Oracle to lease space over Net

REDWOOD SHORES, California--Looking to utilize its expertise in building sophisticated software infrastructure for corporations, Oracle disclosed that it soon will offer a new outsourcing service for small and medium-sized businesses that do not want to handle their computing needs in-house.

The new Oracle Business Online offering, discussed at a scheduled event for the release of Oracle's Application Server 4.0 software, will essentially provide a small-business user with a secure Web site address from which he or she can use various Oracle software from its database to its business applications, according to chairman and chief executive Larry Ellison.

The upcoming move feeds into the company's increased focus on consulting and services, a growing chunk of revenue for the database software leader.

The new outsourcing option also highlights Ellison's well-worn view that distributing computing power everywhere will not rule the day going forward and--given the Web's explosion--large, centralized servers feeding customized information and applications to browser-enabled devices will usurp the so-called Windows everywhere strategy of nemesis Microsoft.

"Client-server computing, unfortunately, distributes complexity," Ellison said.

For example, a human resources application from Oracle's bundle of business software could be accessed by a user over the Web so they could update benefits. Those updates could then saved to computers dedicated to Oracle Business Online customers.

A key component in this strategy is the latest release of the company's Application Server, a suite of software services that is intended to sit between a client and a back-end database system. Though some industry observers have noted that the definition of an application server remains elusive, Oracle executives compared the amorphous set of components to a beach ball--an obvious choice--due to the fact that the different colors of the ball represent a coherent combination of software functionality and services.

Oracle is seeking to tie its Application Server release into a structure that also includes its database and business applications, offering a one-stop software shop for companies looking to tie older systems to the Web.

"This is an emerging marketplace with a number of distinct competitors," said Beatriz Infante, senior vice president for Oracle's application server division. "You will see more and more integrated messages coming out of Oracle."

Added Ellison: "Your corporate network should be architected like the Internet."

The company has championed a Network Computing Architecture, or NCA, for some time, as an overarching strategy for building corporate applications.

Included in the latest version of the company's Application Server--due to ship next month for $195 per user--are a variety of infrastructure tools, sometimes called "middleware," that allow for the creation of sophisticated business applications. Analysts said the potpourri of back-end software technology should keep Oracle's installed base close to home.

"Pulling it together to make it easy to build these applications is very appealing," said Carolyn DiCenzo, an analyst with Dataquest. "They understand the environment as well as anyone.

"I think it continues to lock people into Oracle. In order to keep customers locked into technology, you have to make it easier for customers to do business with you," she added.

Some elements found in the latest version include support for the Enterprise JavaBeans and CORBA standards, inclusion of transaction software technology, and the addition of dynamic load-balancing, a feature targeted at large organizations.

Observers see the application server niche as one of the best opportunities in the software market. "Nearly every vendor has committed to this type of architecture," noted Larry Perlstein, analyst with the Gartner Group."The money to be made in these things is in the deployment of applications to large scale communities [of users]."

Mark Jarvis, senior vice president of worldwide marketing for Oracle, characterized the growth in application servers as a "midtier revolution."

Others note that previous versions of Oracle's Application Server were less than complete in functionality, despite company estimates of 2,200 existing customers for the software.

"This one, at least in theory, is the real thing," noted a report from Zona Research. "The question is whether Oracle has taken too long to get to this point. IBM has already emerged with its WebSphere offerings, and a host of Java-based Web application servers have emerged since Oracle's original app server announcement."

Oracle soon also will launch a more Web-friendly version of its database software.