Oracle takes aim at Microsoft Exchange

On the surface, the theme of Oracle’s user conference in San Francisco in November looked contradictory: the total cost of owning Oracle products is lower than going with Microsoft, and switching from Oracle will save IT buyers money. Even the choice of the band for a party for attendees was on message: Cheap Trick.

Central to making that plausible was the release of Oracle Collaboration Suite, a product aimed at the mature personal productivity market, where it will compete squarely against Microsoft’s Outlook


Company: Oracle

HQ: Redwood City, California

Main activity: Database management software

Last full-year revenue: $9.7 billion

Last full-year net income: $2.2 billion

Key issue: With its database sales in decline, Oracle is extending its reach into new personal productivity software. But its Collaboration Suite faces the might of Microsoft and IBM in this mature sector and will need to undercut MS Exchange and IBM’s Lotus Notes on price by a large margin in order to make any headway.



and Exchange combination, as well as IBM’s Lotus Notes and Domino offerings.

However low cost, the scale of the challenge facing Oracle is steep. Microsoft has 88 million server seats for Outlook/Exchange and IBM 74 million for Notes/Domino, according to IDC.

But bare market statistics only tell part of the story. The launch of Collaboration Suite has evoked memories of Oracle Office and Oracle InterOffice, the company’s ill-fated attempt to take on Microsoft in the 1990s in its lucrative office applications market franchise.

For Oracle to make any headway with Collaboration Suite, it will have to launch a most persuasive sales and marketing campaign. But such challenges rarely trouble Oracle CEO and a consummate showman Larry Ellison.

Collaboration Suite is designed to leverage the Oracle database as a unified data store, he says, seeking to solve a problem that Microsoft chairman and chief software architect Bill Gates has repeatedly highlighted. “Bill is a genius,” says Ellison. “We owe it all to him. We did exactly what he said we should do.”

The problem to which Ellison refers happens to be a problem that has plagued the IT industry for many years: how to convert data into useful information. Oracle’s answer is to store corporate data in a single database, where it can be easily and cheaply managed, and then deploy the database on clusters of cheap servers capable of handling big workloads and user populations.

For Collaboration Suite, Oracle also added web services interfaces, such as SOAP (Simple Object Access Protocol) and XML, to link it with other enterprise data sources and applications.

Although the product supports the Outlook client as well as Oracle’s own email application, the company is aiming Collaboration Suite squarely at Exchange. Ellison claims that Collaboration Suite licence costs are less than half of Microsoft’s rival product, and claims that Oracle can capitalise on what he sees as three major drawbacks to being a Microsoft customer.

First, there is Microsoft’s new licensing scheme, Software Assurance, which threatens to push up fees for most users. Second, he claims that Microsoft’s Exchange server is insecure and prone to failure, which increases support costs.

Finally, he believes that Microsoft’s plan to discontinue support for Exchange 5.5 in mid-2003 – when it releases the next version of Exchange, code-named Titanium – is a big mistake that will alienate many users.

Research commissioned by Oracle suggests that migrating from Exchange 5.5 to Exchange 2000, the current version, costs as much as $100 per mailbox for companies with more than 1,000 seats. In a bid to capitalise on that, Oracle’s consulting business is offering migration services to help users shift from Exchange 5.5 to Oracle Collaboration Suite for about $30 per mailbox. Microsoft, of course, disputes Oracle’s figures.

At a higher level, winning over Microsoft users has become even more important for Oracle, which suffered a 23% fall in new licence sales during its last quarter, partly as a result of intensified competition from Microsoft and IBM in its core database market.

But if Oracle is to break through, it needs to do so quickly – Microsoft is planning to base post-Titanium versions of Exchange on its .Net web services technology, which could make it harder for users to switch suppliers.

Nevertheless, Oracle executives believe an opportunity has opened up. “A lot of customers are very upset with Microsoft,” says Mark Jarvis, Oracle’s chief marketing officer. For cash-strapped CIOs and IT directors, it should at least offer the opportunity to try and turn the tables on their suppliers and negotiate better prices for email and collaboration software.

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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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