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Errant Oracle fax reveals pricing details

A fax from software maker Oracle, accidentally sent to a newspaper, may indicate that the company is feeling the heat in a competitive battle with rival Microsoft over the Windows NT-based database market.

An errant fax from software maker Oracle may indicate that the company is feeling the heat in a competitive battle with rival Microsoft over the Windows NT-based database market.

The fax, mistakenly sent to the Wall Street Journal, listed Oracle's 20 largest customers for the quarter ended August 31, as well as the revenue Oracle received from each and their payment terms.

More revealing perhaps are the discounts each customer received from the database market leader. The document shows that those discounts range from 42 percent to 94 percent. Nine customers received discounts of 70 percent or more and four were listed as greater than 80 percent, the Journal report stated.

Getting a firm answer on database software pricing has always been tricky, even for Wall Street analysts. Oracle closely guards pricing information on its database software, and does not publish list prices. Consultants and analysts say the company typically cuts deals that involve a generous chunk of consulting, so list prices would be misleading anyway.

Microsoft does publish its database software prices, but it tends to sell large contracts for site licenses that include operating system, application, database software, and consulting for a set monthly fee.

Richard Finkelstein, a consultant with Performance Computing in Chicago, said the discounts are very large, and most likely pertain to Oracle's Windows NT-based products.

"My guess are those discounts are on Windows NT where they [Oracle] are getting the most pressure from Microsoft. For Microsoft, SQL Server is really a commodity item to sell NT, so they can almost give it away almost for free."

Oracle leads the database market overall and sells software that runs on Windows NT, Unix, and other operating systems. Microsoft, which sells SQL Server, owns a large chunk of the lower end of the database market, according to analysts. SQL Server only runs on Windows NT.

Oracle's largest customer for the period is listed as Hewlett-Packard, which received a 42 percent discount, according to the newspaper report. Oracle and Hewlett-Packard have partnered in a number of areas, including a joint marketing deal to sell a database and hardware combo called Raw Iron.

Other customers listed in the report include South Korea's Pohang Iron and Steel Company, which received a whopping 94 percent discount. Drug maker Pfizer is listed for an 85 percent discount, while a Department of Defense health affairs unit received a 73 percent discount, and another agency listed only as Government Customer "G" received a 48 percent discount, the Journal reported.

Finkelstein said Oracle now has more database customers on Windows NT than Microsoft. "That must particularly annoy them [Microsoft]," he said.

For both companies, the battle is less over sheer sales volume and more about platform control, Finkelstein said. "It's not an issues of sales at all. Oracle pretty much gives NT software away in order to get the upscale business on other platforms. It's just that when Microsoft customers install Oracle, it's a way to leave Windows NT, usually to Linux. So for Microsoft it's important to get people to stick with NT, especially with Windows 2000 around the corner."

Oracle is also attempting to grow its market for Oracle 8i, its latest Release, which includes advanced Internet features.

Oracle claims that many of the most popular Internet sites use its database software. However, as reported by CNET earlier this year, many Oracle customers who received 8i as part of regular software upgrades are more interested in included bug fixes than the new Internet features, at least so far.