Ellison Telegraphs Oracle Price Changes
Company Chairman and CEO Larry Ellison said Tuesday that the new price list will be published next week, just days after the annual OracleWorld show closes.
"We've been going back and forth on pricing and never quite gotten it right," Ellison told reporters after his keynote. "What makes sense is enterprise pricing, [where you] pay one price for all the software you use for the year. ... It's hard to count processors and very hard to count users. The notion of enterprise licenses is you pay X per year, [there's] no up-front fee, and it's not metered," Ellison said, adding that enterprise pricing would not be next week's news.
He would not comment specifically on price plans other than to say that the company never publishes price increases. "We've constantly lowered our prices. We've never announced a price change that wasn't a decrease," he said.
That is not to say Oracle pricing has not been controversial. Many pundits say Microsoft and IBM database offerings and prices have forced Oracle to react. Two years ago, the company was forced to ditch its unpopular Power Unit pricing plan, which forced users to pay incrementally more for the same software as they upgraded their computers to faster processors.
Oracle now offers Oracle9i Enterprise Edition for $40,000 per processor, and a Standard Edition for $15,000 per processor. Users can also opt for named-user pricing. But Real Application Clusters (RACs), which Oracle executives tend to talk about in the same breath as the database itself, cost an additional $10,000 per processor.
Industry observers said Oracle, with its traditional strength in large enterprise accounts, must better penetrate midmarket customers, and doing so will require new pricing and packaging options.
"They have a challenge in the midmarket. How do they price and package [their database better for smaller companies] without undermining their enterprise story?" said Carl Olofson, analyst at IDC.
In the wide-ranging Q&A session, Ellison also reiterated his committment to buy applications rival PeopleSoft, even after that company completed its buyout of J.D. Edwards. Oracle recently extended its $19.50 per share cash tender offer for the third time since launching the hostile bid in early June. The lastest deadline is midnight eastern time Oct. 17.
Earlier Tuesday, Rauline Ochs, Oracle's new group vice president for North American channels and alliances, told CRN that the company is looking into pricing and packaging and channel programs to better take on the midmarket. Later this month, Oracle field-sales staff will undergo internal training and education on how to better work with channel partners. "We need to sort out field engagement and implement measures of success. ... And on the behavior side, we're working to create an environment where customers can buy based on their preference," she said.
Some Oracle partners said that the current sales model is not conducive to partners because the vendor's direct-sales team makes more margin when a sale goes direct than when it goes through a partner.
"They get a haircut if I sell the product," said one East Coast partner. He and others said they are weary of Oracle's on-again, off-again channel religion. "Larry's your friend this year and your enemy next," another partner said.