The Service Industry Association has filed a complaint against Oracle in Europe and the US concerning the limitations Oracle puts on its hardware support. Cliff Saran investigates the changes to Oracle support.
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With Dell, HP an IBM shifting from traditional hardware to services, experts have been scratching their heads about why Oracle spent $7bn (£4.4bn) buying Sun Microsystems, the ailing Unix hardware manufacturer. In January Oracle made its intention clear, clamping down on thirdparty support, and in effect, taking ownership
The Service Industry Association (SIA) executive director Claudia Betzner says that if a business selects an independent hardware support provider for hardware maintenance of current Sun/Oracle hardware, Oracle will refuse to support any Sun/StorageTek hardware in the Enterprise. Oracle will also refuse to repair equipment on a "time and materials" basis.
Oracle's 'all-or-nothing' demand
"We are especially concerned at the 'all-or-nothing' policy they implemented in the spring of last year. Prior to that ISO's and Sun could both do service on clients, now it is all Oracle/Sun or they will not provide any support whatsoever."
Betzner previously warned, "Oracle's new policies appear to be an attempt to monopolise the Sun hardware maintenance business. Oracle's strategy appears to force customers into a 'lose-lose' arrangement. Either a customer puts its entire installed base of Sun hardware under Oracle support (no exceptions) or Oracle will cut all ties to the end-user, including refusing access to firmware updates, time-and-materials support and security fixes for Solaris."
She says Oracle will charge businesses 150% of the cost of hardware support to recertify their equipment and refuse access to formerly freely available security patches and firmware updates, even if those updates are related to embedded chip sets or micro-code.
Eric Guyer, an Oracle architect and author of the Oracle Optimization blog, has blogged extensively on the support changes. He says, "Oracle has been operating under an all-or-nothing, one-size-fits-all, Oracle-only software support model for decades. Oracle's business model and the financial success of acquiring Sun depends on applying software-based maintenance policies to the hundreds of thousands of Sun servers that remain operational. This begs the question of whether hardware is or should be different, regardless of industry practices prior to Oracle's acquisition of Sun."
Guyer warns that Oracle will likely throw all its resources at winning the SIA case. Moreover, he says, "Thus far, the courts have sided with Oracle, as demonstrated by the $1.3bn settlement with SAP."
"This is a strange and counterproductive move by Oracle," says Clive Longbottom, service director at Quorcirca. "It shows that [Oracle] is trying to own and control the complete stack in some circumstances."
Longbottom is not convinced that the thrust of Oracle's hardware support strategy is to recoup the cost of acquiring Sun Microsystems, he says, "It is a play to gain control over the hardware-to-application stack through as many layers as possible, and so make Oracle a very sticky company when it comes to deals and renewals."
In a report published last year at the time Oracle announced its Sun hardware support package, Gartner published a research paper stating, "These changes are significant and affect every Sun customer. Oracle is offering high-end support at up to 50% below the current market rate to attract users who defected to third-party maintainers (TPMs). This bold and aggressive policy has the potential to shape the market, because it will exert considerable pressure on TPMs that actively canvassed the Sun installed base after the acquisition was announced. Simplified support pricing in effect reduces choice and may polarise customer opinion despite the value of their offering."
While most members of the UK Oracle User Group use HP, Dell and IBM hardware and are thus not affected by Oracle hardware support policies, chairman Ronan Miles, says "In principle, UKOUG would be against any action which reduces customer choice." However, he says UKOUG would favour any action which, "improved or guaranteed quality".
Oracle has a 5.5% share of the server market, according to IDC's Top 5 Corporate Family, EMEA Server Systems Factory Revenue, Fourth Quarter of 2010 market data. However, it is aggressively targeting customers with its integrated hardware/software product suite. Giorgio Nebuloni, senior research analyst at IDC, says, "Oracle wants to be the main IT supplier in the datacentre. In large accounts it is trying to take direct control of the relationship."
Oracle was not prepared to reveal how many premier support partners it has signed up, that are authorised to provide support for Sun/StorageTek hardware. Computer Weekly's sister title, Microscope, has reported that just four providers are supporting Sun hardware in the UK.
The move to freeze out third-party hardware suppliers appears to be the approach Oracle is taking to take direct control of its key customer accounts. Given that SAP paid out $1.3bn to rival Oracle in the legal battle over SAP/TomorrowNow third-party support, the SIA may well be heading into a David and Goliath battle, against Oracle's ability to execute on its strategy to own the data centre. Gartner reports that Oracle's hardware support pricing is aggressively low; but a win against the SIA may not necessarily be a win for users.
Oracle hardware and systems support policies
In the event that technical support lapses for more than 90 days or was not purchased at the time you acquired your hardware system, then your hardware system must be qualified as service-ready before technical support can be reinstated. To qualify as service-ready you must acquire the Premier Support Qualification Service (at the then current fees) and meet all requirements set out by the service team to obtain a qualification certificate for your hardware system.
Upon the commencement of technical support a reinstatement fee will be assessed. The reinstatement fee is equal to 150% of the last-paid technical support fee, or, if technical support was never acquired, 150% of the applicable technical support fee for the covered hardware system, prorated from the date technical support is being ordered back to the date technical support lapsed (or the hardware order date if technical support was never purchased).
Rob Addy, a research director at Gartner points out that before Oracle bought Sun, Sun support comprised of 90 different offerings. "Over three years Sun gave away services to sell hardware." At the same time, he says Sun's hardware was "uber-reliable" as was Solaris 8, Sun's Unix operating system.
As a by-product of the high levels of reliability and services discounting, "A lot of Sun customers were not paying the market rate for support and some downgraded to next-day support, even in mission-critical environments," said Addy.
Oracle has cleaned up Sun's hardware mess, according to Addy, by offering just one, premier level of hardware support, with a two-hour response time, including parts. Premier support costs 12% of the hardware price, which he says is extremely competitive against IBM AIX and HPUX offerings. Premier support is aimed at Oracle's largest customers. Addy estimates that eight out the 10 biggest Oracle users are better off as a result. But some businesses that spend considerably less with Oracle may end up worse off.