up paying less or more for Oracle's database under the new model.

The change can't come soon enough for some customers who have complained that Oracle's power unit method, which was introduced last year, was unpredictable and hard to fathom, said Betsy Burton, a database analyst with Gartner Inc. In fact, Burton said, Oracle's pricing model "left the door open" for IBM and Microsoft Corp. to steal business from the database market leader.

"Over the last six to nine months I've been hearing clients say they're making the decision for DB2 because of pricing," Burton said. "I've talked to a customer who said, Look, we understand (Microsoft's) SQL Server isn't as scalable or reliable, but at 10 times less the price of Oracle we're going to make do."

On the whole, Burton spoke favorably of Oracle 9i. Oracle hasn't had a good reputation for its manageability and improvements in this area will go down well, she said. Gartner estimates that only 5 percent to 10 percent of Oracle's customers use clustering, so that feature -- dubbed Real Application Clusters -- will have minimal impact in the short term, but eventually could make clustering more popular, she said.

"This is a good, solid enhancement. It will provide a higher degree of scalability and help them position the database at the very high end of the marketplace against DB2," Burton said.

Ellison was more enthusiastic. He described Real Application Clusters as "by far the most important feature since relational databases came out." It not only allows users to add new servers as demand from users increases, but also makes Oracle's database more reliable because in a clustered environment, when one server goes down the others keep running.

IBM's DB2 supports clustering on its mainframe computers, but no standard business applications are available for clustering on the Unix and Windows platforms, Ellison claimed.

"Being able to add performance by plugging in another machine is a very, very big deal," he said. "IBM cannot do this on Windows and Unix, and Microsoft cannot do this."

Oracle announced a partnership with Compaq Computer Corp. in which the server vendor will sell certified configurations of Real Application Cluster on the server vendors AlphaServer and ProLiant systems. The preinstalled systems are designed to make it faster and less risky for customers to deploy the clustering technology, and are available for order through Compaq's Web site, Ellison said.

Beyond its traditional markets Oracle hopes the new release will help it garner new business among service providers, and in particular among companies that host software applications for businesses, said Bob Shimp, senior director of Oracle 9i marketing, in an interview earlier this week. To that end, 9i has a new feature called Virtual Private Database, a security feature designed to help service providers keep data from multiple businesses separate.

"We see (the service provider market) as an opportunity to meet the needs of small and medium-size businesses that might otherwise consider SQL Server," Shimp said. In other words, when customers use applications hosted on Oracle servers, that's one less potential sale for Microsoft, he said.

The second new market Oracle hopes to plumb is for customers migrating away from IBM's DB2 database running on mainframe computers, Shimp said. A feature in 9i called Data Guard, which makes it easier to access a backup database in the event a primary server goes off-line, along with the applications clustering feature, should help Oracle in this high-end market, he said.

Gartner's Burton was skeptical of Oracle's ability to steal business from IBM, primarily because Oracle's prices are higher, she said in an interview earlier this week.

IBM, meanwhile, announced the latest revision to its database product last week, dubbed DB2 UDB 7.2. Big Blue touted many similar features that Oracle has emphasized, including improved management features, business intelligence, and tight integration with its WebSphere application server. IBM recently acquired the database business of Informix for $1 billion.

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