Oracle Takes Aim At Hardware Competitors With Channel-Ready Database Appliance

Oracle on Wednesdady unveiled a turnkey database appliance -- its first appliance product offering -- in a bid to boost sales of the company's flagship database software and Sun Microsystems hardware to SMBs.

The new Oracle Database Appliance bundles Oracle Database 11g Release 2 (Enterprise Edition) software with Real Application Clusters technology and other Oracle software on a two-node, Intel-based Sun Fire server running Oracle Linux.

"We think this is going to be a huge hit with our reseller partners and ISV partners," said Judson Althoff, Oracle senior vice president of worldwide alliances and channels and embedded sales, in a phone interview with CRN. "There's no question this is the single biggest product launch we've done for the channel."

While the Oracle Database Appliance is a high-performance system with a starting pricetag just below $100,000, Althoff said it's designed for "the volume market" for companies with as few as 50 to 100 seats.

Althoff expected up to 90 percent of the product's sales to be through channel partners who can provide needed services and support, although Oracle also will offer the database appliance through its direct telemarketing operation.

"It's really the first of its kind that targets this end of the market," he said, describing it as an "engineered system" -- Oracle terminology for vertically integrated systems that combine Oracle software with Sun server technology. Althoff said the new appliance is positioned below the Oracle Exadata Database Machine, the company's high-end database server.

Channel partners see a range of market opportunities for the product. "This performs better than any rack cluster any customer has now," said John Ezzell, co-founder and executive vice-president of BIAS Corp., an Atlanta-based Oracle Platinum partner. Many customers today run database systems made up of "bolted together" hardware, database and storage technologies from multiple vendors. The Oracle Database Appliance "gives you a way to have everything contained in one box," Ezzell said.

The Pythian Group, an Ottawa, Ont.-based Oracle Platinum partner, provides consulting, implementation and systems administration services, particularly around high-end Oracle products such as Exadata and the Oracle Exalogic Elastic Cloud server. While Pythian is an authorized Oracle reseller, that hasn't been a top focus for the solution provider, said CTO Alex Gorbachev, given that sales cycles for Exadata and Exalogic are so long.

The Oracle Database Appliance could change that. "This database appliance is a very entry-level system," Gorbachev said. Because the new product can be sold at the departmental level, rather than require "C-level" executive approval, Pythian might increase its resell efforts.

Ever since Oracle acquired Sun Microsystems in January 2010 it has urged partners to sell more combined hardware-software systems to compete against hardware rivals such as Dell and Hewlett-Packard. And the Oracle Database Appliance could boost those efforts. "We feel this is going to put a lot of energy into our efforts to combine our hardware and software channels," Althoff said.

Next: The Threat To Hardware Competitors

Many customers today run older versions of the Oracle database, going back to releases 7 and 8, on aging hardware from Hewlett-Packard and other vendors, according to Ezzell at BIAS. Those are coming to the end of their lifespan, but businesses have held off upgrading because of the economy. The Oracle Database Appliance and its simple-to-install design will provide upgrade opportunities, he said. "It will be a nice addition to our product line."

Gorbachev at Pythian concurred. While the product's selling points include its simple installation, "one-button" software provisioning and automatic "phone home" service for hardware failures, Gorbachev said the system will generate plenty of database upgrade and data migration service opportunities. "This is definitely generating new project management work," he said.

Customers also can use the product to consolidate multiple databases onto a single platform, Althoff said. And because of its built-in storage capabilities, the product also will provide competition for such vendors as NetApp and EMC, Althoff said.

The CEO of an enterprise Oracle and HP partner, who did not want to be identified, views the new database appliance as a huge "strategic coup" for Oracle. He said his team will do an in-depth bakeoff to see just how the new Oracle appliance stacks up against HP servers and competing products from VMware, NetApp and EMC.

The CEO said the biggest challenge for Oracle may lie not with the product, but whether the company fires on all cylinders on the channel initiative around it. "Regardless of performance, it won't sell unless Oracle has the programs and commitment to drive a channel-friendly, margin-preserving business working in a cooperative model with the channel. It has to be a carrot versus a stick approach. You can't dictate to VARs the way many software companies do."

As for the ability to eat into HP server sales with the appliance, the solution provider CEO said the product comes just as HP is "vulnerable" because of a major strategic shift at the company emphasizing software and services. "Oracle is attacking and they are attacking at the right time," he said.

The Oracle Database Appliance, designed for both online transaction processing (OLTP) and data warehousing applications, offers the kind of performance and high-availability previously offered only on high-end systems, said Sohan DeMel, Oracle vice president of product strategy and business development, in an interview.

The starting price for the hardware is $50,000 while the starting price of the database software is $47,000, putting the entry price for the complete system at $97,000. Customers will be able to use existing Oracle database licenses on the appliance hardware, Althoff said.

Partners will require no specializations or certifications to carry the database appliance. Partners who resell the product will be eligible for the 3-percent software rebate and up to 8-percent hardware rebate Oracle began offering earlier this year under the Oracle PartnerNetwork (OPN) Incentive Program.

"This should be a fairly attractive product from a channel margin perspective," Althoff said. "We're really pulling out all the stops here to make this easy to sell."