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Analysts shrug at Oracle's new software

Oracle lowers the price and releases new components for 11i--but analysts say improving service and quality is crucial to aiding its ailing applications business.

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Oracle's 11i e-business jumps for Java
Larry Ellison, CEO, Oracle
Oracle on Wednesday said it will release software that's packed with new features, but analysts say the company has to offer more than that to woo customers.

The Redwood Shores, Calif., software maker says its latest version of 11i e-business software, to be released in the next 60 days, will offer businesses better access to data about customers, sales, inventory and other key information.

In Amsterdam on Thursday, Oracle Chief Executive Larry Ellison said the company was lowering the price on the 11i e-business line.

"Effective immediately, pricing is $4,000 per power user and $400 per casual user," the company said in a statement. Additional details were not immediately available.

In addition to enhanced data analysis, the new applications will allow businesses to share sales and product information with marketing partners over the Web and automate the maintenance of company assets such as factory equipment.

But analysts say Oracle needs to provide more than new features and functions to shore up its ailing applications business.

With rivals SAP and Siebel already offering similar products, "Oracle needs to compete on service," said Laurie Orlov, an analyst at Forrester Research. "They have to do a better job managing their image and acting more customer friendly."


Gartner analyst Brian Zrimsek says Oracle and 11i are headed in the right direction, but they're not moving at breakneck speed.

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Sales of the product have flagged over the last year. While the entire market for business software has been hit hard by the dour economy, Oracle's sales declined more sharply than its competitors. New e-business application license sales, totaling $163 million, were down 42 percent year over year in Oracle's second quarter ended Nov. 30.

Oracle itself is partly to blame for slow adoption of its e-business software, analysts say. The company's message that businesses should toss out all other software and use only Oracle applications doesn't fly with customers, said Melissa Eisenstat, a financial analyst with CIBC World Markets.

"SAP has sold multiple (applications) for years, but they don't emphasize buying the whole suite at once," Eisenstat said. "The monumental all-in-one

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Oracle 11i e-business promises online integration
Larry Ellison, CEO, Oracle
approach is not being adopted by customers."

Oracle admits that while more than 5,000 customers are in some stage of installing the 11i software, they're doing it in bits and pieces rather than adopting all the components.

"While we do sell the entire suite, not all businesses are putting all 70 components in," said Lisa Arthur, vice president of e-business software marketing at Oracle.

Putting the brakes on bugs
Sales of Oracle's e-business software have also been affected by well-publicized problems encountered by customers with the first release of 11i. Oracle promised the applications would be easy to implement. In reality, many companies found an unusual number of glitches in the software and put the brakes on their projects. Arthur says Oracle fixed the bugs and that the new applications won't have the same problems.

"We have six generations of the e-business suite under our belt, so it's extremely stable," Arthur said. "Early on, it was extremely complex. With that complexity there were some early concerns from customers, but those concerns have been completely eliminated."

Software quality continues to be an issue for Oracle customers, however, because of the way the company releases products, Orlov said.

"They wait until the software has reached a level of stability to ship it to their largest customers, and then hand-hold them through the debugging process," Orlov said. "It's a bit tougher for smaller customers," because they don't get the same level of attention.

Reuters contributed to this report.