Oracle confronts pricing, user issues

By Dan Verton, Computerworld |  Development

Oracle Corp.'s Japanese unit last week slashed prices for the company's database software by 25 percent and increased volume discounts to 35 percent, raising hopes among U.S. users that the cuts herald lower prices here.

The price reduction in Japan, which will take effect July 1, is the second such reduction Oracle's Japanese unit has announced there in six months, according to a report released May 31 by Credit Suisse First Boston Securities Ltd. in Japan. In January, Oracle Japan streamlined its pricing structure in a manner similar to what Oracle put in place in the U.S., offering customers a choice of only named-user licenses or licenses based on processor speed, known as the Universal Power Unit (UPU).

On the matter of whether the price cuts in Japan will be followed by lower prices in the U.S., Wendell Laidley, an analyst at Credit Suisse First Boston's Technology Group in San Francisco, said it's too early to tell. "I have to believe that there's some consistency between Oracle Japan and the rest of the world," said Laidley. But, "I don't know," he said.

Another analyst in the U.S., who was scheduled to receive a nondisclosure briefing from Oracle executives on pricing issues Friday, said Oracle canceled the briefing at the last minute.

Kristin Kryway, an Oracle spokesperson, indicated that Oracle's headquarters was uncertain of the specific actions of its Japanese unit. That unit is majority-owned by Oracle, but it's an independent operating company, she said.

"They did put out a press release, but it's in Japanese and we don't know what it says," Kryway said. "We're working on getting it translated."

Kryway added that Oracle hasn't announced any changes in the U.S. and declined to say whether pricing changes are forthcoming here. But Laidley said he recently spoke with top Oracle executives about the changes in Japan.

In contrast to the negative reaction that the UPU pricing structure has drawn in the U.S., where many Oracle database users have complained publicly about what they consider to be exorbitant pricing that in some cases has led to project delays and cancellations, customers in Japan have responded positively to the new pricing, according to the Credit Suisse report.

"In Japan, the response has been generally positive to the new model, and we believe that scarcely anyone has refused to accept the new pricing," the report stated. "Some 70 percent of customers have found that switching to the new model is cheaper."

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