Multicore move cuts Oracle database cost

Facing Microsoft pressure and new multicore chips, Oracle quietly cuts database prices for some lower-end servers, has learned.

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In a move designed to counter Microsoft's growing database influence, Oracle has quietly cut software prices on some lower-end servers using multicore processors, CNET has learned.

With the new pricing for Oracle's lower-end Standard Edition and Standard Edition One products, the software company now is effectively matching Microsoft's practice of pegging price to a server's processor socket count and rather than processor core count. The move could cut the costs of purchasing Oracle database software by as much as 87 percent in some cases.

The move, described in an unpublicized pricing document (PDF) on Oracle's Web site, took effect February 16, just days before Microsoft announced an update to its rival SQL Server 2005 software.

Oracle is feeling Microsoft's sting, Technology Business Research analyst Stuart Williams said.

"With Microsoft reporting 30 percent-plus revenue growth each quarter in SQL Server for a couple of years now, this is a sign that Microsoft is getting strong adoption in a growth segment of the database market," for example outside large data centers and in smaller countries, Williams said. "That must chafe Oracle."

Oracle confirmed on Thursday the licensing change but didn't respond to further questions.

According to the modified licensing rules, customers now may run Oracle's lower-end Standard Edition and Standard Edition One products on systems with as many as four or two processors, respectively, with no limit on the number of cores. Previous limits precluded use of the software in some multicore configurations--for example, Standard Edition One on a system with two quad-core processors, according to Oracle's Software Investment Guide.

One example of a price break with the new scheme concerns a server with four quad-core processors. Customers no longer must buy licenses for each of the 16 cores to run the top-end Enterprise Edition, but instead may buy licenses for the four sockets and run Standard Edition. That cuts list licensing prices from between $320,000 and $480,000--depending on Oracle adjustments that factor in multicore processor performance--to $60,000.

Servers with four quad-core chips are relatively rare right now, but Intel and Advanced Micro Devices plan to release processors for that segment later this year.

Oracle's new pricing also means that a customer whose server uses two quad-core Intel Xeon 5300 chips may run Standard Edition One for a $9,990 licensing fee instead of Standard Edition with a $60,000 fee.

Microsoft applauded Oracle for following Microsoft in what it called the right direction. "The market wants simple, flexible licensing options," and Microsoft works to ensure its licensing policies help customers and partners, the company said. "It's nice to see others in the industry doing similar things."

Redwood Shores, Calif.-based Oracle is effectively modernizing its licensing policies to accommodate the arrival of multicore processors, those with multiple processing engines on a single slice of silicon or in a single chip package. The company already has changed course twice because of new chip realities--once in July 2005 and again in December 2005.

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