Enterprise software: customers upgrading at a snail's pace

Oracle and other large, proprietary software vendors are struggling to figure out why their customers should upgrade to their newest technology. Why not shift the discussion off technology and onto support, and start to develop a new customer base instea

Oracle owns the database world. And this may be precisely its biggest problem.

As the Wall Street Journal reports, customers aren't planning to snap up its newest version of its industry-leading database, 11g. The reason? Oracle is improving its database at a much slower pace, providing fewer reasons to upgrade:

[I]t typically takes at least several months for a company to fully shift to a new version of Oracle's database software -- the larger the company, the longer it takes -- and lately Oracle has made several small, incremental changes in new releases rather than a few large, important ones that would compel a company to switch quickly, customers say....

...highlighting maturation in the database industry. The Independent Oracle Users Group, an independent organization for Oracle users, says 35% of users it recently surveyed said they plan to upgrade to 11g within a year of release, while 53% said they plan to wait "a few years" before upgrading. [From the print edition: "Whereas database releases were once seen as revolutionary and typically sparked a buying frenzy, the new one offers relatively incremental change."] The lukewarm reception echoes a phenomenon taking place elsewhere in software: Microsoft Corp.'s latest Windows operating system, called Vista, received far less fanfare when it was released for consumers this year than, say, Windows 95 did.

In short, at least some big enterprise software categories have commoditized, and there's just not much reason to upgrade to...slightly more of the same.

This, of course, opens the door to open source commoditizers, which tend to innovate in terms of ease of use, tailoring to specific purposes, and price-performance. In fact, to this end MySQL is offering a free "Boot Camp" for Oracle DBAs (who also increasingly manage MySQL databases):

For the companies who have these two complementary databases working side-by-side, we're providing their Oracle DBAs with this fast-track opportunity to learn and get certified on MySQL as well -- free of charge.

Oracle has done better than most big ecosystem players in finding ways to grow. It has done exceptionally well executing on its acquisitions, for example. But Oracle, like all major software vendors, needs to figure out how to grow beyond its core customer base. Acquiring one's way into other existing software markets is one way, but using open source to build completely new software markets is another. Why not try both?

And why not shift the discussion away from bits and bytes ("Upgrade and get this FREE toaster!") onto the software services/support that make customers happy to use the bits and bytes?

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About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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