Oracle Offers New Licensing ModelBy Scott Ferguson | Posted 2006-12-19 Email Print
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The IT giant is offering four new pricing models that it claims will help simply the processes its customers use to select and buy its numerous enterprise applications.
Oracle wants to make its pricing model easier to handle.
The Redwood Shores, Calif., company announced its new pricing model on Dec. 19, one day after posting a 26 percent revenue gain during its second fiscal quarter. Oracle also announced that its profits grew 21 percent compared with the same period last year.
In offering a streamlined pricing guide, Oracle is trying to clarify the numerous licensing metrics it has inherited during a nearly three-year buying spree.
"With a number of pre-existing and newly acquired products, each with its own licensing metrics, Oracle's new simplified licensing model creates consistency across all product lines," said a statement released by the company.
Some of the company's product that will be affected by the new pricing structure include applications such as PeopleSoft, JD Edwards, Siebel and the Oracle E-Business Suite.
During its current buying spree, Oracle has continued to offer support for the applications the company has acquired. The company's purchases have tended to focus on acquiring vertical offerings, especially in those areas where there is a growth market and where Oracle feels it can gain market share at the expense of its rival SAP.
Under the new pricing and licensing guidelines, Oracle's users can select from four different models.
The first model is what Oracle calls a Component Model, which offers "a la carte," or on-demand, pricing. The second is a Custom Application Suite model, which allows users to create a customized bundle of applications based on a company's needs.
The third is the Enterprise Application Model, which will use metrics such as company revenue or number of employees to set a price. This model also provides unlimited application usage.
The fourth pricing model, the SMB model, targets small and midsize businesses, which Oracle defines as businesses that produce less than $100 million in annual revenue. In addition to pricing based on revenue, this model provides partner support.
Oracle also is offering a so-called flexible pricing model for those applications that have already released. Customers can either use the old or new pricing models for these applications. New products and applications will be offered only through the updated pricing model, company officials said.
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