Oracle lowers its price by 50 percent

Associated Press

REDWOOD SHORES, Calif. — Oracle Corp. slashed the price on its database software by about 50 percent yesterday in an effort to thwart recent marketing advances by its rivals, IBM Corp. and Microsoft Corp.

The price cut comes amid growing concerns that Oracle has been losing business in its biggest market under a 1-year-old pricing formula that charged customers more for database software as their computer processors became more powerful.

With yesterday's switch, a customer that paid $326,000 for Oracle's main database product a month ago would pay $160,000 under the new plan, said industry analyst Betsy Burton of the Gartner Group.

"This is the right thing for Oracle to do. It moves Oracle into a better position with its customers," Burton said.

In recent months, both IBM and Microsoft have been emphasizing the lower prices of their database products, and industry analysts said the message seemed to be resonating with increasingly budget-conscious corporate customers.

Redwood Shores-based Oracle consistently argued that the superior technology of its database made it cheaper to operate in the long run, but the company decided to put its lower prices in more straightforward terms, CEO Larry Ellison said yesterday.

"We think IBM and Microsoft will cease to be important components in the marketplace," Ellison told a crowd of analysts, media and Oracle employees.

At the end of 2000, Oracle held a 33.8 percent share of the database market, followed by IBM at 30.8 percent and Microsoft at 14.9 percent, according to the Gartner Group.