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Oracle Fires Another Shot in Messaging Battle

Oracle Corp. used its OracleWorld conference this week in San Francisco to promote its Oracle Collaboration Suite (OCS) as an alternative to established collaboration offerings from Microsoft Corp. and IBM Corp.

First, Oracle announced the immediate availability of a new e-mail and collaboration outsourcing service that exploits OCS 1.0, which was released in July. Next, the software giant took aim at rivals Microsoft and IBM with the announcement of OCS Release 2.0, slated to ship sometime in the first half of 2003.

Steve Levine, Oracle’s vice-president of collaboration suites marketing, acknowledges that Microsoft and IBM are well entrenched in the groupware space. According to Radicati Group, a consultancy that specializes in enterprise messaging and collaborative solutions, the two companies control a combined 80 percent to 85 percent of the total market for enterprise messaging, groupware or collaborative products.

At the same time, Levine speculates, Oracle can siphon share away from both vendors by exploiting what he identifies as their weaknesses relative to OCS: higher total-cost-of-ownership (TCO) and poor scalability. Because OCS runs on top of Oracle 9i, Levine says, it can scale to support tens of thousands of users on a single server, which makes it ideal for server consolidation efforts in large environments. This has the added benefit of reducing TCO, he contends.

“There are a couple of differentiators, probably the key one is how manageable is a certain number of servers [in a Lotus or Exchange environment] versus consolidating all of your e-mail servers and running everything on one server [with OCS],” Levine says.

Oracle’s argument makes sense on paper, says Radicati Group president and CEO Sara Radicati, but there simply aren’t yet enough real-world OCS implementations to substantiate the company’s case for TCO savings. “I don’t want to say that cost is a [competitive] positive [for Oracle], because I think that has yet to be proven. It’s probable, yes, but we don’t know for sure.”

Although Oracle views both vendors as susceptible to its TCO- and scalability-focused messaging, it sees Microsoft as especially vulnerable. Levine cites a study from Ferris Research that indicates that corporations of larger than 1,000 users typically pay $100 per mailbox to migrate from Exchange 5.5 to Exchange 2000. According to Levine, Oracle's professional services unit now offers a migration service that can transition existing users of Microsoft’s Exchange 5.5 platform to OCS for roughly one third the cost of a similar migration to Exchange 2000. “We’ve had Oracle Consulting work with a number of customers and be able to put a stake in the ground and say that we can migrate customers to [OCS] for as little as $29 dollars a head.”

For corporations that aren’t undertaking Exchange migrations, however, Radicati Group found that Microsoft Exchange is a cheaper overall proposition than Lotus Notes/Domino over a three year period -- by a whopping $2.91.

Levine says that OCS can improve upon this figure, as well, by virtue of its suitability for massive server consolidation efforts. He cites an internal Oracle project that currently supports 40,000 users on a single OCS server. In addition, he says that several of Oracle customers, Fujitsu-Siemens among them, have deployed very large OCS implementations, as well. “With Exchange 2000, Microsoft can support a couple of thousand users on a single server. From an Oracle perspective, we’re busy running 40,000 employees [on a single server]. Another of our references is running 47,000.”

Levine acknowledges, however, that Oracle doesn’t currently offer customers much in the way of migration tools to facilitate the transition of Exchange or Notes/Domino user mailboxes and other data to the Oracle environment. “We would argue that the price we put on the product itself is a motivation for migration, and we believe that the features we have is motivation for migration.”

Both Microsoft and Lotus offer a variety of tools to help customers migrate from one another’s environments, as well as from competitive platforms such as Novell Inc.’s GroupWise.

David Ferris, president of messaging consultancy Ferris Research, says that if Oracle is going to compete against Microsoft and Lotus in entrenched accounts, it’s going to have to provide migration tools. “If they in fact succeed in getting the attention of companies, then the development of easy migration tools will be very, very important to their success.”

