DBMS Competitive Landscape November 13, 2001 Dialin: 877-302-8255 Conf. Pin#: 6693619

2. DBMS Competitive Landscape November 13, 2001 Dialin: 877-302-8255 Conf. Pin#: 6693619

3. Jacqueline WoodsVice President Global Practices Oracle Corporation

4. Increasingly Oracle’s DBMS competitors are using price to infuse a tenor of fear, uncertainty and doubt (FUD) into negotiations with YOUR customers

5. In this presentation you will learn: • How to position Oracle’s products against competitors by integrating a compelling pricing and licensing story to “win” deals • Important details of each competitor’s pricing strategy and their respective pricing models • The weaknesses of each competitor and instructions on how to leverage their shortcomings during the sales cycle • Three principle types of buyers and their typical behavior when making purchasing decisions • How to dispel each buyer’s primary pricing issues by demystifying the competitor’s key messages about their products, their positioning and their pricing

6. Database Licensing - Observations • Through 2002/03, externalization of corporate information (e.g., self-service, virtual storefront, supply chain management) will cause an explosion in DBMS user volumes and fragmentation of user types • This fragmentation of user types is injecting overwhelming complexity into seat-based licensing models causing contract complexity, excessive cost per transaction and total cost of data management • The heightened complexity of managing IT environments will drive standardization and an increase in vendor imposed customer support requirements • Incremental DBMS demand for its users has virtually extinguished seat-based licensing in favor of server-based models • Both IBM & MS trying to commoditize the DBMS market

7. Microsoft Pricing Strategy • Integrate DB server with other enterprise software offerings (subsidizing DB to drive overall software sales) • Low cost leadership in databases with “good enough” functionality at each price point • Better functionality over time -- SQL Server 2000 • Surround the glass house and increase enterprise presence over time

8. Microsoft Licensing Strategy • Licenses can be purchased through: • Original Equipment Manufacturer (OEM) • Retail • Volume Licensing Programs • Open License 6.0 (5 licenses min.) • Select License 6.0 (250 licenses min.) • Enterprise Agreement 6.0 (250 licenses min., 3-year agreement term) • Enterprise Subscription Agreement 6.0 (250 licenses min., 3-year term, subscription-based) • Repurchase license with every new version release at “Upgrade” cost, or enroll in the new “Subscription” program Software Assurance • Discounting is based on number of products purchased and number of seats

9. Microsoft Pricing Model Pricing: Discounting: Strengths: Weaknesses: Opportunity: Threats: CPU or Seat based Volume discounting based upon # users Very price competitive Not enterprise or internet ready Backoffice CALs no longer cover SQL server For some customers price is only thing that matters irrespective of integration or scalability

10. MS Aggressively Targets Enterprise Market • MS SQL Server’s product offering is more comparable to Oracle9i SE offering • Oracle’s SE NU is equivalent to SQL Server 2K SE • MS announces new subscriber based support model and customers will not be able to get any other type of support • Microsoft SQL Server 2000SQL Server and 5 Client Access Licenses • $1,489 Lowest price offering • $5,000 (unlimited users) • Microsoft SQL Server 2000 EESQL Server Enterprise Editionand 25 Client Access Licenses • $11,099 • $20,000 (unlimited) Over the past 12 months MS has increased prices for SE and EE by 60% and 38%, respectively

11. What’s Next for Microsoft? Microsoft Licensing 6.0: • The new program, launched on October 1, 2001, favors a subscription-based licensing scheme • Main benefits are to customers who upgrade every two to three years and who purchase in large volume quantities • The further behind corporations are in their version releases, the more it will cost them to upgrade under 6.0 • BackOffice CAL no longer available • Core CAL no longer includes SQL Server; must be purchased separately A Giga survey of about 4500 IT professionals indicates that 80% anticipate their costs will increase due to MS’ new licensing model

12. IBM Pricing Strategy • Leverage hardware/database combination to shift pricing as needed • Attack Oracle at points of perceived weakness (e.g., higher base price on EE) • Low cost leadership in UNIX databases with “good enough” functionality at each price point • Lower than Oracle in Windows databases with added value compared to Microsoft

13. IBM Pricing Model Pricing: Discounting:Strengths: Weaknesses: CPU based - EE: $20,000 per CPU - EEE: $25,000 per CPU Suggested Volume Pricing (SVP) based on:- total contract value - number of CPUs - number of users Bundling of hardware of software products Options at additional cost over base price Opportunities: Threats: For smaller user populations such as for Data Warehousing, O9i is more competitive Customers claim no value add’l O9i features

