Ellison sees new software pricing model

SAN FRANCISCO — The model of pricing enterprise software on a per-processor basis should be replaced with a flat annual fee that allows businesses to use as much software as they want, Oracle Corp.’s chairman and chief executive officer Larry Ellison said Tuesday.

“It becomes very hard to count processors and to count users,” Ellison said, responding to a question on the future of software pricing at the OracleWorld show. “Where I think we’ll go is towards enterprise licensing. … You pay an annual recurring fee and use as much software as you want, and I think that’s a much more sensible model to use.”

A few of Oracle’s large customers already pay for their software in this way, according to Ellison. He didn’t say whether Oracle might adopt such a system more widely any time soon.

Some analysts have predicted the demise of per-processor pricing. Chip makers such as Sun Microsystems Inc. and IBM Corp. are developing chips with multiple processor cores, making it harder to define what constitutes one processor. The grid computing model, in which applications are shifted around a network to where computing resources are available, adds to the complexity.

Separately, the Oracle chief said his company would release pricing next week for Oracle’s grid-enabled Oracle 10g software, which was announced here this week.

In a wide-ranging discussion with reporters, Ellison also reaffirmed his company’s commitment to acquiring PeopleSoft Inc. “We’re very determined to complete this acquisition, and we’re very patient,” he said.

Oracle said last week that about 38.7 million shares had been tendered by PeopleSoft shareholders, up only slightly from 37.7 million a month earlier and still far short of its control target.

Ellison also predicted further consolidation in the software industry. Asked about application server vendor BEA Systems Inc., which reportedly has been in Oracle’s acquisition sights, Ellison predicted the company would be acquired within “a couple of years.”

Oracle isn’t interested at present, however, because BEA is “too expensive,” Ellison said. BEA’s stock closed Wednesday at $14.08, about $1.50 off its 52-week high.