DBMS Competitive Landscape November 13, 2001 Dialin:877-302-8255 Conf. Pin#:6693619.

DBMS CompetitiveLandscape

November 13, 2001

Dialin: 877-302-8255Conf. Pin#: 6693619

Oracle Internal Confidential

Jacqueline WoodsVice PresidentGlobal PracticesOracle Corporation


Increasingly Oracle’s DBMS competitors are using price to infuse a tenor of fear, uncertainty and doubt (FUD) into negotiations with YOUR customers


In this presentation you will learn:

How to position Oracle’s products against competitors by integrating a compelling pricing and licensing story to “win” deals

Important details of each competitor’s pricing strategy and their respective pricing models

The weaknesses of each competitor and instructions on how to leverage their shortcomings during the sales cycle

Three principle types of buyers and their typical behavior when making purchasing decisions

How to dispel each buyer’s primary pricing issues by demystifying the competitor’s key messages about their products, their positioning and their pricing


Database Licensing - Observations

Through 2002/03, externalization of corporate information (e.g., self-service, virtual storefront, supply chain management) will cause an explosion in DBMS user volumes and fragmentation of user types

This fragmentation of user types is injecting overwhelming complexity into seat-based licensing models causing contract complexity, excessive cost per transaction and total cost of data management

The heightened complexity of managing IT environments will drive standardization and an increase in vendor imposed customer support requirements

Incremental DBMS demand for its users has virtually extinguished seat-based licensing in favor of server-based models

Both IBM & MS trying to commoditize the DBMS market


Integrate DB server with other enterprise software offerings (subsidizing DB to drive overall software sales)

Low cost leadership in databases with “good enough” functionality at each price point

Better functionality over time -- SQL Server 2000

Surround the glass house and increase enterprise presence over time

Microsoft Pricing Strategy


Licenses can be purchased through:– Original Equipment Manufacturer (OEM)– Retail– Volume Licensing Programs

Open License 6.0 (5 licenses min.) Select License 6.0 (250 licenses min.) Enterprise Agreement 6.0 (250 licenses min., 3-

year agreement term) Enterprise Subscription Agreement 6.0 (250

licenses min., 3-year term, subscription-based) Repurchase license with every new version release

at “Upgrade” cost, or enroll in the new “Subscription” program Software Assurance

Discounting is based on number of products purchased and number of seats

Microsoft Licensing Strategy


CPU or Seat based

Volume discounting based upon # users

Very price competitive

Not enterprise or internet ready

Microsoft Pricing Model

Pricing:

Discounting:

Strengths:

Weaknesses:

Opportunity:

Threats:

Backoffice CALs no longer cover SQL server

For some customers price is only thing that matters irrespective of integration or scalability


Microsoft SQL Server 2000SQL Server and 5 Client Access Licenses

$1,489 Lowest price offering

$5,000 (unlimited users)

Microsoft SQL Server 2000 EESQL Server Enterprise Editionand 25 Client Access Licenses

$11,099

$20,000 (unlimited)

Over the past 12 months MS has increased prices for SE and EE by 60% and 38%, respectively

MS Aggressively Targets Enterprise Market

MS SQL Server’s product offering is more comparable to Oracle9i SE offering

Oracle’s SE NU is equivalent to SQL Server 2K SE

MS announces new subscriber based support model and customers will not be able to get any other type of support


What’s Next for Microsoft?Microsoft Licensing 6.0: The new program, launched on October 1, 2001, favors

a subscription-based licensing scheme Main benefits are to customers who upgrade every two

to three years and who purchase in large volume quantities

The further behind corporations are in their version releases, the more it will cost them to upgrade under 6.0

BackOffice CAL no longer available Core CAL no longer includes SQL Server; must be

purchased separately

A Giga survey of about 4500 IT professionals indicates that 80% anticipate their costs will increase due to MS’ new licensing model


Leverage hardware/database combination to shift pricing as needed

Attack Oracle at points of perceived weakness (e.g., higher base price on EE)

Low cost leadership in UNIX databases with “good enough” functionality at each price point

Lower than Oracle in Windows databases with added value compared to Microsoft

IBM Pricing Strategy


CPU based - EE: $20,000 per CPU - EEE: $25,000 per CPU

Suggested Volume Pricing (SVP) based on: - total contract value - number of CPUs - number of users

Bundling of hardware of software products

Options at additional cost over base price

IBM Pricing Model

Pricing:

Discounting:

Strengths:

Weaknesses:

Opportunities:

Threats:

For smaller user populations such as for Data Warehousing, O9i is more competitive

Customers claim no value add’l O9i features


IBM DB2 Universal Database 7.2Workgroup Edition

1 server install (1 named user)$249 + $969 per install

Workgroup Unlimited Edition

4 < CPUs (unlimited users)$14,500

Enterprise Edition>5 CPUs$20,000 per CPU

Extended Enterprise Edition$25,000 per CPU Over the past 12 months IBM has increased prices for EE and EEE by 60% and 28%, respectively

