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Oracle eyes small businesses with new partner program

Oracle's small business strategy will draw in regional value-added resellers (VARs) and systems integrators (SIs) who will be able to sell its software without formally joining its partner network.

Oracle launched a new partner program yesterday designed to broaden its base of resellers and sell a new line of small-business products without forcing partners to go through lengthy licensing agreements with every sale.

Rather than requiring even small resellers to sign up for the Oracle Partner Network (OPN) and qualify to sell the company's main line of products, it signed agreements with two distributors that will allow their customers to resell Oracle small-business products with no further contact with Oracle.

The new program and products are designed for businesses with fewer than 100 employees -- a segment of the market dominated by Microsoft Corp., admitted Judson Althoff, Oracle's vice president of global platform and distribution sales.

Analysts, however, said it could be difficult for Oracle to break into that segment of the market.

Resellers will have to buy the Oracle software for small businesses through value-added distributors (VADs) that Oracle has certified as Oracle's VAD Remarketers. Oracle announced the VAD Remarketer designation yesterday; so far, Ingram Micro and Tech Data are the only distributors that have joined the program. Oracle is talking with eight other VADs, Althoff said, but he would not elaborate further.

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The VAD Remarketer program does not apply to Oracle's main, enterprise-level line of products or include the kind of service a seasoned Oracle partner provides, so Oracle's existing systems integrators (SIs) shouldn't feel threatened by a new class of competitors, according to David O'Connell, senior analyst with Wellesley, Mass.-based Nucleus Research.

There will always be a need for VARs in large companies, and the new software is aimed at customers who don't currently buy Oracle products. So Oracle's push through VADs is likely to hurt Microsoft's sales more than it will cause cannibalization of Oracle's existing sales, O'Connell said.

Ingram Micro's director of vendor management Dawnmarie Martin said she doesn't foresee much overlap between Oracle's existing partners and Oracle resellers she hopes to sign up; but the two market segments may run into conflict at companies of about 500 users, where the upper end of the small and midsized business (SMB) market bumps into the low end of the enterprise segment.

The products themselves are a repackaged, slightly stripped down version of Oracle's enterprise products, branded SMB Technologies. Those products come with a simplified install process and very limited configuration options, compared to Oracle's enterprise editions.

Earlier this week, the company also released Business Intelligence Standard Edition One, a BI application based on its Fusion platform for five to 50 users. The application includes Oracle's BI front-end software as well as the Oracle database and ETL tools, installed as a single program, said Dave Planeaux, director of BI product marketing at Oracle.

The SMB Technologies line also includes versions of Oracle's Database 10g and its Java application server.

The VAD Remarketer program is designed to lower what Althoff said were high barriers of entry for resellers and SIs trying to sell Oracle software to small businesses.

Previously, those companies would have to join OPN, which requires a contract with the company and partner fees, and then negotiate unique licensing agreements for each sale.

That process is worthwhile for million-dollar deals, Althoff said, but is too much overhead for deals ranging in the tens of thousands of dollars or fewer. Working with the VAD Remarketer program and a new, streamlined ordering process, resellers can now sell SMB Technology products without any contract and under a simplified, standardized licensing agreement.

One of the big hurdles the company will have to overcome is Microsoft's dominance in the small business market. Oracle is "definitely the underdog and they have a very tough road ahead of them," Martin said. But Oracle's mission isn't hopeless, she said.

"Most of the VARs that I speak to… their concern about Microsoft is that they never like to limit their selection to one vendor. In this case, they've kind of been forced to" due to lack of other alternatives, she said.

Oracle will also have to get the word out to the end users, many of whom have heard of the company but look at it as an enterprise-focused vendor, said Forrester Research senior analyst Michael Speyer. That requires, in part, casting a wide net with its channel, he said, which is where the VAD Remarketer program comes in.

For now, Ingram is focused on getting the word out and trying to get its VARs to give Oracle's products a look, Martin said. After that, the goal will be to train those VARs and have them join OPN and sell Oracle's main line of products, which carry higher licensing costs and more integration services and therefore more money for the channel, she said.

Even though the small business sector is a market in its own right, Oracle's small business approach is also keeping an eye on the future, Speyer said.

"The whole strategy is to get these products into these small businesses, so that when they develop applications, they'll develop [them] on top of Oracle products and not on top of Microsoft SQL server or some other product," he said.

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