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Database Business Problems at Oracle? 210

abb_road writes "Wall Street responded to yesterday's report of a 42% rise in profits by pushing Oracle's stock down. Despite a 77% increase in applications business, investors are worried that Oracle's core database business remains comparatively stagnant. Though Ellison claims that the DB business will grow in double digits over the next few years, it seems that more companies are switching to open source rather than paying Oracle $40,000 a processor."
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Database Business Problems at Oracle?

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  • by E. Edward Grey ( 815075 ) on Tuesday March 21, 2006 @12:16PM (#14964495)
    Well, you could switch to an open source database, and then hire all kinds of brainpower to understand how it works, keep updated on the development, institute updates constantly, search high and low to find someone who can solve the problem that apparently only your company is having... ...or, you could do the exact same thing with Oracle, plus forty large per processor. This decision isn't that hard to make.
  • by yog ( 19073 ) * on Tuesday March 21, 2006 @12:16PM (#14964496) Homepage Journal
    The poster asserts that:
    ...it seems that more companies are switching to open source rather than paying Oracle $40,000 a processor.
    ...and provides exactly one example. It's clear that a little more analysis is needed to back up this claim. A more credible statement might be that companies are choosing either open source databases or lower priced Microsoft and IBM alternatives. DB2 from IBM is actually a lot cheaper per CPU than Oracle's dbms; a former employer of mine had decided to go with DB2 (before the company went under) because it was a fraction of Oracle's $250,000 price for a relatively small system.

    On the other hand, Oracle has been very generous in allowing developer downloads of their DBMS; I was able to take their Linux port, install it on an old box running Red Hat, and port a Microsoft SQL Server-based back end over to Oracle in a couple of days just as an experiment. Obviously, to actually use the product would cost some bucks but this kind of flexibility is what helps keep Oracle's tentacles in so many businesses.

    The other thing that the analysts ignored is that the database and enterprise software business isn't so much about having innovative technology, contrary to what was asserted in the Business Week article but rather having an effective sales organization. DBMS and enterprise management software is sales driven, not innovation driven. Executives don't watch commercials about sexy features in the latest rev of Oracle or Sql Server, then order a few copies from Amazon. It's the inside sales teams that patiently build relationships over the years. IBM knows this, Oracle knows this, and MS knows it too. Sybase tried but their hubris and arrogance brought them down. (direct personal experience with that!)

    No doubt, while Larry crows about upcoming tech innovations, he's internally yelling at the sales teams to get more aggressive, offer more discounts, and steal more customers from Bill and from the SAP people. He'll eke out a few more percentage points of market share, and the investors will be satisfied for a couple more quarters. That's how the business works. ;)
  • Re:Works for me (Score:3, Insightful)

    by networkBoy ( 774728 ) on Tuesday March 21, 2006 @12:16PM (#14964501) Journal
    Really that's what it comes down to:
    If the cost of lower performance is less than $40K per CPU then OSS is the way to go. Since OSS is in a continual state of improvement, I've got to think that it is the selection of choice for anyone with a budget. It is most certainly at least worth a look, even to an entrenched Oracle or MSSQL camp.
    -nB
  • Lies.... (Score:5, Insightful)

    by Kunta Kinte ( 323399 ) on Tuesday March 21, 2006 @12:19PM (#14964528) Journal
    Though Ellison claims that the DB business will grow in double digits over the next few years, it seems that more companies are switching to open source rather than paying Oracle $40,000 a processor.

    Do we have to stoop to this to make our point?

    You can get Oracle server for as cheap as $150 per named user, with a three user minimum last I checked. This is perfect for many small business applications. And there are pricing schemes that gradually go up from there depending on the situation.

    There are many great open source databases ( I use SQLite extensively ), but the commercial vendors still bring a lot to the table, and sometimes are even the best choice all things considered ( gasp! )

  • by blueZ3 ( 744446 ) on Tuesday March 21, 2006 @12:26PM (#14964570) Homepage
    This is one of the areas where I think that Open Source can really shine, and it's interesting to see how the mindshare of Open Source database software is growing.

    When you look at software purchasing patterns, it seems that most software purchases are driven by four things: cost, features, familiarity, and "safety." Open Source software usually competes strongly on the first, moderately well on the second, and not so well on the third and fourth. Asking DBAs to use something they're not familiar with means that they're going to be working slower and harder--not the choice that most people make. In addition, the "nobody ever got fired for choosing IBM" syndrome sometimes prevents Open Source choices from getting a fair shake. But it appears that Open Source tools are starting to compete on those last two fronts as well.

    A lot of geeks like to fiddle around with software on their own, and the "free" part of Open Source plays right to this. After all, are you going to pay for a Microsoft Sequel Server license, or try out MySQL when you're doing something for your own satisfaction? I'm a good example of something similar: I wanted some dynamic Web pages, but I didn't want to pay for ASP support through my ISP. So instead I started looking into PHP and eventually wound up using PHP to handle the dynamic content.

