Eye on Oracle

Oct 5 2011   8:12PM GMT

Should Oracle expand sub-capacity pricing?

Mark Fontecchio Mark Fontecchio Profile: Mark Fontecchio

One of the features of the new Oracle Database Appliance is that it offers sub-capacity pricing. That is, you don’t have to license the entire box if you’re not using it. You can just license those cores you are using, and increase that as your business grows. Presumably that affects the cost of the machine.

It’s an intriguing concept and one that has been around for a while in the IT world. IBM has been offering it on mainframes for more than a decade. With the Oracle Database Appliance, customers can scale from 2 to 24 processor cores. An Oracle employee told me today that Oracle will allow a customer to scale down once, and only once. As he put it, Oracle doesn’t want customers “playing games” with the sub-capacity feature, scaling up and down frequently during workload peaks and lulls to save money.

The Oracle Database Appliance is the first product where Oracle has offered sub-capacity pricing. The question then becomes: Should Oracle offer it elsewhere?

It’s a good question. Many very large organizations have unlimited license agreements with Oracle. They pay one (big) cost, and get all the licenses they need. So sub-capacity licensing doesn’t interest them. But in the midmarket, the small-to-medium (SMB) space, sub-capacity pricing could play well. And that is a market that Oracle hasn’t captured as much as other vendors, and where the Oracle Database Appliance plays.

The bottom line is that sub-capacity pricing is technically possible on any Oracle platform. The question remains whether Oracle CEO Larry Ellison wants to make that feature available on a wide range of platforms. On the plus side, offering it on other platforms might be a way for Oracle to grab more SMB customers. On the downside, it could mean not getting as much licensing revenue from those customers that they would otherwise get.

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