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Oracle Exalogic appliances intrigue VARs

Big-ticket Oracle appliances carry big prices but no reseller margin.

SAN FRANCISCO -- Even Oracle bashers in the channel admit considerable interest in the new Oracle Exalogic Web server appliance and its older Exadata cousin.

But for reseller partners it is unclear what, if any, opportunity there is in these high-end appliances that primarily sell direct. (Or will sell direct. Oracle said to expect the just-announced Exalogic to be generally available in the next 12 months.)

For one thing, company insiders said Oracle Corp. CEO Larry Ellison is loath to offer partner discounts on hot-selling machines. Oracle claims a $1.5 billion plus pipeline for the year-old Exadata "database machine." And discount equals margin.

Oracle execs said they are working on the channel play for Exadata (and by extension Exalogic).

As far as Exadata goes, "we do not have the profit model and value proposition for the channel yet," said Ted Bereswill, senior vice president in charge of Oracle's North America channels. Oracle has, nonetheless, launched an Exadata specialization within its Oracle PartnerNetwork (OPN) channel program.

There does appear to be customer demand for Exadata. Several Oracle VARs say their customers have asked about it since the latest version debuted at Oracle OpenWorld last year. The problem for partners is a lack of demo machines. Anyone wanting a proof-of-concept machine must submit a purchase order, several said.

Kerry Osborne, founding partner of Enkitec Inc., a Dallas-based Oracle partner, has done extensive testing on Exadata and says he's sold, characterizing the machine as "smoking fast on data warehousing type workloads."

"We have a customer using it for segmenting marketing survey data that has consolidated several databases onto a single platform and it has run like a champ. In our POC's [proof of concept] we routinely see results that are 10 to 100 times faster. There are many individual examples of things that previously took minutes to complete which are completed by Exadata in sub-second timeframes due to the Storage Indexes," Osborne wrote in an email.

In another proof of concept comparing an OLTP workload that updates more than a billion records one at a time, Exadata performed the task in 45 minutes compared to three or four hours on the existing platform -- a Sun M5000 32-core using an all solid state disk.

"We were actually a little disappointed because for that particular POC we did a total of seven separate tests and that was the smallest improvement we saw (many of the others were in the 50 to 100 times faster type of range. )," Osborne wrote.

"I am normally very skeptical of Oracle marketing claims," he said, "but in this case I think they have been underselling [Exadata]."

Services-oriented Oracle partners, like Enkitec, with expertise in database and the rest of the software stack, stand to do well at least in implementation and consulting services with Exadata and Exalogic. Sun hardware VARs will have to brush up on database and software skills, said Tom Wagner, group vice president of North American alliances and channel sales.

Kate Johnson, an executive vice president at Oracle, has been tasked with figuring out the right model that will work for partners, Bereswill said.

Big-ticket boxes without margin

There's a lot at stake. Clearly, Oracle (and Sun) partners would love a piece of these high-end products. The $1,075,000 Exalogic price tag quoted by Oracle CEO Larry Ellison in his keynote turns out to be just the hardware cost for a full-rack system. As with Exadata, half racks and quarter racks will also be offered. Up to eight Exalogics can be harnessed together as one gigantic Web-serving compute-and-storage pool.

The full boat of software -- Oracle VM and the Coherence Java caching software that are now offered in the WebLogic Suite will be extra. The current price on a standalone WebLogic Suite is $45,000 per CPU plus $9,000 for support. Specialized Exalogic Elastic Cloud software for additional tuning will be another extra-cost option. Pricing for that will be announced later, said Rick Schultz, vice president of technology product marketing for Oracle.

Given Oracle's current software pricing model, the overall software cost is bound to be impressive. One Exalogic box with Intel Xeon CPU processors harnesses up to 30 servers, each server sporting two six-core processors for a grand total of 360 cores.

"If you figure Oracle's pricing with 360 cores, you're talking real money," said one data center admin at the show. He faulted Ellison for comparing an Exalogic box at $1,075,000 versus an IBM Power 795 server at more than $4 million. "He's comparing hardware-only cost [for Oracle] to a fully loaded IBM machine," he noted.

Patrick Zanella, technical product manager for data center maintenance services at Akibia Inc., a Westborough, Mass.-based IT consultancy, has one customer who says the Exadata performance screams but may not commit to the product out of concerns of vendor lock-in.

"The hardware-software-complete message is compelling but many customers want a choice of vendors in their data center," he said.

Osborne said for many customers, these high-end machines are the cost of doing business. "I think it's worth the price for companies that need the performance," he said. "Oddly enough it is not that difficult to cost justify it when you consider the cost of setting up, testing and deploying alternate platforms."

Who's choking whom?

Oracle and Sun VARs and customers continue to complain privately that heavy-handed software audits have ramped up now that Oracle has Sun in-house. Maintenance and support costs on hardware have risen substantially since March.

Another IT pro said the Oracle software audits have gotten so bad that his shop would love to dump the little Sun hardware it has remaining except that it has a few applications that run only on its Solaris/SPARC implementation. They "have no choice" but to pay up and stay legal, he said.

That specter of pricey maintenance on these million-dollar boxes is also a factor in the purchase decision.

Other Sun shops running Oracle are moving off Sun hardware but will keep running their bread-and-butter Oracle databases.

The conventional wisdom of IT vendors like Hewlett-Packard, Cisco Systems and now Oracle (with Sun) pushing converged data center hardware/software is that customers want one throat to choke when it comes to maintenance and support.

"The question is, who's choking whom?" Zanella said.

Let us know what you think about the story; email Barbara Darrow, Senior News Director at, or follow us on twitter.

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