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Transcript
DBMS Competitive
Landscape
November 13, 2001
Dialin:
Conf. Pin#:
877-302-8255
6693619
Jacqueline Woods
Vice President
Global Practices
Oracle Corporation
Oracle Internal Confidential
Increasingly Oracle’s
DBMS competitors are
using price to infuse a
tenor of fear, uncertainty
and doubt (FUD) into
negotiations with YOUR
customers
Oracle Internal Confidential
In this presentation you will learn:
 How to position Oracle’s products against competitors by
integrating a compelling pricing and licensing story to “win”
deals
 Important details of each competitor’s pricing strategy and
their respective pricing models
 The weaknesses of each competitor and instructions on how
to leverage their shortcomings during the sales cycle
 Three principle types of buyers and their typical behavior
when making purchasing decisions
 How to dispel each buyer’s primary pricing issues by
demystifying the competitor’s key messages about their
products, their positioning and their pricing
Oracle Internal Confidential
Database Licensing - Observations
 Through 2002/03, externalization of corporate information (e.g.,
self-service, virtual storefront, supply chain management) will
cause an explosion in DBMS user volumes and fragmentation of
user types
 This fragmentation of user types is injecting overwhelming
complexity into seat-based licensing models causing contract
complexity, excessive cost per transaction and total cost of data
management
 The heightened complexity of managing IT environments will drive
standardization and an increase in vendor imposed customer
support requirements
 Incremental DBMS demand for its users has virtually extinguished
seat-based licensing in favor of server-based models
 Both IBM & MS trying to commoditize the DBMS market
Oracle Internal Confidential
Microsoft Pricing Strategy
 Integrate DB server with other enterprise software
offerings (subsidizing DB to drive overall software sales)
 Low cost leadership in databases with “good enough”
functionality at each price point
 Better functionality over time -- SQL Server 2000
 Surround the glass house and increase enterprise
presence over time
Oracle Internal Confidential
Microsoft Licensing Strategy
 Licenses can be purchased through:
–
–
–
Original Equipment Manufacturer (OEM)
Retail
Volume Licensing Programs
 Open License 6.0 (5 licenses min.)
 Select License 6.0 (250 licenses min.)
 Enterprise Agreement 6.0 (250 licenses min., 3-year
agreement term)
 Enterprise Subscription Agreement 6.0 (250
licenses min., 3-year term, subscription-based)
 Repurchase license with every new version release at
“Upgrade” cost, or enroll in the new “Subscription”
program Software Assurance
 Discounting is based on number of products purchased
and number of seats
Oracle Internal Confidential
Microsoft Pricing Model
Pricing:
Discounting:
Strengths:
CPU or Seat based
Volume discounting based upon # users
Very price competitive
Weaknesses:
Not enterprise or internet ready
Opportunity:
Backoffice CALs no longer cover SQL server
Threats:
For some customers price is only thing that
matters irrespective of integration or scalability
Oracle Internal Confidential
MS Aggressively Targets Enterprise
Market
Microsoft SQL Server 2000
SQL Server and 5 Client Access
Licenses
$1,489
Lowest price offering
$5,000
(unlimited users)
Microsoft SQL Server 2000 EE
SQL Server Enterprise Edition
and 25 Client Access Licenses
$11,099
$20,000 (unlimited)
 MS SQL Server’s product
offering is more comparable to
Oracle9i SE offering
 Oracle’s SE NU is equivalent
to SQL Server 2K SE
 MS announces new
subscriber based support
model and customers will not
be able to get any other type
of support
Over the past 12 months MS has increased prices
for SE and EE by 60% and 38%, respectively
Oracle Internal Confidential
What’s Next for Microsoft?
