IBM to slash some database prices

By Lisa Baertlein

PALO ALTO, California: International Business Machines Corp. on Thursday said it would slash the price on the new version of its database for mid-size companies and simplify pricing on its updated high-end database. The new software is expected to be available from November 21, a company spokeswoman told Reuters.

The new price for Big Blue's entry-level DB2 Workgroup Server Unlimited Edition database will be $7,500 per processor, 46 percent lower than the $14,000 per processor price on the current version. That database -- often used by companies with fewer than 1,000 employees -- also is referred to as DB2 standard edition.

IBM also said it has merged two high-end database products -- DB2 Enterprise Edition and DB2 Extended Enterprise Edition -- and simplified its pricing structure for the new, combined product. First Albany Corp. analysts on Thursday predicted that IBM's moves would put more pressure on key rival Oracle Corp. "This will take DB2 back to a 2-to-1 price advantage versus Oracle Standard Edition, which sells for $15,000 per CPU," the analysts said.

Price per CPU, or central processing unit, is pricing based on the number microprocessors used by a database customer. An Oracle spokeswoman said the CPU pricing mentioned in the First Albany report is correct, but noted that Oracle customers may also be eligible for per-user pricing that may be more cost-effective.

Oracle's flagship database product is widely seen as best-in-class, but the First Albany analysts said they see that technology lead slipping. "We think improvements being made to IBM DB2 and Microsoft SQL Server are steadily eroding the technical advantages currently held by Oracle and marching the database industry toward undifferentiated competency among the three major players," they said.

On other fronts, IBM announced earlier this week that it would offer cheap financing terms to large and medium-sized companies in an effort to spur technology sales.

IBM's purchase of database company Informix in April 2001 helped make it the No. 1 database software provider in terms of revenue, unseating long-time king Oracle, according to Gartner Inc. research unit Dataquest. Last summer, spurred by demand for lower-priced databases and competition from IBM and Microsoft Corp., Oracle began selling a stripped-down version of its high-end flagship database. That product is called Oracle Standard Edition.

And earlier this year Oracle published its pricing policies on the Web in an effort to give customers additional information. Gartner Research Director Frank DeSalvo said the rivals' efforts to lower prices and simplify the purchasing process is generally good for database software buyers.

But every sale is subject to negotiation, he said, particularly as software makers battle a lingering corporate spending slump. "There's a whole lot of difference between street price and list price," DeSalvo said. At the end of the day, he added, a vendor's goal is to win the most sales and dominate the database market. "There's not a lot of business ... The game right now is market share gain," DeSalvo said.






(C) Reuters Ltd.