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

Oracle Internal Confidential

YOUR
Oracle Internal Confidential

 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
Oracle Internal Confidential

 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
Oracle Internal Confidential

 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
Oracle Internal Confidential

 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
Oracle Internal Confidential

Pricing: CPU or Seat based
Discounting: Volume discounting based upon # users
Strengths: Very price competitive
Weaknesses: Not enterprise or internet ready
Opportunity: Backoffice CALs no longer cover SQL server
Threats:
For some customers price is only thing that matters irrespective of integration or scalability
Oracle Internal Confidential

Microsoft SQL Server 2000
SQL Server and 5 Client Access
Licenses
$1,489 Lowest price offering
$5,000 (unlimited users)
Microsoft SQL Server 2000 EE
SQL Server Enterprise Edition and 25 Client Access Licenses
$11,099
$20,000 (unlimited)
 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
Over the past 12 months MS has increased prices for SE and EE by 60% and 38%, respectively
Oracle Internal Confidential

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
Oracle Internal Confidential

 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
Oracle Internal Confidential

Pricing:
Discounting:
Strengths:
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
Weaknesses:
Opportunities:
Threats:
Options at additional cost over base price
For smaller user populations such as for Data
Warehousing, O9i is more competitive
Customers claim no value add’l O9i features
Oracle Internal Confidential

FUD
IBM DB2 Universal Database 7.2
Workgroup 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
 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
Over the past 12 months IBM has increased prices for EE and EEE by 60% and 28%, respectively
Oracle Internal Confidential

 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
Oracle Internal Confidential

ISV Applications
• Provide reasonable margins and offer embedded licenses (new FY2002)
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
Oracle9 i
Database
Hardware Vendors
• Provide good margins, but not leading margins, on certified systems
Large Enterprises
• Maintain pricing umbrella in UNIX
• Grow at the market rate for UNIX
• Focus on mainframe migrations
Oracle Internal Confidential

Value  Highest value in performance, functionality,
Leadership: QoS at all price points
Processor
Based Pricing:
 Price based on # Processors of server
 Consistent pricing across operating systems and platforms
Oracle Internal Confidential

Target Markets by OS:
Target
Channels:
 Leadership in UNIX and Windows markets
 Participate in mainframe, Linux and embedded markets
 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)
Oracle Internal Confidential

 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 Internal Confidential

DB2
3 products with 3 code bases: OS/390, AS/400 and
Unix/NT/Linux.
Compatibility problems
.
Shared nothing clusters don’t meet real-world needs.
Limited high availability
WebSphere has no DB caching. All read requests go straight to the database.
Makes DB2 slower
Lacks advanced high availability features: accelerated failover, automated standby etc.
Minimal security capabilities.
Poor Java support. Lacks platform-wide support.
Hence, Poor internet application environment.
One product family built on one code base. Compatibility across all major hardware platforms.
Real Application Clusters offer near-linear scaling of all apps out of the box.
Availability increases with more nodes.
Oracle9 i App Server has database caching that can boost database performance by 3x or more
Complete suite of failover, disaster recovery, and online maintenance solutions.
Zero data loss. Zero down time
Advanced security features: virtual private database, Label security, single sign-on, FIPS 140-2 certified.
Superior Java support. deploy anywhere
With Oracle JVM, develop once and
Limited partitioning options. Hence, Costly admin. and lower performance, scalability and availability.
Hash, Range, List and Composite partitioning provide flexible deployment options across all platforms.
Dynamic bitmap index uses extra CPU/memory and requires pre-built b-tree index. and scalability
Limits performance
With compressed stored bitmap index, less storage is required and data is processed faster. Hence, Oracle improves performance and cuts hardware costs
Oracle Internal Confidential

SQL Server 2000
Limited functionality on OLTP and Application
Support
Limited functionality with respect to Data
Warehousing performance
Limited Database Security features
Lacks advanced high availability features: accelerated failover, automated standby etc.
Limited support on Operating systems. Support on NT only.
Microsoft Directory is an isolated component works only in a Microsoft environment.
Oracle provides Non-escalating row-level locking, and Multiversion read consistency
Historical Leader of DW performance
Row-level access controls, Enterprise, User, & Role Mapping
& Active Directory, Encryption capability inside the DB
Transparent application failover, Partitioned Recovery, synchronous replication and Fast Start Fault Recovery
Support on Unix, Linux, MVS, Win95/NT, and many more
Limited JAVA Support if any
Limited Integrated Multi Media Support
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.
Oracle provides JVM, SQLJ, and Java support for shared, read-only object memories (performance gains).
Provides Text, Audio, Video, Image, Spatial as an Integrated
Multi Media Support offering.
Oracle Internal Confidential


 Price Buyers


Loyalty Buyers
Value Buyers
Growth Mature Decline
Oracle Internal Confidential


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

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
Oracle Internal Confidential


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

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
Oracle Internal Confidential


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

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)
Oracle Internal Confidential


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
Oracle Internal Confidential

DBMS
Queuing
Workflow
Files
Total
Oracle
Standard Edition
$60,000 included included included
$60,000
Cost comparison between Oracle 9i Standard Edition and
IBM DB2 Workgroup Edition on a 4-way 700 MHz Netfinity 7100
Source: IBM price list
Interesting
IBM DB2
Workgroup Edition
$58,000
$7,200
$140,000
$32,000
$237,200
Oracle Internal Confidential

DBMS
Queuing
Workflow
Files
Total
Oracle
Enterprise Edition
$160,000 included included included
$160,000
Cost comparison between Oracle 9i Enterprise Edition and
IBM DB2 Enterprise Edition on a 4-way 700 MHz Netfinity 7100
Source: IBM price list
IBM DB2
Enterprise Edition
$80,000
$7,200
$140,000
$32,000
$259,200
Oracle Internal Confidential

Application Server
Cache
Reporting
Ad-hoc Query
Portal
Workflow
Oracle9iAS
Enterprise Edition
$80,000 included included
Included
Included
Included
IBM
Websphere
$140,000
$32,000
Not Available
Not Available
$272,000
$140,000
Total $80,000 $584,000
Cost comparison between Oracle iAS Enterprise Edition and IBM
Websphere Enterprise Edition on a 4-way 700 MHz Netfinity 7100
Source: IBM price list
Oracle Internal Confidential

Value
IBM
Microsoft
Oracle
$ $$
Price
$$$ $$$$
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Oracle Internal Confidential

Oracle Internal Confidential


–
 Pricing
- Competitive Comparison Tools
Oracle Internal Confidential