Oracle Goes Small with Database Appliance

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The new Oracle Database Appliance comes prepackaged with Oracle Database 11g and an ‘pay-as-you-grow’ model, a combination of technology and sales designed to make it easier for the channel to sell and small enterprises to buy. It’s also a reflection of the growing interest in future-proofing customer bases.

Oracle isn’t exactly known as “small-business friendly,” which is why its new Oracle Database Appliance is designed for “small and midsized enterprises,” or companies with 500 to 5,000 seats. Yet, the new appliance is a reflection of how large software and hardware vendors are paying closer attention to the midmarket for current and future sales.

Oracle made a big deal out of the release of the Oracle Database Appliance. It’s a bundle of software, servers, storage and networking in one neat 4U package. It includes an array of software ranging from OLTP to data warehouse application databases, making it productive virtually out of the box. The appliance doesn’t have an official price tag yet, but some estimate it will cost around $50,000.

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“Companies are spending tens of thousands of dollars and countless hours to buy, build and customize database solutions,” said Oracle senior vice president Andrew Mendelsohn. “With the Oracle Database Appliance, customers get the power of the world’s leading database in a highly-available system from a single vendor. We’ve taken the risk out of designing and deploying database infrastructures, which makes it ideal for small and midsize companies or enterprise departments that want higher availability for their application databases.”

To drive adoption, Oracle is offering this appliance on a “pay-as-you-grow” model. Enterprises can  add software and processor cores to the appliance to meet current and future needs. Oracle believes this will make it easier for small enterprises to acquire the Oracle Database Appliance and keep it serviceable over time.

Driving the sale and deployment of the Oracle Database Appliance will be Oracle’s channel partners. Oracle believes the packaging, add-on options for vertical and horizontal apps and pricing model will make the appliance easy for partners to sell and support.

“Oracle resellers want differentiated solutions that can be sold at volume. By combining a dramatically simpler user experience with pay-as-you-grow pricing, the Oracle Database Appliance plays well in this Oracle reseller sweet spot,” said Judson Althoff, senior vice president of worldwide alliances, channels and embedded sales at Oracle.

More details about the Oracle Database Appliance will be released at Oracle OpenWorld next month in San Francisco. What’s already clear is one of the intents behind this release: future proofing.

Oracle, IBM, Microsoft and other vendors are pushing new applications, hardware and bundled appliances to the midmarket and small business. Yes, the midmarket is at least equal or slightly bigger than the enterprise market, which makes the IT budgets there very attractive. But small businesses and midmarket enterprises have proven elusive to the large enterprise-oriented vendors. The creation of appliances such as the Oracle Database Appliance is a foot in the door for growth.

The growth, however, won’t just stop there. The model behind the Oracle Database Appliance shows that Oracle intends to stay with those companies as they grow into large enterprises. The “pay-as-you-grow” model makes it easier and more affordable for the target customer to add more capacity and features. Ultimately, it will provide a relatively easy transition to Oracle’s more advanced Exadata platform.

IBM is doing relatively the same thing with its Netezza business intelligence appliance. The midmarket packaging for that hardware/software package is designed to capture midmarket customers and keep them in the Big Blue fold.

And while Oracle calls the “pay-as-you-grow” model unique, it’s actually being employed by other hardware vendors to stimulate sales, capture market share and “futureproof” install bases. Brocade recently announced it was offering its switches and routers on a subscription plan, which will make them more affordable to smaller businesses.

Oracle is one of those brands that hasn’t had the greatest track record in down-market penetration. Yet, the midmarket is an increasingly attractive destination for big hardware and software vendors. The Oracle Database Appliance could be a catalyst for Oracle and partner growth in this segment.

* * *

Lawrence M. Walsh is CEO and president of The 2112 Group, a technology business advisory service that specializes in optimizing indirect channels and partner relationships. He’s also the executive director of the Channel Vanguard Council. He is the former publisher of Channel Insider and editor of VARBusiness Magazine. You can reach him at lmwalsh@the2112group.com.

On Twitter:
Larry Walsh:@lmwalsh2112 | Channelnomics: @channelnomics

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