14. IBM leverages brand equity to gain share and increase FUD • IBM positions EEE against Oracle EE w/partitioning option • IBM EE is 38% more than WE and both have unlimited users • MQ Series Workflow Option is $35K per CPU – no NU pricing • IBM Datalinks Manager is$8K per CPU • IBM DB2 Universal Database 7.2 • Workgroup Edition • 1 server install (1 named user) • $249 + $969 per install • Workgroup Unlimited Edition • 4 < CPUs (unlimited users) • $14,500 • Enterprise Edition • >5 CPUs • $20,000 per CPU • Extended Enterprise Edition • $25,000 per CPU Over the past 12 months IBM has increased prices for EE and EEE by 60% and 28%, respectively

15. Oracle Pricing Strategy • Attack MS and IBM on feature/function inadequacies • Bundle in key features to improve depth of product compared to both MS and IBM • Oracle only vendor that offers simple, scaleable and flexible pricing alternatives • Named User and CPU pricing on all technology products • Term licenses 2yr, 4yr and perpetual

16. Oracle Pricing Strategy • ISV Applications • Provide reasonable margins and offer embedded licenses (new FY2002) • Small/Medium Business • Parity pricing for Windows named users • Price/perf leadership for online service providers • Price/perf leadership on certified systems • No favoritism towards Linux • Large Enterprises • Maintain pricing umbrella in UNIX • Grow at the market rate for UNIX • Focus on mainframe migrations Oracle9i Database • Hardware Vendors • Provide good margins, but not leading margins, on certified systems

17. Oracle Pricing Focus • Highest value in performance, functionality, QoS at all price points Value Leadership: Processor Based Pricing: • Price based on # Processors of server • Consistent pricing across operating systems and platforms

18. Oracle Pricing Targets Target Markets by OS: • Leadership in UNIX and Windows markets • Participate in mainframe, Linux and embedded markets Target Channels: • Oracle Store • Direct and telesales force • Large ISVs and SIs • High growth ISVs • Online Service Providers • Certified system vendors (CPQ, Sun) • Not small resellers ($<10K per month)

19. Oracle Channel Pricing Strategy • Keep it simple • Top ISVs -- SAP, PeopleSoft • Consistent custom negotiated pricing contracts • Other ISVs • Standard product packaging • Special discount policies for all VADs/VARs • Special negotiated contracts for Online Service Providers and certified systems vendors • Reinforce policy of free software to developers

20. Technical Comparison with IBM IBM DB2 Oracle Database 3 products with 3 code bases: OS/390, AS/400 and Unix/NT/Linux. Compatibility problems. One product family built on one code base. Compatibility across all major hardware platforms. Shared nothing clusters don’t meet real-world needs. Limited high availability Real Application Clusters offer near-linear scaling of all apps out of the box. Availability increases with more nodes. WebSphere has no DB caching. All read requests go straight to the database. Makes DB2 slower Oracle9i App Server has database caching that can boost database performance by 3x or more Lacks advanced high availability features: accelerated failover, automated standby etc. Complete suite of failover, disaster recovery, and online maintenance solutions. Zero data loss. Zero down time Advanced security features: virtual private database, Label security, single sign-on, FIPS 140-2 certified. Minimal security capabilities. Poor Java support. Lacks platform-wide support. Hence, Poor internet application environment. Superior Java support. With Oracle JVM, develop once and deploy anywhere Limited partitioning options. Hence, Costly admin. and lower performance, scalability and availability. Hash, Range, List and Composite partitioning provide flexible deployment options across all platforms. With compressed stored bitmap index, less storage is required and data is processed faster. Hence, Oracle improves performance and cuts hardware costs Dynamic bitmap index uses extra CPU/memory and requires pre-built b-tree index. Limits performance and scalability

21. Technical Comparison with Microsoft Microsoft SQL Server 2000 Oracle Database Limited functionality on OLTP and Application Support Oracle provides Non-escalating row-level locking, and Multi-version read consistency Limited functionality with respect to Data Warehousing performance Historical Leader of DW performance Limited Database Security features Row-level access controls, Enterprise, User, & Role Mapping & Active Directory, Encryption capability inside the DB Lacks advanced high availability features: accelerated failover, automated standby etc. Transparent application failover, Partitioned Recovery, synchronous replication and Fast Start Fault Recovery Limited support on Operating systems. Support on NT only. Support on Unix, Linux, MVS, Win95/NT, and many more Oracle Internet Directory is fully LDAP v3 compliant and RDBMS-based. It is fully scalable for enterprise/extranet needs, and/or utilities for high-speed bulk operations. Microsoft Directory is an isolated component - works only in a Microsoft environment. Oracle provides JVM, SQLJ, and Java support for shared, read-only object memories (performance gains). Limited JAVA Support if any Limited Integrated Multi Media Support Provides Text, Audio, Video, Image, Spatial as an Integrated Multi Media Support offering.

