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Oracle builds groupware brand

Oracle plans to rent out pieces of its InterOffice groupware online, hopping on an early market wave for leasing groupware to small and medium-sized businesses.

Oracle (ORCL) this week announced plans to rent out pieces of its InterOffice groupware online, hopping on an early market wave for leasing groupware software online to the large and virtually untapped market of small and medium-sized businesses.

The company, best known for its database software, has enlisted the services of Digital Equipment and a Washington D.C.-based Internet service provider called Digex, which caters to business users nationwide.

Digex is currently offering Oracle's InterOffice email, calendaring, and scheduling tools to a few thousand customers who download the software when needed to their desktop systems. Digex is hosting the service on Digital's Alpha Server technology.

The service is free for the first 90 days. Oracle is still working out a usage-based pricing model for the new service to kick in after the free trial period.

Steven D'Alencon, Oracle's senior director of product marketing, called the approach "a proof of concept exercise."

But the idea is to reach a bigger market by providing affordable access to the most up-to-date software to customers that can't afford a full-scale installment of high-end groupware applications or to those who have no IS expertise to install, maintain, and update the software. "This broadens our reach," said D'Alencon.

Some analysts think Oracle may be onto something. "It's sort of the extension of email through an ISP," said Stan Dolberg, an analyst with Forrester Research. "Why not? Small and medium-sized businesses are already doing a lot of outsourcing of applications. It's an interesting story."

For Oracle, the deal with Digex is also an experiment to see if the rental scheme works for network computers--the crux of the company's recently announced Network Computer Architecture.

Oracle has a special interest in the rental-software scheme because of its need to provide a feasible infrastructure for network computers, but it's not the only company to recognize a new market opportunity.

This fall, Digital opened up ForumForum, a "virtual office tower" that offers collaborative tools accessible from any of the tower's 2,000 floors of "office suites."

In addition, Lotus promises to get a similar Domino Service Provider Application off the ground before the end of the year. Lotus is working with Netcom and a few other ISPs and telcos on the project to provide both companies and regular Netizens with essentially prefabricated Web sites that can be rented on a temporary basis.

As if they were working on a corporate intranet, groups of users would be able set up the sites to access and share databases as well as to conduct group scheduling and threaded discussions via a standard browser.

Despite Oracle's strong presence in the database tool market and its head start with its rental offering, analysts wonder if small and midsize companies won't turn to groupware market leader Lotus Notes. InterOffice has made little headway in the traditional groupware market of large corporations since it was first introduced a few years ago and has little brand-name recognition with smaller companies.

"InterOffice just does not show up in the top market spots," said Dolberg. "Brand recognition is the name of the game and some no-name application from Oracle" faces an uphill battle, he said.

Oracle says the InterOffice initiative falls in line with the company's network computing plans where Oracle plans to be a leader in providing back-end services to NC clients.

"There will be market changes taking place that will shift the markets as we knew them," said Oracle's D'Alencon. He added that the company's goal is to announce a dozen additional ISP agreements in the next year.