Microsoft Licensing 6.0:
 The new program, launched on October 1, 2001, favors a
subscription-based licensing scheme
 Main benefits are to customers who upgrade every two to
three years and who purchase in large volume quantities
 The further behind corporations are in their version
releases, the more it will cost them to upgrade under 6.0
 BackOffice CAL no longer available
 Core CAL no longer includes SQL Server; must be
purchased separately
A Giga survey of about 4500 IT professionals indicates that 80%
anticipate their costs will increase due to MS’ new licensing model
Oracle Internal Confidential
IBM Pricing Strategy
 Leverage hardware/database combination to shift
pricing as needed
 Attack Oracle at points of perceived weakness (e.g.,
higher base price on EE)
 Low cost leadership in UNIX databases with “good
enough” functionality at each price point
 Lower than Oracle in Windows databases with added
value compared to Microsoft
Oracle Internal Confidential
IBM Pricing Model
Pricing:
Discounting:
CPU based
- EE:
$20,000 per CPU
- EEE: $25,000 per CPU
Suggested Volume Pricing (SVP) based on:
- total contract value
- number of CPUs
- number of users
Strengths:
Weaknesses:
Opportunities:
Threats:
Bundling of hardware of software products
Options at additional cost over base price
For smaller user populations such as for Data
Warehousing, O9i is more competitive
Customers claim no value add’l O9i features
Oracle Internal Confidential
IBM leverages brand equity to
gain share and increase FUD
IBM DB2 Universal Database 7.2
Workgroup Edition
1 server install (1 named user)
$249 + $969 per install
Workgroup Unlimited Edition
4 < CPUs (unlimited users)
$14,500
Enterprise Edition
>5 CPUs
$20,000 per CPU
 IBM positions EEE against
Oracle EE w/partitioning option
 IBM EE is 38% more than WE
and both have unlimited users
 MQ Series Workflow Option is
$35K per CPU – no NU pricing
 IBM Datalinks Manager is
$8K per CPU
Extended Enterprise Edition
$25,000 per CPU
Over the past 12 months IBM has increased prices
for EE and EEE by 60% and 28%, respectively
Oracle Internal Confidential
Oracle Pricing Strategy
 Attack MS and IBM on feature/function inadequacies
 Bundle in key features to improve depth of product
compared to both MS and IBM
 Oracle only vendor that offers simple, scaleable and
flexible pricing alternatives
–
Named User and CPU pricing on all technology
products
–
Term licenses 2yr, 4yr and perpetual
Oracle Internal Confidential
Oracle Pricing Strategy
ISV Applications
• Provide reasonable margins
and offer embedded
licenses (new FY2002)
Small/Medium Business
• Parity pricing for
Windows named users
• Price/perf leadership
for online service
providers
• Price/perf leadership on
certified systems
• No favoritism towards
Linux
Oracle9i
Database
Hardware Vendors
• Provide good margins, but not
leading margins, on certified
systems
Oracle Internal Confidential
Large Enterprises
• Maintain pricing umbrella in UNIX
• Grow at the market rate for UNIX
• Focus on mainframe migrations
Oracle Pricing Focus
Value
Leadership:
 Highest value in performance, functionality,
QoS at all price points
Processor
Based Pricing:
 Price based on # Processors of server
 Consistent pricing across operating systems
and platforms
Oracle Internal Confidential
Oracle Pricing Targets
Target Markets
by OS:
Target
Channels:
 Leadership in UNIX and Windows markets
 Participate in mainframe, Linux and
embedded markets







Oracle Store
Direct and telesales force
Large ISVs and SIs
High growth ISVs
Online Service Providers
Certified system vendors (CPQ, Sun)
Not small resellers ($<10K per month)
Oracle Internal Confidential
Oracle Channel Pricing Strategy
 Keep it simple
 Top ISVs -- SAP, PeopleSoft

Consistent custom negotiated pricing contracts
 Other ISVs

Standard product packaging

Special discount policies for all VADs/VARs
 Special negotiated contracts for Online Service
Providers and certified systems vendors
 Reinforce policy of free software to developers
Oracle Internal Confidential
Technical Comparison with IBM
IBM DB2
Oracle Database
3 products with 3 code bases: OS/390, AS/400 and
Unix/NT/Linux. Compatibility problems.
