Oracle users balk at licence hike

Oracle has come under fire from customers which claim it is asking "impossible" licence fees for its 8i database software used to underpin web applications.

Oracle has come under fire from customers which claim it is asking "impossible" licence fees for its 8i database software used to underpin web applications.

The criticisms follow changes in the company's licensing structure last year, when it moved from charging per concurrent user to fees based on the power of the hardware running the software.

The changes came as Oracle realised that the increase in internet-connected databases made it hard to calculate the number of end users.

Some customers have had licence price hikes of up to 70 per cent, due to an increase in hardware power and a growing number of 8i users with web applications.

"Oracle has outstanding products, but it's making it impossible for me to afford them," said Len Schulte, information systems integrator at Maritz, a heavy user of Oracle database software.

Oracle now calculates licence costs using the universal power unit model. They define a power unit as 1Mhz of power in an Intel-compatible processor or 0.67Mhz in a Risc processor.

Maria Reeve, an analyst at Gartner, warned of the dangers of price hikes. "Clients say they are paying much more under the power unit model than previously," she said.

Gary Bloom, executive vice president at Oracle, defended the new pricing model, however. "Some customers like it and others like the old model where they could negotiate. But as our US sales director says to ex-Oracle people who ask for that extra per cent off: 'The price is the price'," he said.

Strong sales combined with lower operating costs helped Oracle to comfortably beat analyst expectations for its first quarter results. Profit was $500m (£37.5m), up 111 per cent compared with $237m a year ago.

Turnover increased 15 per cent to $2.3bn. The company said it expected application software sales to become an increasing part of turnover in coming months.