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Oracle Announces a Database Fire Sale

Written By: M. Reed
Published On: December 22 1999

Event Summary

"REDWOOD SHORES, Calif., Dec. 16 /PRNewswire/ Today, Oracle Corp. announced lower software and support prices for the Oracle8i database. Specifically, the price of Oracle8i Standard Edition was lowered 40% from $25 per power unit to $15 per power unit, while Oracle8i Enterprise Edition was cut 50% from $200 per power unit to $100 per power unit.

"Every time we lower prices we sell more software," said Larry Ellison, Oracle Chairman and CEO. "Just about the only reason people cite for not buying Oracle8i is price. Now that's fixed. Internet computing has driven the popularity of our database to an all-time high. Lowering prices will increase the overall size of the database market." Database prices are effectively reduced even further by making some separately priced optional features standard. Two key Internet options -- interMedia, a text and multimedia search engine, and Jserver, an integrated Java interpreter -- are now included with both Oracle8i standard and enterprise editions at no additional cost."

Market Impact

As stated by Ellison, "Our real competition is Windows NT, not SQL Server", the competing database product from Microsoft Corporation. Oracle is aiming at the midrange to workgroup market with this move, hoping to take market share away from Microsoft. These changes do not affect Oracle's named-user pricing model according to Ellison, but support pricing has been standardized at 7 percent of the software cost for continuous coverage. In addition, Ellison is hoping that all of Oracle's sales can be booked via the Internet within the next year, which would serve to reduce sales overhead. Oracle's stock has more than tripled within the last three months, reflecting investors' confidence in Mr. Ellison's strategies. The most interesting aspect of Ellison's strategy is to go after customers that don't store their data in a database, but in a traditional file system, such as Windows NT. As stated by Ellison "We're going after the NT file server market." If Oracle's stated strategy is successful, they could pick up a huge piece of business in the low to mid-range customer base.

User Recommendations

Customers who are investigating better ways to track and analyze their data should consider Oracle 8i for this purpose, especially if they use dynamically generated web pages. If the web pages are static, serving them from the file system may enhance performance. The downside of Oracle's success is that their revenue stream has been very strong, which reduces the software vendor's usual approach of giving discounts to make sales quotas at the end of the quarter/year. Customers should also investigate Microsoft SQL Server and IBM's DB2 Universal Database, and do price comparisons to maximize their leverage with the vendor.

 
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