NetSuite Nixes Oracle Licensing

Since being co-founded in 1998 by Oracle CEO Larry Ellison"who remains majority stakeholder in the San Mateo, Calif., ASP"NetSuite has paid a royalty to use the Oracle logo on some of its products. Today, however, Oracle-badged software accounts for only 5 percent of NetSuite's sales to its 7,500 customers, NetSuite CEO Zach Nelson told CRN. Those royalty fees had to go.

"We ended the relationship contractually about 60 days ago, but could use the name until July," Nelson said. "Now that we've discontinued paying the royalty, it will help us in our drive toward profitability."

The big question now is whether Oracle will offer a product designed specifically for SMBs. Its chief competitors already do. SAP's growing base of channel partners sell its BusinessOne and mySAP All-in-One offerings to companies with less than $200 million in revenue. PeopleSoft is recruiting IBM's channel partners to sell its EnterpriseOne and World software suites to companies with less than $100 million in revenue.

So is Oracle preparing an SMB edition of Oracle E-Business Suite? Frank Prestipino, vice president of Global Applications Enterprise Strategy at Oracle, told CRN it doesn't have to.

"What's unique about us is both the product and the platform scale to any size company, from five to 500 users. We already say just buy what's relevant to you."

But this doesn't rule out an eventual offering, said Randy Johnston, executive vice president of Hutchinson, Kan.-based Network Management Group, an infrastructure VAR that helped with the early development of NetSuite's first software.

"I know Oracle has had internal projects that they didn't roll out because of the tight relationships with [NetSuite]," Johnston said. "It would not take too doggone much to build a BusinessOne competitor on top of the Oracle database."