IBM leverages brand equity to gain share and increase FUD

IBM positions EEE against Oracle EE w/partitioning option

IBM EE is 38% more than WE and both have unlimited users

MQ Series Workflow Option is $35K per CPU – no NU pricing

IBM Datalinks Manager is$8K per CPU


Oracle Pricing Strategy

Attack MS and IBM on feature/function inadequacies

Bundle in key features to improve depth of product compared to both MS and IBM

Oracle only vendor that offers simple, scaleable and flexible pricing alternatives

– Named User and CPU pricing on all technology products

– Term licenses 2yr, 4yr and perpetual


Oracle9iDatabase

Small/Medium Business

• Parity pricing for Windows named users

• Price/perf leadership for online service providers

• Price/perf leadership on certified systems

• No favoritism towards Linux

Large Enterprises• Maintain pricing umbrella in

UNIX• Grow at the market rate for

UNIX• Focus on mainframe

migrations

Hardware Vendors• Provide good margins, but

not leading margins, on certified systems

ISV Applications• Provide reasonable

margins and offer embedded licenses (new FY2002)

Oracle Pricing Strategy


Highest value in performance, functionality, QoS at all price points

Oracle Pricing Focus

Value Leadership:

Price based on # Processors of server Consistent pricing across operating

systems and platforms

Processor Based

Pricing:


Leadership in UNIX and Windows markets Participate in mainframe, Linux and

embedded markets

Oracle Pricing Targets

Target Markets by

OS:

Oracle Store Direct and telesales force Large ISVs and SIs High growth ISVs Online Service Providers Certified system vendors (CPQ, Sun) Not small resellers ($<10K per month)

Target Channels:


Keep it simple Top ISVs -- SAP, PeopleSoft

Consistent custom negotiated pricing contracts

Other ISVs Standard product packaging Special discount policies for all VADs/VARs

Special negotiated contracts for Online Service Providers and certified systems vendors

Reinforce policy of free software to developers

Oracle Channel Pricing Strategy


Technical Comparison with IBM

3 products with 3 code bases: OS/390, AS/400 and Unix/NT/Linux. Compatibility problems.

One product family built on one code base. Compatibility across all major hardware platforms.

Shared nothing clusters don’t meet real-world needs. Limited high availability

Real Application Clusters offer near-linear scaling of all apps out of the box. Availability increases with more nodes.

WebSphere has no DB caching. All read requests go straight to the database. Makes DB2 slower

Oracle9i App Server has database caching that can boost database performance by 3x or more

Lacks advanced high availability features: accelerated failover, automated standby etc.

Complete suite of failover, disaster recovery, and online maintenance solutions. Zero data loss. Zero down time

Minimal security capabilities.Advanced security features: virtual private database, Label security, single sign-on, FIPS 140-2 certified.

Limited partitioning options. Hence, Costly admin. and lower performance, scalability and availability.

Poor Java support. Lacks platform-wide support. Hence, Poor internet application environment.

Superior Java support. With Oracle JVM, develop once and deploy anywhere

Dynamic bitmap index uses extra CPU/memory and requires pre-built b-tree index. Limits performance and scalability

Hash, Range, List and Composite partitioning provide flexible deployment options across all platforms.

With compressed stored bitmap index, less storage is required and data is processed faster. Hence, Oracle improves performance and cuts hardware costs

IBM DB2IBM DB2 Oracle DatabaseOracle Database


Technical Comparison with Microsoft

Limited functionality on OLTP and Application Support

Oracle provides Non-escalating row-level locking, and Multi-version read consistency

Limited functionality with respect to Data Warehousing performance

Historical Leader of DW performance

Limited Database Security features Row-level access controls, Enterprise, User, & Role Mapping & Active Directory, Encryption capability inside the DB

Lacks advanced high availability features: accelerated failover, automated standby etc.

Transparent application failover, Partitioned Recovery, synchronous replication and Fast Start Fault Recovery

Limited support on Operating systems. Support on NT only.

Support on Unix, Linux, MVS, Win95/NT, and many more

Limited JAVA Support if any

Microsoft Directory is an isolated component - works only in a Microsoft environment.

Oracle Internet Directory is fully LDAP v3 compliant and RDBMS-based. It is fully scalable for enterprise/extranet needs, and/or utilities for high-speed bulk operations.

Limited Integrated Multi Media Support

Oracle provides JVM, SQLJ, and Java support for shared, read-only object memories (performance gains).

Microsoft SQL Server 2000Microsoft SQL Server 2000 Oracle DatabaseOracle Database

Provides Text, Audio, Video, Image, Spatial as an Integrated Multi Media Support offering.


