Database Vendors Vie For SMBs

In October, IBM announced new pricing for its DB2 Express database software, offering an unlimited user option at $3,899, which Big Blue claims is 35 percent lower than its competition in the Windows and Linux operating environments. Since DB2 Express' June release, IBM has signed up 300 Business Partners and migrated more than 20 partners from competitive offerings. Standard pricing for DB2 Express on Linux and Windows is $624 for a base server package, with an additional licensing cost of $124 per user that includes maintenance.

The move undercuts Oracle's September introduction of Oracle Standard Edition, aimed at SMBs. The single-processor version costs $5,995 for unlimited users. Oracle also offers a payment option of $195 per user for at least five people.

Both companies are countering the emergence of Microsoft's SQL Server database, which, according to Gartner Dataquest, grew faster than IBM's and Oracle's offerings last year.

That's not all. In September, Sun said its Java Enterprise System and Java Desktop System software would cost $100 per employee per year or $150 for both. Sun is aiming the systems at businesses across the board, regardless of size, but both should appeal to small companies. The prices went into effect last month with Sun claiming it offers 30 percent to 50 percent savings over Microsoft and IBM.

Not to be outdone, Microsoft has partnered with Dell to offer PowerEdge Servers with Microsoft's Small Business Server 2003 suite for less than $1,000. Microsoft also has begun selling Windows Server 2003 and Exchange Server 2003 in a $599 package for up to five PCs.

In addition, Microsoft unveiled its Microsoft Partner Program (MPP), which will change the way the company allocates perks among its 800,000 resellers and software and consulting partners, especially those in the SMB arena. The MPP creates new criteria, such as vertical or technical specialization, for evaluating how to reward up-and-coming partners.

All these efforts are directed either partially or squarely at an SMB sector that IDC says will account for about 53 percent of the growth in IT spending in 2003. But while the flurry has the look of an old-fashioned price war, the truth is that most vendors plan their price changes months in advance and couldn't respond to a competitor's price moves quickly, even if they wanted to.

Jeff Jones, IBM's director of strategy for DB2 system software, says the company sticks to its announced pricing schedule as closely as possible, but will monitor customer responses and requests and make necessary adjustments. "There's a lot of internal scrutiny on pricing with an eye to the competition, but it's impossible to do pricing on the fly," he says.

But as the DB2 Express announcement shows, IBM is no less conscious of price than its rivals. Sam Fatigato, president of Ascendant Technology, a services provider and IBM partner in Austin, Texas, says the technological advantages of IBM's portal products make price less of a consideration, but he acknowledges that IBM's pricing changes are designed to win market share in a wide-open sector.