Levine says that because Microsoft doesn’t currently ship native collaborative tools with Exchange 2000 -- outside of instant messaging -- Oracle will stress the collaborative strengths of OCS, which features an integrated set of real-time collaborative functions, dubbed iMeeting, that facilitate shared browsing, a shared “whiteboard” and other collaborative features. OCS also includes Oracle’s portal facility.

Microsoft offers a variety of collaborative capabilities with its Sharepoint technologies, including a portal server, which is available separately from Exchange. At this point, the software giant says that it has no plans to incorporate Sharepoint into the next version of Exchange, due next year.

Oracle also proposes to compete against Microsoft by accommodating the software giant’s Outlook e-mail client as a front-end for OCS. This is important, Levine concedes, because business users tend to become attached to their mail clients. “We don’t bring change. One of the key aspects of our strategy going forward is that there’s a lot of end-user loyalty to the tool that they’ve got, such as Outlook or Netscape, so we replace the back-end and don’t cause any changes on the front-end.”

For his part, Ferris suggests that the extent to which Oracle will support the Outlook client is one of the biggest question marks associated with the database kingpin’s attempt to court end users. “It’s unclear about how well they will in fact support Outlook clients, or the level of tolerance that customers will have for small differences. That’s not to mention that it’s unclear how well they’ll support future versions of Outlook. It’s quite possible that they may have to do some reverse-engineering to get it to work {in the OCS environment].”

Microsoft seems to realize that Exchange is a more costly environment to administer than it should be. During the software giant’s Microsoft Exchange Conference, held in October of this year in Anaheim, Calif., Microsoft officials repeatedly stressed that Exchange Titanium will address many of Exchange 2000’s TCO shortcomings by making more efficient use of bandwidth and by facilitating ever larger server consolidations.

“With Titanium, we will be delivering a product that is going to deliver a dramatic reduction in TCO and we think the best user experience that’s available today,” asserts Jim Bernardo, a product manager in Microsoft’s .NET Enterprise Servers group. “We’re doing a lot of innovation around TCO that we believe will allow customers to significantly reduce the cost of their messaging systems through some pretty massive server consolidations.”

As James Kobielus, a senior analyst with consultancy Burton Group, points out, IBM representatives made similar claims when Big Blue launched its long-awaited Lotus Notes/Domino Release 6 in early October. The simple fact of the matter, Kobielus suggests, is that both Microsoft and Lotus are wise to the fact that TCO is a liability in the enterprise groupware and collaboration space. Consequently, they’ve both made reducing TCO a major message point in their efforts to promote "Titanium," which is the code-name for the next release of Exchange, and Notes/Domino R6, respectively.

Whether or not either product will deliver major reductions in TCO remains to be seen, says Kobielus. “At this point, with Lotus, the data isn’t available yet. And Microsoft won’t ship Titanium until sometime next year.”

In addition to its TCO-focused messaging, Ferris and other analysts say that Oracle has a number of additional positives in its favor -- starting first and foremost with the fact that OCS is built on top of Oracle 9i. “Both Microsoft and IBM plan to migrate to a commercial relational database over the next five years. But Oracle is already there.”

At this stage of the game, Ferris points out, a collaborative suite that exploits a relational database as its message and data store opens up a number of possibilities for IT organizations. “It’s now possible to integrate e-mail with mainstream commercial applications, and that doesn’t happen today because the people who write mainstream commercial applications don’t exploit e-mail because they don’t know the e-mail APIs. Here, they just need to know how to write to Oracle.”

Add’s Radicati, “[OCS] will most likely integrate well with the whole suite of business applications that are already running in the enterprise, such as CRM and ERP applications, that already run on top of Oracle [9i].”

In the near term, however, analysts don’t expect that Oracle will siphon significant share away from Microsoft or Lotus. Because the majority of Exchange and Notes/Domino customers still run non-current versions of both products, however, Oracle could compete for customers who are currently considering a transition. “I think that right now, [OCS] will be attractive for customers who for whatever reason are going through a transition. It’s going to appeal initially to customers that have a background reason, such as a merger or acquisition, that’s motivating some change.”

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