IBM to slash database price by half


1 November 2002 Systems giant IBM is to cut the price of its entry-level database software by half, according to analysts at investment bank First Albany.

The new price of IBM’s DB2 Standard Edition database software will be $7,500 per processor, 46% lower than the current $14,000 per processor price of the product. The cut will restore the price differential between DB2 and the equivalent database from rival Oracle, which costs $15,000 per processor.

DB2 Standard Edition is typically used by companies with less than 1,000 employees. First Albany expects IBM to announce the cut when it launches a new high-end database product later in the month. This new product will consolidate the DB2 Enterprise Edition and DB2 Extended Enterprise Edition products into one package.

Investment bank First Albany Companies said IBM’s move could put more pressure on database software giant Oracle. “We think improvements being made to IBM DB2 and Microsoft SQL Server are steadily eroding the technical advantages currently held by Oracle,” First Albany analysts told Reuters.

They claimed that databases have become commodity with users perceiving little functional difference between the leading three products.

IBM overtook Oracle in 2001 as the largest database software vendor in the world with a market share of 34.6%, according to analysts at Gartner Dataquest. This was largely the result of IBM’s 2001 acquisition of Informix’s database division, which accounted for about 3% of the global market.

Meanwhile, IBM CEO Sam Palmisano, and newly elected chairman, presented his vision for the company’s future in his first big public strategy announcement since taking over from Louis Gerstner in March 2002.

At the heart of IBM’s vision is computing on demand, where companies buy computing power in the same way that they purchase electricity. To deliver this and other new technologies, Palmisano said IBM will invest $10 billion (€10.1bn) in research and development and acquisitions.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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