Oracle makes move in hosting market
The database software giant is looking to tap a new area for additional profits: hosting and managing customers' database and application-server software over the Web.
Oracle executives are banking on hosted services to generate an additional $1 billion in revenue for the company in the next five years to prop up its slumping sales. Despite a lot of hype the past few years, the software rental market has yet to take off, but Oracle still believes in its potential, touting it as a cheaper alternative for businesses that don't want the hassle of installing and maintaining software.
Oracle is offering to host and manage the company's 9i database and application server for a fee, so customers don't have to do it themselves. It's part of Oracle's overall hosted service strategy, which includes the company's 11i E-Business Suite, a suite of accounting, human resources, manufacturing, sales and customer service software.
The software maker is formally launching the hosted service for its database and application server Tuesday. Oracle said it has unofficially offered those products to customers on a hosted basis for the past year.
Oracle customers will now have several installation options. Customers can host their databases and application-server themselves or have Oracle or the database giant's service provider partners, such as Broadwing and Qwest Cyber Solutions, host them, said Paige O'Neill, senior director of Oracle's outsourcing marketing. For an additional fee, customers can hire Oracle to remotely administer the software, which includes diagnosing and fixing problems. O'Neill added that about 200 customers are already using Oracle's database through the hosted service.
"Customers tell us their biggest pain is a shortage of IT staff," she said. "If Oracle releases a new patch, they need to deploy that. Customers have us do that for them and the problem goes away."
Database software is technology that holds vast amounts of corporate and Web site information, while application-server software is technology that runs e-business and other Web site information.
Gartner analyst John Rubin said he doesn't expect many database customers to use the hosted service for databases and application servers, unless they're also renting the E-Business Suite from Oracle. Most businesses would prefer to keep their databases on site at the company, he said.
"The hosted service is attractive to those running the entire (Oracle) stack of software, from e-business suite on down," he said.
Oracle's rivals in the database market also offer some hosted services. Microsoft and IBM offer their databases as a hosted service through service providers. Sybase doesn't host its databases, but the company can remotely manage customers' databases for a fee.