One product family built on one code base. Compatibility
across all major hardware platforms.
Shared nothing clusters don’t meet real-world
needs. Limited high availability
Real Application Clusters offer near-linear scaling of all apps
out of the box. Availability increases with more nodes.
WebSphere has no DB caching. All read requests
go straight to the database. Makes DB2 slower
Oracle9i App Server has database caching that can boost
database performance by 3x or more
Lacks advanced high availability features:
accelerated failover, automated standby etc.
Complete suite of failover, disaster recovery, and online
maintenance solutions. Zero data loss. Zero down time
Minimal security capabilities.
Advanced security features: virtual private database, Label
security, single sign-on, FIPS 140-2 certified.
Poor Java support. Lacks platform-wide support.
Hence, Poor internet application environment.
Superior Java support. With Oracle JVM, develop once and
deploy anywhere
Limited partitioning options. Hence, Costly admin. and Hash, Range, List and Composite partitioning provide flexible
lower performance, scalability and availability.
deployment options across all platforms.
Dynamic bitmap index uses extra CPU/memory and
requires pre-built b-tree index. Limits performance
and scalability
With compressed stored bitmap index, less storage is
required and data is processed faster. Hence, Oracle
improves performance and cuts hardware costs
Oracle Internal Confidential
Technical Comparison with Microsoft
Microsoft SQL Server 2000
Oracle Database
Limited functionality on OLTP and Application
Support
Oracle provides Non-escalating row-level locking, and Multiversion read consistency
Limited functionality with respect to Data
Warehousing performance
Historical Leader of DW performance
Limited Database Security features
Row-level access controls, Enterprise, User, & Role Mapping
& Active Directory, Encryption capability inside the DB
Lacks advanced high availability features:
accelerated failover, automated standby etc.
Transparent application failover, Partitioned Recovery,
synchronous replication and Fast Start Fault Recovery
Limited support on Operating systems. Support
on NT only.
Support on Unix, Linux, MVS, Win95/NT, and many more
Microsoft Directory is an isolated component works only in a Microsoft environment.
Oracle Internet Directory is fully LDAP v3 compliant and
RDBMS-based. It is fully scalable for enterprise/extranet
needs, and/or utilities for high-speed bulk operations.
Limited JAVA Support if any
Oracle provides JVM, SQLJ, and Java support for shared,
read-only object memories (performance gains).
Limited Integrated Multi Media Support
Provides Text, Audio, Video, Image, Spatial as an Integrated
Multi Media Support offering.
Oracle Internal Confidential
Putting it all together – Moving
from the Sellers to the Buyers
 Recognizing the 3 primary types of buyers and
adjusting the “pricing pitch” to accommodate their
needs
 Price Buyers
 Loyalty Buyers
 Value Buyers
Product Lifecycle
Growth
Mature
Decline
Oracle Internal Confidential
Putting it all together – Price
Buyers
 Price Buyers
–
–
–
Typically large companies with resources to qualify multiple
buyers and want to purchase at the lowest price
Not willing to pay for incremental product value beyond their
identified specifications
Unwilling to pay for intrinsic benefits that accompany long
term relations with suppliers
 Negotiation Tactics
–
Difficult to negotiate with price buyers but sales person
needs to refocus attention on Oracle9i’s value
Increase customer’s willingness to pay by proving that
added value is cost justified (O9i security features protect
against DB corruptions, loss of data, etc.)
