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Oracle expands midmarket ambitions

Company looks to juice its application server business with a version tuned for smaller organizations.

Oracle intends to introduce a version of its Java server software suite for small and midsize companies as part of its efforts to gain market share.

At its customer conference in London next month, the company will detail Oracle Application Server 10G Standard Edition One, said Thomas Kurian, the company's senior vice president in charge of its application server business.

At a briefing for financial analysts on Thursday, Kurian said the new product is designed to help Oracle expand its customer base beyond large corporations.

The midmarket version of Oracle's infrastructure software will include a Web server, an application server for running Java applications and a portal server. It will be priced at $5,000 per server processor. The most expensive edition of Oracle's suite, the Enterprise version, costs $20,000 per processor.

Kurian said the primary competitor among small and midsize companies is Microsoft. Oracle last year introduced a scaled-down version of its database, called Oracle Database 10G Standard Edition One, and reduced its database cost to match that of Microsoft.

The company's Application Server and related products, including portals and integration software, are used as a foundation on which corporations build and run business applications.

These server software suites are viewed as increasingly strategic, because customers are standardizing on a single infrastructure for all of their business applications. Packaged-application provider SAP, for example, is getting into application server business in an effort to tap into infrastructure software spending.

Oracle was late in entering the application server market, but it is expanding its product line and boosting related marketing and sales. The company intends to roughly double its sales force dedicated to application servers--to about 420 people this year, Kurian said.

Based on surveys, Oracle is gaining market share. The company has a good opportunity to take business from niche application server providers as well as from BEA Systems, said John Rymer, an analyst at Forrester Research.

BEA has seen its share of new licenses drop for two consecutive quarters and has seen the departure of a number of high-level executives. "BEA is in a position where they could fall really, really fast, based on recent events. And Oracle is executing very well," Rymer said.