Recognizing the 3 primary types of buyers and adjusting the “pricing pitch” to accommodate their needs

Price Buyers Loyalty Buyers Value Buyers

Putting it all together – Moving from the Sellers to the Buyers

Product Lifecycle

Growth Mature Decline

Loyalty

Buyers Price

BuyersValue

Buyers


Price Buyers– Typically large companies with resources to qualify

multiple buyers and want to purchase at the lowest price

– Not willing to pay for incremental product value beyond their identified specifications

– Unwilling to pay for intrinsic benefits that accompany long term relations with suppliers

Putting it all together – Price Buyers

Negotiation Tactics– Difficult to negotiate with price buyers but sales person

needs to refocus attention on Oracle9i’s value– Increase customer’s willingness to pay by proving that

added value is cost justified (O9i security features protect against DB corruptions, loss of data, etc.)

– Mission Critical apps no guarantees with MS or IBM


Loyalty Buyers– Value consistent product quality and performance– Customer wants their trusted suppliers to continue providing

it– Loyalty is driven fundamentally by the risk and uncertainty

associated with unproven/untested suppliers– Critical implications of inadequate performance outweigh the

benefit of a lower price in the short term

Putting it all together – Loyalty Buyers

Negotiation Tactics– Fortify the relationship with the loyal customer by focusing

attention on past performance and deficiencies of competition– Stress the impact of inferior MS and IBM performance such as

MS’ limited scalability as well as SQL Server 2000’s shortcomings in OLTP and application support

– Emphasize compatibility issues that continue to haunt IBM due to multiple code bases which make integration challenging


Value Buyers– Largest group of buyers seeking neither highest

quality nor the cheapest price– They weigh attributes and analyze trade-offs, buying

the product offering with the highest utility given the price

– Product qualities and added features hold no significance until they are valued by the customer

Putting it all together – Value Buyers

Negotiation Tactics– Convince value buyers that they cannot run their

businesses without the added features of Oracle9i and Oracle9iAS (examples illustrated on the next 3 slides)

– Provide your customer a clear understanding of how Oracle9i can save them money in the long run (see TCO calculators end of presentation)


In a recent survey of large US companies, IDC found that availability and security are their top two priorities.

According to the Standish Group, downtime costs anywhere from $2,500- $10,000 per minute. Even for business providing 99.9% uptime, this could be costing over $5 million per year.

Gartner Group claims over 60% of businesses do not have a basic plan to mediate the effects of a disaster, should one occur.

Neither MS nor IBM provides what Oracle can Get system protection by using Oracle9i Real Application Clusters Ensure storage protection with Oracle9i Database's Recovery Manager and

Data Guard features site protection with Oracle9i Database's Data Guard feature

Manage self service error recovery with Oracle9i Database's Flashback Query feature

Yield near-elimination of planned downtime maintenance operations using Oracle9i Database

More Facts to Help you Blow Past the Competition


DBMS

Queuing

Workflow

Files

Total

OracleStandard Edition

IBM DB2Workgroup Edition

$58,000

$7,200

$140,000

$32,000

$237,200

Source: IBM price listInteresting

Cost comparison between Oracle 9i Standard Edition andIBM DB2 Workgroup Edition on a 4-way 700 MHz Netfinity 7100

Oracle vs. IBM Product Comparison

$60,000

included

included

included

$60,000

$60,000

included

included

included

$60,000


DBMS

Queuing

Workflow

Files

Total

OracleEnterprise Edition

Oracle vs. IBM Product Comparison

Source: IBM price list

Cost comparison between Oracle 9i Enterprise Edition andIBM DB2 Enterprise Edition on a 4-way 700 MHz Netfinity 7100

IBM DB2Enterprise Edition

$160,000

included

included

included

$160,000

$160,000

included

included

included

$160,000

$80,000

$7,200

$140,000

$32,000

$259,200


Oracle9iASEnterprise Edition

IBMWebsphere

Cost comparison between Oracle iAS Enterprise Edition and IBMWebsphere Enterprise Edition on a 4-way 700 MHz Netfinity 7100

Application Server

Cache

Reporting

Ad-hoc Query

Portal

Workflow

Total

$80,000

included

included

Included

Included

Included

$80,000

$80,000

included

included

Included

Included

Included

$80,000

$140,000

$32,000

Not Available

Not Available

$272,000

$140,000

$584,000

Source: IBM price list

IBM Websphere over 7x Oracle9iAS EE


Value Proposition of DB Vendors

$ $$ $$$ $$$$

IBMMicrosoftOracle

Value

Price


IBM-Oracle DB Cost Calculator


Microsoft-Oracle DB Cost Calculator


Location of TCO Calculators http://partner.oracle.com

– Sales Pricing

Competitive Comparison Tools

http://partner.oracle.com/

DBMS Competitive Landscape November 13, 2001 Dialin:877-302-8255 Conf. Pin#:6693619.

Documents

pricing slide

scalability slide

dbms market slide

competitors pricing

based models

seatbased licensing

compelling pricing

respective pricing models