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Stalled Oracle Fumbling For A Jump-Start Kit Part 2: Event Summary Continued

Written By: Predrag Jakovljevic
Published On: April 15 2002

Event Summary Continued

In its quest to further embellish its E-Enterprise suite, Oracle will bolster a new portal, wireless capabilities, business intelligence (BI), workflow features, new Business Objects for Java, and improved support for industry standards and competitive offerings. Oracle plans to introduce Wireless Internet self-service applications for non-PC devices in an upcoming release of its 11i Suite that will enable customers to receive B2B exchange information, handle urgent approvals and receive alerts. It also plans to enable the use of industry standard tools such as Dreamweaver to code self-service pages and build common reusable components as it evolves the suite into an object-oriented programming platform. Oracle also plans to implement a common application architecture based on Java Server Pages (JSPs) as the successor to its own PL/SQL application architecture. One Business Component for Java (employee benefits) has already made its way into 11i suite.

Oracle also unveiled a new portal development kit at JavaOne show at the end of March that aims to blur the line between portlets and emerging Web services. The developer kit, which works with the portal framework built into Oracle's 9i Application Server, should allow users build portlets out of existing Java Server Pages (JSPs) or Web services. This convergence of Web services and portlet standards, should let Java developers build portlets based on the SOAP and XML architecture they are using to build Web services. The new architecture uses Java and J2EE for core business logic, and XML infrastructure to deliver the app to the end user-whether they are portlets, Web services, or wireless content. In addition to the portal product, Oracle is rolling a new "micro" edition of its J2EE developer tools focused on wireless applications. Oracle is also making a preview version of its Oracle 9i Application Server supporting J2EE 1.3 available to developers at the show.

This is Part 2 of a 4-part note on recent developments at Oracle.
 
Part 1 began the summary of recent events.
Part 3 begins a discussion of the Market Impact.
Part 4 makes User Recommendations.

Addressing the AS Market

Having faced stiff competition in the database market Oracle has also set its sights on the prosperous application server (AS) market. It was the only bright spot in the last quarter, as this part of business grew 35%. Although late to market, the recent 9iAS enhancements in terms of Java 2 Enterprise Edition (J2EE) compliance, Web Services support, and integration to other Oracle products, should increase Oracle's opportunity, especially in its database shops. Also, Oracle's strategy of providing tools and support to members of its development network as free downloads, may promote its applications server sales.

As Oracle has long needed to embrace more closely the emerging Web services in order to close the gap behind IBM and Microsoft, and to use it as an advantage to further open its applications, the next release of Oracle9i Application Server will fully embrace such Web standards as XML, UDDI, and SOAP. It will also support ebXML and RosettaNet, the supply chain integration schema, but for multi-solutions communications, applications might require more multi-step processes. Therefore, Oracle will support interoperability between services developed with its technology and .NET services using Microsoft's framework, but only up to a point. Oracle will call out to .NET services and, vice versa, .NET can call into Oracle's, but Oracle will not support consumer-oriented services like Microsoft's promulgates HailStorm services and Passport authentication. Also, Oracle sanctions Java and does not support Microsoft's C#. However, Oracle does support WSDL for building applications and wrapping them in interfaces.

Oracle ASP

Oracle's endeavor to deliver "software as a service" through its application service providers (ASP) has recently been bolstered by a management service provider (MSP) option, where Oracle will host customers' servers and manage the entire infrastructure. On March 20, the idea was revisited yet again in Oracle's attempt to breathe new life into its strategy of renting software to customers over Web. Oracle hopes to build annual revenue from hosting business from ~$50 million now to $1 billion by 2006. Oracle made its first foray into hosted software when it launched its Business Online division at the end of 1998. The unit was renamed Oracle.com and renamed again recently as Oracle E-Business Suite (OEBS) Online.

So far, Oracle reportedly has 200 companies renting its software over the Web. The aim is to convert 25% of its 12,000 applications customers over to the service in the next 5 years. This month (April), the company will also announce plans to offer its database software over the Web in the same way. Although the program has challenges such as Oracle's well-known unwillingness to integrate with other software products, very limited customizations tolerance, and a likely channel conflict with other Oracle ASPs, as well as with SI partners, Oracle might become a fearsome player in the ASP market. Oracle has the advantage of intimate knowledge of its own application in comparison with other ASPs, its infrastructure capabilities, and corporate viability, all stumbling blocks for other ASPs.

Oracle's new plan to save businesses 5% each year on their IT budget by converting to outsourcing solution delivered by Oracl, is an intriguing new twist. The company will take over a business's entire IT operation for 5 years with pricing based on whatever its current IT budget is, less 5% for each year. Customers opting for the program will have their applications migrated to Oracle at no extra charge and will become users of the ASP service, OEBS Online. Without a need for an immediate investment and with the ability to plan the IT budget 5 years into the future, plus savings and the migration to an integrated environment, the proposal is seen to tickle prospects' fantasy.

New Pricing Model

Finally, in its Sisyphus attempt to simplify its admittedly traditionally jumbled pricing model, Oracle has been throwing many new pricing at the interested user and analyst constituency. Unfortunately, these have not mitigated the market's confusion and non-clarity given that many concurrent pricing models remain (per processor/CPU, per named user, per concurrent user, per module, per order line, per $ amount of goods sold, etc.).

The new pricing model unveiled in January at Oracle AppsWorld in Amsterdam, applies only to the E-Business Suite and is based on two fixed-price metrics: Professional User at $4,000 and Self-Service User at $400. However, the caveat remains that specific-vertical applications are not included in the E-Business Suite, nor are any component products not specifically identified as part of the E-Business Suite. These applications will still need to be licensed in the original component-based pricing model. The fact that the pricing model is only applicable to the E-Business Suite might indicate that pricing modification is about wider adoption within existing Oracle accounts and not necessarily about new business.

Oracle has set a minimum list licensing requirement of $250,000 with the minimum number of Professional Users and Self-Service User licenses of 10% each, of the total employee population. For customers who want to migrate to the new pricing model, Oracle offers to credit the previous application purchases. While it is a no-brainer that Oracle is trying to entice its customers to spend more money on its applications and extend the use of them throughout the entire organization, Oracle still seems to be denying that there is a multi-vendor world out there.

Having not still been able to stay away from controversy, Oracle has possibly even pushed the envelope and caused strong reactions from some users and analysts on March 20, by reportedly trying to impose some extraneous license fees to its database users. It was alleged that Oracle's sales force would like to trick users to pay for extra named users for data transferred from an Oracle database into a data warehouse, either Oracle's or a third-party one.

The issue escalated around Oracle's new creative definition of "multiplexing", which means using some software, either Internet-based or coming from internal data source, that utilizes a shared group of connections to the ERP database and disguises the actual number of connected users. It was alleged that Oracle is now changing the definition of multiplexing to include batch feeds from non-Oracle applications into Oracle databases, which would particularly impact Oracle customers using data warehousing applications that are utilizing reams of information collected from a variety of source applications. Regardless of which side is correct in their claims, Oracle will likely be scrutinized under a negative spotlight, which is not going to help its endeavor to turn the tide of declining revenues.

This concludes Part 2 of a 4-part note on recent developments at Oracle.
 
Part 1 began the summary of recent events.
Part 3 begins a discussion of the Market Impact.
Part 4 makes User Recommendations.

 
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