IBM Discounts DB2 Express Pricing

Tuesday Oct 21st 2003 by Patricia Fusco
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The database market for small and mid-sized businesses has become a hotbed of activity over the past few months. Clearly IBM intends to keep the fire burning by dropping its DB2 Express pricing as much as 35 percent.

On Monday IBM announced it will slash the price of DB2 Express in an effort to capitalize on the momentum it claims to have gained in the small- to medium-sized business market. DB2 Express will be available at $3,899 per processor for an unlimited number of users as of Oct. 31.

The database, for Windows and Linux, was previously available on a per-server and per-user basis. For example, IBM's DB2 Express edition was priced at $499 for a base server package, with an additional licensing cost of $99 per user. For a small business with 50 users, DB2 Express used to cost about $5,449. At the end of this month, the same database system will cost less than $4,000.

Jeff Jones, Director of Strategy for IBM DB2 information management software, said the price change makes its database programming a more scalable computing solution.

"When we introduced DB2 Express in June with flat-fee and per-user pricing we did so knowing that the software is geared for only one or two processors running Microsoft or Linux," Jones said. "To make a more scalable transition to the next edition, a Workgroup server edition, we came out with this per-processor pricing model."

The database market for small and mid-sized businesses has become a hotbed of activity over the past few months. Earlier in October, Oracle launched a new, lower priced version of its flagship database system aimed at the midmarket. Oracle's entry-level version of its Oracle 9i database is $5,995 per processor or $195 per user with a minimum of five users.

Meanwhile, Microsoft is bundling its SQL Server software into the Premium Edition of its new Small Business Server 2003 system, which costs $1,499 and includes five user licenses (each additional user license is $99). For a small business with 50 users, implementing Microsoft's Small Business Server Premium Edition would cost $5,945.

Clearly the major database makers are responding to the fact smaller businesses have limited IT budgets and often can't afford the support staff that accompanies deploying a relational database. Jones pointed out that with DB2 Express, IBM business partners and their small business customers now have access to a full-function database at a competitive price point.

"A lot of the automation is built into our database systems, which have evolved over a decade or two," Jones said. "But if computing power takes a big IT staff, small businesses won't use it. We automated our installation and configuration processes to get the best possible performance out of the box. This has made it possible for us to entertain the idea of pricing DB2 Express this way."

The technology behind DB2 Express has the same functionality as IBM's more robust data management systems that power high-performance, multiple-server data centers. Because DB2 Express is a one- or two-processor system, much of the time and expense involved with font end tuning is eliminated.

"DB2 Express works for up to two processors with Windows or Linux," Jones said. "Knowing this, we can preconfigure and automate the startup process in a general sense because we know how many processors are involved. We call it autonomic computing."

Small businesses call it saving money. Since the Express version of IBM's database software was introduced in June, nearly 300 business partners and more than 20 customers opted to go with DB2 Express over competing database programs from Oracle and Microsoft.

"Interest has been very high since the debut," Jones said. "Historically, IBM is known for software on the high-end — this is a fun growth pattern for us."

The DB2 Express offering is also intended to make IBM's software easier to use by partners, such as value-added resellers, which create custom business applications for small and mid-sized business.

"Want to be attractive by price but also wanted to create a smooth transitional platform for our partners and resellers," Jones said. "By making our database easy to scale, we smooth out the path for growth for all parties concerned. We take the fear out of deploying relational databases for our customers and partners."

According to AMI-Partners, midsize businesses present a $175 billion market opportunity. With DB2 Express, IBM has nearly completed its plan to offer versions of its major software offerings for smaller businesses. WebSphere and WebSphere Portal Server launched last year. Content Manager Server Express is expected to debut soon.

Microsoft's focus on the mid-market helped grow its SQL Server share by 15 percent in 2002. According to IDC, IBM grew its share of the small business market by nine percent while Oracle lost five percent over the same time frame. IBM's aggressive pricing of its DB2 Express program is likely to tip the scales further for Big Blue by the time the year is through.

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