    Once people involved in making decisions (not perhaps the decision-makers themselves, but people with input) start using Open Source for themselves, a lot of the "I don't know it so it's harder and slower" goes right out the window. Sure your average CRM developer might not be making the decision, but if they're asked about DB support and they know PostgreSQL because that's what they used to build their roll-your-own blog, they may offer that as an option.

    As Open Source comes into use in the market, that helps alleviate the "safety" factor, too. When you can point to a large organization that's successfully running enterprise-grade applications on Open Source, it's easier for the decision makers to rationalize choosing an Open Source solution.
  • $40K/CPU is BS (Score:5, Insightful)

    by bloobamator ( 939353 ) on Tuesday March 21, 2006 @12:27PM (#14964576)
    $40K/CPU is full-boat retail. Anyone who pays full retail for Oracle licenses gets what they deserve. With only a little negotiation, you can get Oracle to come down 45% off retail. Or go to some vendor like CDW (I do not work for CDW), and they'll get you a nice discount.

    And if you're negotiating with Oracle directly, something I do not recommend, then all you have to do is mention mySQL or PostgreSQL, and Oracle will drop their prices.

  • nitpicking (Score:4, Insightful)

    by pixelated77 ( 472348 ) on Tuesday March 21, 2006 @12:27PM (#14964580)
    Sure, Oracle Enterprise has a $40k per CPU listing price, but let's be realistic. NOBODY pays $40k a CPU and maintenance and services. Not that I'm defending Oracle or their draconian pricing model, but in the end, Oracle can provide close to turn-key solutions when it comes to providing the product, escalating problems to engineering, custom solutions, consulting, deployment, implementation, long-term support. Combine that with Oracle's impressive feature list and the fact that most of the money that a company will spend on their database IT will NOT be DBMS licensing fees and you can see why upper management will spend thousands of dollars on a feature set that might very well be served by an open-source solution.

    I am sure that there are many consulting firms that can mimick this kind of turn-key solution using PostgreSQL, but I'm not sure that they are as established--that is, give the CEO of XYZ company the warm & fuzzy that they require when they're about to undertake a multi-million dollar project whose backbone has to be a rock-solid DBMS.

    It would be fabulous if Vault 10 IT consulting firms could provide this level of service using open source but that's just not the case Right Now(tm).
  • by Saggi ( 462624 ) on Tuesday March 21, 2006 @12:32PM (#14964614) Homepage
    Basically a database is only used to keep data. Sometimes the data is vital to the business other times it is not. Databases move toward becoming more and more a commodity, just like everything else. It's a market where it's difficult to difference yourself.

    Oracle is a very good database, no doubt about that, but what is the need of the business? As hardware becomes less and less expensive the performance and stability of the database becomes less of a differentiator.

    It is true the market for databases is growing, but it is not the high-end database market. Especially now that the definition of high-end is moved up by the availability of less expensive hardware. It is better to spend money on good hardware, backup and storage, rather than on the database license.

    So why by an oracle database? Only if you need the really high end performance of your database, that outranks the affordable hardware, you'll need to look at products like oracle.
  • Re:Works for me (Score:5, Insightful)

    by hey! ( 33014 ) on Tuesday March 21, 2006 @12:34PM (#14964643) Homepage Journal
    Sure. Oracle's seen the writing on the wall here, thus we have Oracle Express.

    In an odd way, this may make Oracle's high end database product more secure.

    There is no way that Postgres or MySQL is even close to the kinds of scalability and features that Oracle has. Trust me. It's just that people like you don't need certain capabilities that are a very good deal for Oracle customers. Nor do 99% of all applications. But in terms of value 99% of applications doesn't amount to 99% of profit for an outfit like Oracle.

    There's no way that MS SQL Server comes close either. Trust me on this one too. I've used both. SQL Server is perfectly adequate and maybe even preferable for many applications, but comparing it to Oracle is a joke. Just recently I read a MS announcement of a middling-huge application that was done on SQL server. I was impressed, until I realized it wouldn't be remotely newsworthy if it has been done in Oracle. It was impressive for SQL Server, and probably only possible given certain aspects of the application.

    What Postgres and MySQL mean is that in the long term there are no profits in the low end of the database market for general RDBMS duties, and not much future in the mid-range. Take them out of the picture, and Microsoft has a self-funded machine for nibblng its way into the high end. I'm not saying they won't get there, but I see a potential for financial pain along the way. The market position for SQL Server is really this: it integrates well with the MS tools, and its available on all MS OS platforms (Wince and NT derivatives). If it weren't for that, then it would be a sitting duck.

    Oracle XE there mainly as a way to keep mind share. It means a lot more people will be familiar with Oracle technology, providing a cadre of workers who are prepared for large scale apps.

