Oracle's Ellison calls new database "Holy Grail"

REDWOOD SHORES: Oracle Corp., which owns the biggest piece of the world's

$8.8 billion database software market, fueled the red-hot industry war with its

latest release on Thursday.

"We're cheaper, we're faster, we're more reliable, we have more

features," Larry Ellison, Oracle's outspoken founder and chief executive,

said during the product launch of its new 9i database at the company's Oz-like

Silicon Valley headquarters.

The software giant has comfortably held the No. 1 spot in terms of overall

database market share for several years. It extended that lead in 2000 and vows

to repeat the performance this year with 9i.

"Internally, the code name for 9i is 'the last database' ... We think

we're going to gain a huge amount of market share," said Ellison, who added

that the company also was changing its database pricing structure and offering

9i at a lower cost to users.

Oracle's new database comes as industry and financial analysts increasingly

are noting that International Business Machines Corp. and Microsoft Corp. are

inflicting price pressure and making gains in Oracle-dominated territory.

What's more, that once-solid ground is shifting under Oracle's feet as its

flagship database business - which contributed about three-fourths of the

company's total fiscal 2000 revenues of $10.1 billion - is being pinched by

corporate America's move to cut tech spending as the economy slows.

Performance enhancement



During the debut of 9i, Ellison gave equal time to the shortcomings of his
competitors and 9i's new key feature - clustering. Clustering enables users to

tie servers together so they can handle more transactions and data volume

without slowing substantially or failing.

"This is the Holy Grail of the database business," Ellison said

during his speech at Oracle's home in Redwood Shores, California. While IBM does

clustering well on mainframes, he said, IBM and Microsoft have fallen down on

the UNIX and Windows NT platforms.

"Microsoft and IBM have to start over now if they want to catch

us," said Ellison, who added that 9i's new enhancements will allow Oracle

to go after customers who have stuck with mainframe systems because of their

stability and reliability.

What's best? it depends



Betsy Burton, a vice president at technology research firm Gartner Inc. , said
some of the market share gains by IBM and Microsoft in 2000 were the result of

users' willingness to give up some of Oracle's functionality in favor of its

rivals' lower prices.

But independent analyst Philip Russom disagreed. The database markets for

UNIX, Windows NT and mainframe, are "different kingdoms," he said.

"Users tend to make decisions based on technology and features, not price.

Sometimes, it's some funny little feature that decides the sale," said

Russom, who is based in Waltham, Massachusetts.

That helps explain how little known Progress Software Corp. wins deals with

small to medium-sized manufacturers. It's also why several large media companies

favor Informix's old-style object database and why Sybase Inc. , a former

database powerhouse, remains a strong contender for deals with high-end

financial service companies, Russom said.

"They don't choose databases in a vacuum. Businesses will decide there's

a certain application they have to have. They buy whatever they have to have to

get that application running," he said.

Burden of proof on oracle



Despite the self-heralded release, company rivals and analysts had mixed
responses to Oracle's new offering. "The burden of proof still remains with

Oracle," said Jeff Jones, director of marketing for IBM data management

solutions.

"With the position they're taking, we feel like they're playing

catch-up," said Jeff Ressler, lead product manager for Microsoft's SQL

Server, which rivals Oracle on the Windows NT platform.

"This is a good feature enhancement .... It's not something that will

dramatically change Oracle's position in the marketplace," said Gartner's

Burton. Independent analyst Richard Winter, who attended Thursday's launch,

differed.

"I think it's a big step forward," said Winters, who added that

IBM's DB2 Universal Database in UNIX is not as robust or mature as Oracle's

database, which dominates that segment. In addition to clustering, Winters said,

Oracle has rolled other business-friendly features into 9i, including analytical

processing and data mining.

Merrill Lynch software analyst Chris Shilakes said in a recent client note

that those additions will help the company maintain its lead position in the

increasingly competitive database segment. On that point, Burton concurred.

"At a time when Oracle could be resting on its laurels, it's not," she

said.

(C) Reuters Limited 2001.