Oracle is now offering ISVs the ability to pay by the month for its SaaS (software as a service) infrastructure platform, versus shelling out major sums for perpetual licenses.
The vendor's platform for SaaS combines a variety of its software, including the Oracle database, Fusion Middleware, Oracle VM, and Enterprise Manager, into a stack for building and deploying SaaS applications.
[ Tomorrow, Oracle will release the long-awaited Fusion Middleware 11g. ]
Many SaaS vendors are already using the system.
But Oracle has primarily "serviced the high end" of the SaaS market to date, and the new pricing model will allow the company to "reach a much broader base of ISVs," said Judson Althoff, senior vice president, worldwide alliances and channels, in a video message posted on his official Oracle blog Tuesday.
Under the new system, license fees would be paid each month and determined "as a percentage of Oracle's published processor based pricing for perpetual licenses," according to a company data sheet. Further details weren't immediately available.
The switch "represents a continued gradual easing of Oracle into the SaaS arena," particularly toward the infrastructure side of the space, as well as its own on-demand applications, 451 Group analyst China Martens said.
A wide range of PaaS (platform as a service) vendors are courting ISVs, and Oracle is trying to figure out its play, Martens said.
What's interesting is that some SaaS ISVs using Oracle technology, such as the sales compensation management vendor Xactly, are also advocates of Salesforce.com's Force.com development platform, she added.
"It's a sign that SaaS ISVs that started out very closely aligned to Salesforce.com are continuing that relationship as they grow, but the next place they look for PaaS, particularly if they're looking to attract more higher midmarket and enterprise customers, is Oracle," Martens said.
But another observer questioned how much more business Oracle will gain from new companies, given the cost of its software, monthly pricing or not.
"For many [SaaS vendors] the price of 'free' for open source middleware -- be it the LAMP stack, JBoss, Tomcat, et cetera -- is hard to beat," said RedMonk analyst Michael Coté.
That said, monthly payments could be attractive to Oracle's current ISV clients since that system maps to the way they're already charging customers, Coté added.
But another RedMonk analyst, James Governor, had a more skeptical reaction.
"Oracle is the industry's leading tech-fashion conglomerate. Nobody knows next season's hemlines like [CEO] Larry Ellison. He likes to act like everyone else is about hype while he just sells classics -- but he is truly superb at tailoring to the latest fashions," Governor said via e-mail. "ISV pricing on a monthly plan responds to current industry trends for low [capital expenditure] IT."