The price strategy change in Oracle post-Ellison era is more critical than technology

While the vagaries of the technology industry are stressful, chief information officers of companies using Oracle software say Oracle's big challenge is not to improve technology, but to change aggressive pricing strategies and to keep consumers in a tough way. The issue began to emerge in Thursday, when Oracle announced that founder Larry Ellison had resigned as chief executive and Ellison as chairman and chief technology officer.

Mr Ellison's two deputies, Mark Hurd, and Savera Katz (Safra Catz) will be the company's co-CEO. In addition, the company will face the challenges of technology and product frontiers, including cloud computing and new types of databases.

The threat is also reflected in Oracle's earnings, which grew 4.2% per cent in annual revenues, below the growth rate of the past three years. While cloud software revenue rose 31% in the fiscal quarter up to August, it still accounts for less than 6% per cent of the company's total sales. Oracle's operating profit fell year-on-year in the latest quarter, the first time since the acquisition of Sun Microsystems in early 2010.

For CIOs in many companies, they prefer to maintain the status quo rather than seek change, but history has proved that this is not a long-term solution.

The biggest challenge for Oracle is perhaps to be in a more and more selective market. But if a company uses Oracle's products, especially at the data management level, it will be hard to remove the impact of Oracle's software unless it is pushed back by the company's IT department.

While Oracle dominates the database, the Open-source sector also has many low-cost analytics and cloud technologies that attract companies ' CIOs to use these products.

Samuel Chesterman, chief information officer of IPG Media at the marketing company, said he had contacted Oracle's sales representatives two years ago to remove three Oracle HR products that the company no longer used, but it was shocking to him that, while the product could be canceled, But Oracle's new mandate and support charges will be raised to 50,000 dollars a year. Chesterman says Oracle's pricing is too high.

Questcor Pharmaceuticals, the IT vice president Beyrouze, said Oracle would make as much profit on software as possible. Its regulatory fees are too radical, though it has made Oracle a huge profit, reassuring Wall Street investors, but driving away consumers. Now that Jay has switched to Microsoft's SQL Server database software and other cloud computing applications.

Maristan College pays Oracle $100,000 a year, uses its database and integrates with Ellucian's campus resource management software. The school has paid a lot of money and energy for the maintenance of Oracle software, but now they can't stop using Oracle software because the Maristan College has signed a five-year contract with Ellucian, but unless Ellucian uses Oracle's software, the Maristan college cannot use other databases, which is frustrating.

But other companies ' CIOs are encouraged by the focus on technical work for Mr. Ellison's transfer to Oracle's chief technology officer. They hope that Ellison will feel the pain of their users and let him understand the needs of customers and the challenges Oracle faces.

In this respect, a Oracle spokesman said a handful of clients could not represent the experience of most Oracle customers.

(Responsible editor: Mengyishan)