Oracle to cut price on lower-end database

 Oracle plans to announce a price cut Tuesday for a lower-end version of its database, part of an effort to lure potential customers away from Microsoft’s SQL Server software, according to a source familiar with the plan.

The 10g version of Oracle’s Standard Edition One database, aimed at small and midsize companies, will be listed at $4,995, a $1,000 price drop, the source said. Oracle will also allow customers to run the software on up to two processors. Currently, Standard Edition One is for use on only single-processor machines.

Oracle is also considering adding limited RAC (Real Application Clusters) capabilities to the Standard Edition of its 10g database, which is also aimed at small and midsize businesses, for no additional charge, according to the source. The company has positioned the technology, which lets companies run their database across a group of servers, as an important differentiator from its competitors.

An Oracle spokeswoman declined to comment on any planned announcements. The company has invited media to a conference call Tuesday morning to discuss “10g-related topics.”

Oracle President Chuck Phillips alluded to the price cuts in a presentation to financial analysts last week. Having established itself as an ardent Linux supporter, the company is going to make more of an effort to promote its database on Windows in the hope of stealing some business from Microsoft, he said in a speech that was webcast from San Diego.

“This is the first time ever we’ve had the same list price per processor as Microsoft,” Phillips said, apparently preempting Tuesday’s announcement. Pricing for SQL Server 2000 starts at $4,999 per processor.

A Microsoft official said the company is not threatened by the planned pricing move.

“Lowering cost of ownership is not just about lowering the price per processor. What matters to customers are the long term costs associated with running a database like maintenance, support, staff overhead, training and completeness of functionality,” Tom Rizzo, director of product management for SQL Server, wrote in an e-mail response to questions.

It was unclear whether Oracle plans to announce any pricing changes to the higher-end versions of its database. Oracle 9i Enterprise Edition is priced at $40,000 per processor.

While Oracle’s database is known for performance and its ability to scale, the company has battled a reputation for complexity and high costs when compared to Microsoft, Phillips acknowledged in his speech. New ease of use features in Oracle 10g, combined with its pricing strategy, will help the company compete more effectively with Microsoft, he said.

Oracle’s Standard Edition One database was released in October. A few months earlier IBM also released a version of its database software for the midmarket. It retails for $499 for the base server package plus $99 per user, and is available for one- and two-processor systems.