commentary SQL Server 2005 will cost more but why aren't customers complaining?
Something didn't feel right when Microsoft seemingly volunteered itself to more product scrutiny. In February, the company hinted it might make the source code for SQL Server available to a select few.
| "But even with the hike, Microsoft is unlikely to face much backlash. IBM and Oracle are still more expensive." |
However, Rizzo was non-committal when pressed further on details. "It's not finalised. But if a lot of customers demand it, we'll definitely look at doing shared source with SQL Server," he said. The next day Microsoft took the covers off an improved SQL Server 2005. Availability is expected by the first half of 2005, Rizzo said.
SQL Server 2005 will come in four editions with a variety of new features: the free Express version, Workgroup (aimed at small businesses), Standard, and Enterprise.
At first glance, the most eye-catching offering is Express and the low-priced Workgroup. Rizzo said this cheaper variety would allow Microsoft to compete better against the likes of IBM and Oracle. "We want to make sure that we continue to beat the competition, no matter where they are. We believe the packaging and licensing is a feature," he said.
But somewhere down the line, for obvious reasons, not much emphasis was given to the 25-percent hike in pricing for the enterprise edition -- which is slated to cost US$24,999 per processor.
This attracted the attention of market research firm Gartner. In a research paper entitled Prices and Complexity Rise With Microsoft SQL Server 2005, analysts Jonathan Mein, Alvin R. Park, and Donald Feinberg said the price hike would "sharply deviate from price patterns across most of Microsoft's other server products".
"Most prices have remained relatively consistent since 2000," he said.
But even with the hike, Microsoft is unlikely to face much backlash. IBM and Oracle are still more expensive. And for small businesses, at US$3899 per processor, Gartner said the Workgroup Edition still costs less than Oracle's entry-level product.
Some leeway in pricing is understandable. However, as the analysts warned, there are two key challenges for Microsoft:
- To retain rights to upgrade from Workgroup Edition to the Standard or Enterprise Server versions buyers must buy Software Assurance on the Workgroup licence.
- By licensing Workgroup Edition on a server/CAL (client access license) basis, Microsoft supports a licencing model that is inherently unmanageable using software asset management tools.
When I spoke to Terry Clancy, who manages the SQL Server business in Australia, he said the two barriers presented by Gartner were not an issue. "I'm rapt about it. With the current version [of SQL Server], you can't upgrade from Standard to Enterprise. At the end of the day, at least with SQL Server 2005, there's a clear upgrade path."
But for customers planning to make the transition, here's a word of caution from Gartner: "If a licence is purchased without Software Assurance, users should be prepared to discard and repurchase their licences if they need to move to Standard or Enterprise." Based on my discussions with existing customers, the increase in price is justified. Bear in mind though, these are extremely loyal SQL Server users. It's clear that IBM, Oracle, and even open-source database companies will have a tough time converting them.
Fran Foo is Technology & Business magazine contributing editor. Contact Fran via e-mail at edit@zdnet.com.au.
This article was first published in Technology & Business magazine before Microsoft announced SQL Server would be delayed again.
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It goes to credability, if your opposition are far more expensive then they must be better...raise your price to something similar remove this barrier....silly isn't it. You can imagine how free stuff really doesn't stack up in the enterprise.