Oracle and hosted ERP software supplier NetSuite have
ended a licensing agreement which allowed NetSuite to use Oracle's
name to brand its small-business applications bundle.
NetSuite chief executive officer Zach Nelson cited increased
competition between NetSuite and Oracle, along with changing
business conditions, as the catalyst for the licensing deal's
termination.
The arrangement dates back several years, to NetSuite's creation
by Oracle chief executive officer Larry Ellison and former Oracle
employee Evan Goldberg, now NetSuite's chairman and chief
technology officer.
"It was a good deal for both of us at the time," Nelson said.
"Oracle got a footprint in the small business market, and it was a
rough time for ASPs [application service providers]. Certainly the
Oracle brand helped us get through that patch."
Now, the Oracle Small Business Suite - which will be rebranded
the NetSuite Small Business Suite in July - comprises just 5% of
NetSuite's sales, according to Nelson.
The bulk of NetSuite's customers subscribe to its higher-end
NetSuite bundle, which is built on the same foundation as the
Oracle Small Business Suite but also includes CRM and customer
service functionality.
Nothing will change about the Small Business Suite except the
product's name, Nelson said, and NetSuite and Oracle are likely to
maintain their close ties as Ellison remains NetSuite's majority
owner.
Still, Oracle has been working to strengthen its own hosted
software business. The ASP market has been a high-growth area,
thanks to small suppliers such as Salesforce.com.
As part of an effort to raise its profile as an ASP, Oracle
recently changed the name of Oracle Outsourcing to Oracle On Demand
to identify its applications management business.
Oracle hopes to offset slowing growth in the enterprise
applications market by winning a larger share of the small and
midsized business market.
NetSuite is cutting the price of its Small Business Suite, from
$120 (£66) a month to $99. It is also changing the suite's
licensing structure, allowing customers to purchase add-on modules
without doing a full upgrade to its more advanced NetSuite package.
the upgraded software will cost $399 a month.
Stacy Cowley writes for IDG News Service