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Sun/Oracle: When Is Free Not Free?

Where to begin on this latest chapter in the Sun-Oracle saga?

Ah, where to begin on this latest chapter in the Sun-Oracle saga?

Well, first, substance or lack thereof aside, Scott McNealy and Larry Ellison still give good standup.

The two CEOs kicked off the joint Sun/Oracle employee "town hall" with the question first and foremost on everyone's mind:

Scott: "Right upfront, let's take this off the table. Larry, are you buying Sun?"

[(Nervous) Laughter:]

Larry: "You'll see it in the newspapers. Oracle's way is to do everything hostile-ly."

[Laughter.]

McNealy: "I can hear the keyboards going now."

Then there was a tribute to the long-standing relationship between the companies, how they'd done a lot of collaboration on stuff from Java to Netbeans.

Ellison had the good grace to throw in mention their ill-fated Network Computer work. That took off like a lead balloon.

"Let Google make a Network Computer. They're young and foolish," quipped Larry.

Then there was some talk about how, despite their cooperation, both companies were also promiscuous. "You weren't totally faithful but we weren't totally faithful either," said Scott, adding, "Maybe you less than us."

Larry: "We are talking about IT, yes?"

It was a regular riot.

IBM's gigantic services arm took a beating. McNealy repeatedly quipped that with Sun/Oracle solutions "No IBM Global Services required."

Funny, Ellison himself has been rather conciliatory toward IBM of late, what with his new PeopleSoft/JD Edwards installed basemuch of which runs on IBM hardware/software.

Does anyone think it's a coincidence that right before Christmas, Oracle joined IBM's Unix Lab where AIX is serviced and supported?

Clearly IBM, which is a partner as well as rival to Oracle, was none too pleased to hear Sun touting Solaris 10 as Oracle's "preferred" development platform. I would bet there are plenty of folks at Oracle who make their living selling apps and databases on IBM, HP, Dell and other hardware, who are pretty ticked off still about that one.

McNealy/Ellison said their respective sales forces would not squabble over compensation for the server/database bundle. That means both will get comped for the sale. But what will that bundle mean for the channel partners on each side? McNealy said Oracle sales will upsell the database license after the free year.

And, don't forget: To get that free database, customers must still pay for support and service for the year. Presumably that would be 22 percent of what the license would have cost if there had been a charge. That's not chump change.

One math whiz ran the numbers thusly: If you're talking about a 72-core Sun E20K at an Oracle license charge of .075 per core, that's means you'd need a license for 54 CPUs. (0.75 X 72)

So, 54 licenses of Oracle 10g EE at list would be $40,000 X 54 = $2.16 million. Support on that would be 22 percent of $2.16 million or $475K annually.

So the freebie actually weighs in at about a half a mil.

But wait, it could get better. If Sun/Oracle pays the first year of the license cost, after six years, the cost would be 5X475K or $2.375 million for the database.

If the customer started out new with Oracle, and if the discounting we heard about during the Peoplesoft hearings continues, a customer might be better off buying the database from Oracle. If you figure in a relatively modest 55 percent discount from Oracle for the same 72-core Sun E20K, you get 54 X $40K X .45= $972K license price. Figure 22 percent of that for support, that's $123K. That would mean after six years you'd bay $972K+6X $213.8K or about $2.23 million.

Please, check the math and get back to me, will ya? bdarrow@cmp.com.

Other Tidbits From Database Land

Remember Jim Finn? Oracle's top comm dog for years? He left suddenly last year just as the PeopleSoft battle was winding down and joined (gasp) IBM. Well he's left IBM now for Ingres, the open-source database company spun off from Computer Associates. At Ingres he will join other former Oracleans Kristin Hollins, Michael Rocha, and Dave Dargo.

The newly independent Ingres is right down the road from Oracle in Redwood Shores. How convenient!

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