Oracle Alters Software Pricing PlanOracle Alters Software Pricing Plan

Oracle is going on the software pricing offensive. The vendor said Thursday that it's dumping its much-maligned power-unit pricing scheme for database and application server software in favor of a simpler per-processor price tag. And CEO Larry Ellison, while introducing the Oracle9i database, blasted critics and competitors who say that Oracle software is too expensive.

"In fact, our software is cheaper, not more expensive, than IBM's," Ellison said, zeroing in on the company's biggest competitor in the database arena. The Oracle database now carries a price tag of $15,000 per processor for the standard edition and $40,000 per processor for the enterprise edition. IBM, however, prices the enterprise edition of its DB2 database product at $20,000 per processor. Ellison argues that Oracle's database costs less to operate because it requires less hardware, networking infrastructure, and IT management personnel. The standard and enterprise editions of the Oracle9i application server are priced at $10,000 and $20,000 per processor, respectively.

Under Oracle's power-unit pricing schedule, customers whose IT systems connect to the Internet have paid license fees based on the speed of the microprocessors in the servers on which the Oracle software is running. Because the Internet is open to an unlimited number of users, Oracle created power-unit pricing based on the concept that the server's power corresponded to database use. Customers still have the option of buying licenses on a named-user basis.

Oracle customers disliked power-unit pricing because they were forced to buy more expensive licenses from Oracle when they upgraded their hardware. Industry analysts have said that Oracle's pricing woes have been a factor in the vendor's slower sales in the last two quarters. Gartner analyst Betsy Burton calculated that Oracle's new pricing schedule could mean price reductions of up to 50% for its software running on multiprocessor servers.

Ellison also introduced Oracle9i, the latest version of the vendor's flagship product. Highlights of the product, which is generally available, include the Real Application Clusters technology that lets the database run in parallel across multiple servers without the need to partition the data or rewrite applications. Oracle9i also offers built-in business-intelligence capabilities, including data mining and online analytical processing.