OpenWorld: Ellison goes for IBM, Microsoft

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By James Niccolai

SAN FRANCISCO, California (IDG) -- If Microsoft and IBM didn't hate Larry Ellison already, they might now.

The Oracle chairman and CEO offered an hour-long diatribe against his two biggest rivals at Oracle OpenWorld, which closed on Friday. He criticized the companies' software, saying it's slower and less secure than Oracle's, and added a new dimension to his usual spin: IBM and Microsoft are also more expensive.

"Despite what everyone says, our software is actually cheaper," Ellison told the crowd here.

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For example, he said users would have to pay $140,000 for a 500-user license for Microsoft Exchange running on a four-CPU server, citing what he said are Microsoft's published prices. Oracle can offer customers an e-mail server for the same number of users on the same hardware for $80,000, he said, because the Oracle9i database comes bundled with an e-mail server.

Turning to IBM, he said a user would have to pay $272,000 for the software sold by IBM to build a portal for 25 users. On the other hand, Oracle bundles portal software with its application server, so users could build a similar portal using Oracle's software for $40,000, he maintained.

IBM could not be reached immediately for comment, but Microsoft contested Ellison's math.

"It's ironic to hear Larry claim they are price leaders in anything," said Stan Sorensen, Microsoft's director of enterprise server marketing.

The enterprise edition of Microsoft Exchange is priced at $4,000 per server, and then about $60 per desktop, according to Sorensen. The price of the software does not change with the number of CPUs being used, so the system Ellison described could easily be had for less than $40,000, he said.

"If you're paying $140,000 for the system from us, then someone has sold you something you don't need," Sorensen said.

Some users here who watched Ellison's presentation also were skeptical.

"It seems too good to be true," said Boon Lim, an Oracle database administrator at ePolicy, a Los Angeles-based online insurance company. Microsoft Exchange features several back-end administrative features built in that may not be available from Oracle's e-mail server, Lim said.

"Notice [Ellison] didn't say anything about SQL Server pricing," he added, referring to Microsoft's own database, which competes with Oracle9i.

Boon said his company currently uses a version of Oracle8i. The features in Oracle9i touted by Oracle wouldn't entice him to upgrade before the company issues a second release of the product, which is due early next year. "If you do [upgrade] now, you're basically a beta tester for Oracle, helping them clear out all the bugs," he said.

"My concern with Oracle is, how much does it cost to use all of this?" said Donald Smith, a computer specialist in the IT management branch of the National Eye Institute, in Bethesda, Maryland, who also watched Ellison's speech. The Oracle9i database and application server are "inclusive and well-packaged," he said, but hiring staff who can figure out how to use all the features could prove expensive, he said.

Andrew Brousseau, a managing director at SG Cowen Securities, said performance benchmarks highlighted by Ellison for Oracle's database and application server looked impressive, but he wondered how many customers use the software for the types of applications tested.

"The benchmarks do look better, but you wonder how many customers they really apply to," he said. "Do many people need to run 4,000 transactions per second?"

Ellison maintained that customers would do better if they stopped using software from Microsoft, IBM and their respective independent software vendor partners and switched to an Oracle stack composed of its database, application server and business applications. He cited a series of benchmark tests intended to show that Oracle's application server runs faster than those of IBM and BEA Systems, and also said that Oracle's software is "unbreakable" when used in clustered configurations.