–
Mission Critical apps no guarantees with MS or IBM
–
Oracle Internal Confidential
Putting it all together – Loyalty
Buyers
 Loyalty Buyers
–
Value consistent product quality and performance
–
Customer wants their trusted suppliers to continue providing it
Loyalty is driven fundamentally by the risk and uncertainty
associated with unproven/untested suppliers
Critical implications of inadequate performance outweigh the
benefit of a lower price in the short term
–
–
 Negotiation Tactics
–
–
–
Fortify the relationship with the loyal customer by focusing
attention on past performance and deficiencies of competition
Stress the impact of inferior MS and IBM performance such as
MS’ limited scalability as well as SQL Server 2000’s
shortcomings in OLTP and application support
Emphasize compatibility issues that continue to haunt IBM due
to multiple code bases which make integration challenging
Oracle Internal Confidential
Putting it all together – Value Buyers
 Value Buyers
–
–
–
Largest group of buyers seeking neither highest quality nor
the cheapest price
They weigh attributes and analyze trade-offs, buying the
product offering with the highest utility given the price
Product qualities and added features hold no significance
until they are valued by the customer
 Negotiation Tactics
–
Convince value buyers that they cannot run their businesses
without the added features of Oracle9i and Oracle9iAS
(examples illustrated on the next 3 slides)
–
Provide your customer a clear understanding of how
Oracle9i can save them money in the long run (see TCO
calculators end of presentation)
Oracle Internal Confidential
More Facts to Help you Blow Past
the Competition
 In a recent survey of large US companies, IDC found that availability
and security are their top two priorities.
 According to the Standish Group, downtime costs anywhere from
$2,500- $10,000 per minute. Even for business providing 99.9%
uptime, this could be costing over $5 million per year.
 Gartner Group claims over 60% of businesses do not have a basic
plan to mediate the effects of a disaster, should one occur.
 Neither MS nor IBM provides what Oracle can
 Get system protection by using Oracle9i Real Application Clusters
 Ensure storage protection with Oracle9i Database's Recovery Manager
and Data Guard features site protection with Oracle9i Database's Data
Guard feature
 Manage self service error recovery with Oracle9i Database's Flashback
Query feature
 Yield near-elimination of planned downtime maintenance operations
using Oracle9i Database
Oracle Internal Confidential
Oracle vs. IBM Product Comparison
Oracle
Standard Edition
IBM DB2
Workgroup Edition
DBMS
$60,000
$58,000
Queuing
included
$7,200
Workflow
included
$140,000
Files
included
$32,000
Total
$60,000
$237,200
Cost comparison between Oracle 9i Standard Edition and
IBM DB2 Workgroup Edition on a 4-way 700 MHz Netfinity 7100
Source: IBM price list
Interesting
Oracle Internal Confidential
Oracle vs. IBM Product Comparison
Oracle
IBM DB2
Enterprise Edition
Enterprise Edition
DBMS
$160,000
$80,000
Queuing
included
$7,200
Workflow
included
$140,000
Files
included
$32,000
Total
$160,000
$259,200
Cost comparison between Oracle 9i Enterprise Edition and
IBM DB2 Enterprise Edition on a 4-way 700 MHz Netfinity 7100
Source: IBM price list
Oracle Internal Confidential
IBM Websphere over 7x Oracle9iAS EE
Oracle9iAS
Enterprise Edition
IBM
Websphere
$80,000
$140,000
Cache
included
$32,000
Reporting
included
Not Available
Ad-hoc Query
Included
Not Available
Portal
Included
$272,000
Workflow
Included
$140,000
Total
$80,000
$584,000
Application Server
Cost comparison between Oracle iAS Enterprise Edition and IBM
Websphere Enterprise Edition on a 4-way 700 MHz Netfinity 7100
Source: IBM price list
Oracle Internal Confidential
Value Proposition of DB Vendors
IBM
Microsoft
Oracle
Value
$
$$
$$$
$$$$
Price
Oracle Internal Confidential
IBM-Oracle DB Cost Calculator
Oracle Internal Confidential
Microsoft-Oracle DB Cost Calculator
Oracle Internal Confidential
Location of TCO Calculators
 http://partner.oracle.com
–
Sales
 Pricing
- Competitive Comparison Tools
Oracle Internal Confidential