By Don Clark
Oracle Corp. Chairman Larry Ellison has been competing against
rival computer makers based on performance. His new weapon is
price.
The billionaire software entrepreneur unveiled new server
hardware Wednesday that he said is roughly half the price of
comparable machines sold by Cisco Systems Inc. and others--and is
considerably faster.
Oracle said the refrigerator-sized system would allow the
company for the first time to go after a much broader audience of
server buyers, rather than focus on customers who need extra
computing speed for jobs like sifting through large databases.
"We've never really competed for the data-center core," Mr.
Ellison said at an event in Redwood Shores, Calif. "Now we have a
new strategy."
The server market is one of the most intensely competitive parts
of the technology industry. Many manufacturers now offer systems
that are largely interchangeable, in part because they use
compatible chips from Intel Corp. or Advanced Micro Devices
Inc.
Mr. Ellison said the company's prior machines frequently
translated into lower operating costs for customers, but customers
fixated on the upfront price to buy cookie-cutter style servers
that are purchased in the hundreds or thousands of dollars by some
companies. To appeal to those customers, he said, Oracle for the
first time opted to create a bundle that acts like a rack of such
simple servers and other necessary components--and to offer the
combination at a lower price.
The new system, part of the fifth generation of what Oracle
calls its "engineered systems" product line, incorporates data
storage and networking features along with the equivalent of 27
individual servers, each containing two Intel Xeon processor chips.
It costs about $562,000, Mr. Ellison said, compared with $912,000
for a system based on components from Cisco and EMC Corp. as part
of a joint venture between those companies.
Oracle's new hardware is the latest outgrowth of the software
company's 2010 acquisition of Sun Microsystems Inc., a $7.4 billion
deal that so far has mostly been a negative factor on Oracle's
income statement. In December, however, Oracle reported that
hardware revenue rose 14% to $1.3 billion in the quarter ended Nov.
30.
The company tries to differentiate itself in the server market
by tailoring its hardware to work with specific combinations of
Oracle software--and adapting its programs to exploit unique
features of the machines.
Besides the general-purpose server line, Mr. Ellison unveiled a
series of other machines that are tailored for specific
applications. In each case, he stressed a combination of
performance advantages over competitors as well as aggressive
pricing.
"You pay half as much, but you have to be willing to go twice as
fast," Mr. Ellison joked about one system.
Write to Don Clark at don.clark@wsj.com
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