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Oracle targets software rental business

Oracle wants to help software makers get into the business of renting their applications over the Web.

Oracle wants to help software makers get into the business of renting their applications over the Web.

The company today announced a new strategy that bundles its software with new education and partner programs to help software makers and Internet Service Providers launch an application hosting business.

Oracle's strategy, called iHost, bundles existing Oracle software, including its Internet-focused 8i database, application server, Internet directory and security and management tools.

With its move today, Oracle joins IBM, the Sun-Netscape Alliance and other software makers who hope to sell their technology to software makers and ISPs who want to become application service providers.

The market for application hosting and rentals is expected to grow rapidly. International Data Corporation predicts that the ASP market--which includes hosting of e-commerce, email, and other business applications--will grow to $2 billion by 2003, representing a 91 percent annual growth rate.

The market will boom as more and more businesses choose to save money by renting their software online, from e-mail to financial applications. Software companies and ISPs which enter the business will not only provide the applications, but will in essence manage their customer's computer networks.

Oracle's goal is to convince software makers to start selling their applications as a service on the Web, not just as shrink-wrapped boxes on store shelves, said Mark Jarvis, Oracle's senior vice president of worldwide marketing.

Oracle also plans to compete with ASPs with its own hosting service called Oracle Business OnLine. The service, announced earlier this year, provides hosted applications to handle most business needs, including accounting, manufacturing, and procurement. Customers pay a monthly fee to use applications through the Web or a leased connection.

Oracle is also pushing software makers who want to offer their applications online to the Business OnLine service, Jarvis said.

Oracle created the service earlier this year to rent its own business software on the Web and hopes 50 percent of its application revenue will come from the new service within five years.

So far, the company has signed on 20 customers. Four customers are already using the service, including Triton Network Services. But Business Online can also host applications for software vendors, Jarvis said.

Oracle's new iHost initiative is for ISPs and software makers who want to get into the business themselves.

Oracle today said it added a new section in its developer Web site--the Oracle Technology Network--that provides ISPs with advice on hosting applications on the Web. The company is also improving its partner program to help ISPs link with software vendors.

Oracle executives today said the company will release its software bundle--called the Oracle Internet Platform Hosting Edition--in two months. The technology is available as standalone products today, Oracle executives said, but the company needs to bundle them to make it easier for software companies to use the technology. The company will charge based on the number and power of the processors they use.