  • by Anonymous Coward on Tuesday March 21, 2006 @12:38PM (#14964686)
    WE recently have asked a vendor to see if they can change their product from SQL2000 to postgreSQL or MySQL as the $12,000.00 per processor license we pay for SQL2000Enterprise is more than it would be to hire a OSS DB admin that only takes care of the Database server and then still save 30% after paying someone full time plus benefits.

    Many companies are done with the high ticket low support even on low end hardware such as a 4 processor 16 gigabyte SQL server. we are forced to Enterprise if we want to use the >4Gig ram which makes a huge difference. so Either we stare at $48,000 in SQL license fees per server or find something else. Hell at that price we can probably get our application completely rewritten to our specs and own it by outsourcing to india.

  • by qwijibo ( 101731 ) on Tuesday March 21, 2006 @12:39PM (#14964695)
    I have some data analysis I'm doing right now under PostgreSQL that I previously did under Oracle. Being able to have several parallel processes working on the same query in Oracle makes things go much faster. Oracle is really efficient at creating subsets of data. Most of what I need to do was previously done with lots of "create table as..." statements. Oracle's performance is much better than PostgreSQL for the volume of data I'm working with.

    However, I'm using PostgreSQL now because I keep running into problems with the Oracle server. The listener isn't listening to the network, so I only have local access and I need to share the data with others. I keep running out of space and need more tablespaces added to Oracle. The DBA who supports that database is only available for supporting this environment on a part time basis. The inevitable result of wave after wave of cost cutting is that we have a fraction of the manpower we need to do our work, so some things just don't happen. We used to have two DBA's locally and everything was efficient. Now we have part of one whose work hours rarely overlap with mine, so getting things done is painful.

    A database is just a tool. In this case, I am proficient enough with PostgreSQL that I can use that and be more productive than trying to limp along with no DBA on Oracle.
  • One Example? (Score:4, Insightful)

    by ThinkFr33ly ( 902481 ) on Tuesday March 21, 2006 @12:47PM (#14964759)
    So Oracle is losing business to open source alternatives because one part of one company is switching to EnterpriseDB and because of an anecdotal quote?

    Wow. Spare me the spin.

    Isn't it also possible that the far cheaper closed source alternatives [sqlpass.org] are getting a little business [com.com] as well?

    Oracle has always been pricey, but for a long time their DB features were hard to beat. Competitors, both closed and open, and finally getting to the point where they are on all levels with Oracle. [gartner.com]
  • by Anonymous Coward on Tuesday March 21, 2006 @12:55PM (#14964835)
    You OSS zealots continue to sound ignorant and uninformed by claiming this or that open source product is free. Yeah, yeah, one smart guy can work miracles with freely downloaded stuff in a small setting. In the context of a large enterprise, where lots of people need to support very large databases, nothing is free. The initial cost of the software product is microsocpic when compared to the real TCO. And by the way, 40K is bullshit. I'm at a Fortune 100 and we pay far less than that. The Silver support is what is damned expensive, if you want to take issue over cost.
  • Re:Works for me (Score:5, Insightful)

    by CastrTroy ( 595695 ) on Tuesday March 21, 2006 @12:57PM (#14964855)
    But Oracle has built it's business on selling expensive databases to companies who don't even use all the features. I don't think that even 25% of their customers really need the power of Oracle. Oracle is a great database, but isn't worth it for most people.
  • by CastrTroy ( 595695 ) on Tuesday March 21, 2006 @01:04PM (#14964912)
    Actually, I would argue that Oracle DBAs demand more than DBAs for other databases. So you not only have to pay more for the Software itself (a lot more) you also have to pay a lot more for the people who are working with it.
  • MySQL is light, fast, forgiving, and pretty scalable.
    Forgiving is not something I want out of a database. I want my database to take every possible opportunity to reject bad data.
  • Re:Works for me (Score:3, Insightful)

    by hey! ( 33014 ) on Tuesday March 21, 2006 @02:16PM (#14965529) Homepage Journal
    But Oracle has built it's business on selling expensive databases to companies who don't even use all the features. I don't think that even 25% of their customers really need the power of Oracle. Oracle is a great database, but isn't worth it for most people.

    Well, this is capitalism. If somebody is willing to pay $20K where $3K would do, well... On the other hand, Microsoft made Oracle stand up and take notice. As a result of this, Oracle Standard has been priced pretty much the same as SQL Server. This is also capitalism.

    Oracle licensing these days is an exacting science, carefully contrinved to squeeze every last bit of revenue out of a customer, while providing him with a competitively priced product. It's tricky on both ends. Oracle risks turning off customers with licensing options whose evaluation rivals, if not exceeds the complexity of evaluating many technical requirements. I wouldn't be surprised if many people choose SQL Server not because it was cheaper, but they weren't sure about what they needed to license from Oracle.

    Customers who are not careful can also end up spending huge amounts of money by licensing too much or too little. And if you choose wrong, Oracle is going to do the exact minimum needed to prevent a large scale customer revolt. Most of the time means they do nothing for you. There are no upgrade or conversion paths between license models, so caveat emptor. That's also capitalism.

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