22. Putting it all together – Moving from the Sellers to the Buyers • Recognizing the 3 primary types of buyers and adjusting the “pricing pitch” to accommodate their needs • Price Buyers • Loyalty Buyers • Value Buyers Loyalty Buyers Value Buyers Price Buyers Product Lifecycle Growth Mature Decline

23. Putting it all together – Price Buyers • Price Buyers • Typically large companies with resources to qualify multiple buyers and want to purchase at the lowest price • Not willing to pay for incremental product value beyond their identified specifications • Unwilling to pay for intrinsic benefits that accompany long term relations with suppliers • Negotiation Tactics • Difficult to negotiate with price buyers but sales person needs to refocus attention on Oracle9i’s value • Increase customer’s willingness to pay by proving that added value is cost justified (O9i security features protect against DB corruptions, loss of data, etc.) • Mission Critical apps no guarantees with MS or IBM

24. Putting it all together – Loyalty Buyers • Loyalty Buyers • Value consistent product quality and performance • Customer wants their trusted suppliers to continue providing it • Loyalty is driven fundamentally by the risk and uncertainty associated with unproven/untested suppliers • Critical implications of inadequate performance outweigh the benefit of a lower price in the short term • Negotiation Tactics • Fortify the relationship with the loyal customer by focusing attention on past performance and deficiencies of competition • Stress the impact of inferior MS and IBM performance such as MS’ limited scalability as well as SQL Server 2000’s shortcomings in OLTP and application support • Emphasize compatibility issues that continue to haunt IBM due to multiple code bases which make integration challenging

25. Putting it all together – Value Buyers • Value Buyers • Largest group of buyers seeking neither highest quality nor the cheapest price • They weigh attributes and analyze trade-offs, buying the product offering with the highest utility given the price • Product qualities and added features hold no significance until they are valued by the customer • Negotiation Tactics • Convince value buyers that they cannot run their businesses without the added features of Oracle9i and Oracle9iAS (examples illustrated on the next 3 slides) • Provide your customer a clear understanding of how Oracle9i can save them money in the long run (see TCO calculators end of presentation)

26. More Facts to Help you Blow Past the Competition • In a recent survey of large US companies, IDC found that availability and security are their top two priorities. • According to the Standish Group, downtime costs anywhere from $2,500- $10,000 per minute. Even for business providing 99.9% uptime, this could be costing over $5 million per year. • Gartner Group claims over 60% of businesses do not have a basic plan to mediate the effects of a disaster, should one occur. • Neither MS nor IBM provides what Oracle can • Get system protection by using Oracle9i Real Application Clusters • Ensure storage protection with Oracle9i Database's Recovery Manager and Data Guard features site protection with Oracle9i Database's Data Guard feature • Manage self service error recovery with Oracle9i Database's Flashback Query feature • Yield near-elimination of planned downtime maintenance operations using Oracle9i Database

27. Oracle vs. IBM Product Comparison Oracle Standard Edition IBM DB2 Workgroup Edition DBMS Queuing Workflow Files Total $60,000 included included included $60,000 $58,000 $7,200 $140,000 $32,000 $237,200 Cost comparison between Oracle 9i Standard Edition and IBM DB2 Workgroup Edition on a 4-way 700 MHz Netfinity 7100 Source: IBM price list Interesting

28. Oracle vs. IBM Product Comparison Oracle Enterprise Edition IBM DB2 Enterprise Edition DBMS Queuing Workflow Files Total $160,000 included included included $160,000 $80,000 $7,200 $140,000 $32,000 $259,200 Cost comparison between Oracle 9i Enterprise Edition andIBM DB2 Enterprise Edition on a 4-way 700 MHz Netfinity 7100 Source: IBM price list

29. IBM Websphere over 7x Oracle9iAS EE Oracle9iAS Enterprise Edition IBM Websphere $80,000 included included Included Included Included $80,000 $140,000 $32,000 Not Available Not Available $272,000 $140,000 $584,000 Application Server Cache Reporting Ad-hoc Query Portal Workflow Total Cost comparison between Oracle iAS Enterprise Edition and IBM Websphere Enterprise Edition on a 4-way 700 MHz Netfinity 7100 Source: IBM price list

30. Value Proposition of DB Vendors Value Price

31. IBM-Oracle DB Cost Calculator

32. Microsoft-Oracle DB Cost Calculator

33. Location of TCO Calculators • http://partner.oracle.com • Sales • Pricing • Competitive Comparison Tools