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Dell, Oracle expand alliance

The companies extend their alliance with an exclusive bundling agreement that will have Dell offering Oracle database software with some of its servers.

Dell and Oracle extended their alliance Tuesday with an exclusive bundling agreement that will have Dell offering Oracle database software with some of its servers.

Round Rock, Texas-based Dell will begin serving up Oracle Standard Edition One with its PowerEdge 2600 and PowerEdge 2650 servers, either pre-installed or on a CD, CEO Michael Dell said during a Tuesday conference call he shared with Oracle CEO Larry Ellison.

A PowerEdge server with Red Hat's Enterprise Linux operating system and the Oracle software on a CD will start at just more than $4,100. Dell will begin installing Oracle Standard Edition One at the factory on top of Red Hat's Linux or Microsoft's Windows later this year, the companies said. The Dell servers come with one or two processors.

As previously reported, the agreement expands a year-old arrangement between Dell and Oracle, under which the companies have promoted their database performance through measures such as computer clusters, which connect numerous, relatively inexpensive servers to harness their collective performance. The relationship began in April 2003, when Dell and Oracle reached a deal to install Oracle's 9i database cluster software on Dell PowerEdge 2650 servers.

The companies' latest agreement gives Oracle another avenue to deliver Oracle Standard Edition One, its latest database software. In this case, it can offer the software in a relatively simple way and also package it with services for markets such as small and medium-size businesses. Meanwhile, the deal could help Dell, which considers servers to be one of its vital product lines, deliver more of the machines to customers, the two companies' top executives said.

"We expect to have a broad-based combination of hardware, software, services and ISV (independent software vendor) integration delivered to every industry in which we play," Ellison said.

He went on to describe software bundling, such as the Dell agreement, as a new trend for the company.

"I think it is the wave of the future--ease of use is the wave of the future," Ellison said.

For its part, Dell sees an opportunity to gain more of the market for database servers. Indeed, since the companies began their bundling arrangement a year ago, the number of Dell-Oracle bundles installed at companies has grown from about 15,000 to about 30,000, Michael Dell said.

Right now, Dell garners about half a billion dollars per year in database server revenue, Dell said. The Oracle relationship should help boost that figure.

"We think that in the next couple of years that's going to grow to about a $1 billion business for us, in terms of the hardware," he said.

Dell, the company, will also be able to resell Oracle's professional services, along with the database software, and offer its own consulting services to customers who buy servers.

The agreement also grants some exclusivity to Dell. Although Oracle's software could run on basically any Windows or Linux server, it's unlikely the company will grant any manufacturers beside Dell the ability to bundle it, Ellison said.

"We have no distribution agreement with any other partner like this, other than Dell," Ellison said. "We think Dell...does a wonderful job of preloading software and configuring their servers. We think it makes sense, because Dell is so good at this, to make this an exclusive arrangement with Dell."

The bundling agreement follows another from last month, in which Dell and Oracle entered a partnership to market in China Oracle software that runs on Linux.