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Facing ever-stiffer competition in the database price wars, Microsoft Corp. is introducing an edition of its upcoming SQL Server 2005 upgrade that will provide an easier step between free and not free than it now does with SQL Server 2000.

Microsoft plans to announce on Thursday SQL Server 2005 Workgroup Edition, a product that sits between the free MSDE (Microsoft Database Engine, or what will be known as Express in the 2005 release) and SQL Server 2005 Standard Edition.

SQL Server 2005 Standard, once the entry point for businesses to buy SQL Server at the enterprise data management level, will cost $5,999 per processor or $2,799 per server plus 10 users. In contrast, Workgroup Edition will cost $3,899 per processor or $739 for the server plus five users, thus offering a considerably lower entry point for SMBs (small and midsize businesses).

In addition, SQL Server 2005 Enterprise Edition will cost $24,999 per processor or $13,499 for the server plus 25 users.

In addition, Microsoft, of Redmond, Wash., is announcing a tighter relationship with Dell Inc. Dell, which is now a top reseller of SQL Server 2000, will become an OEM partner for SQL Server 2000 Workgroup Edition, SQL Server 2005 Workgroup Edition and SQL Server 2005 Standard Edition.

Tom Rizzo, Microsoft’s director of product management for SQL Server, said that both of these moves were spurred by customers who like the free MSDE but found the jump to $5,000 per processor to be too jarring. “We’re trying to take enterprise data management of SQL Server and make it affordable and easier to acquire for a broader set of customers,” he said. “From SMBs, we heard they wanted a low-cost entry offering. They wanted it free or close to free, so we think what we’re doing in Workgroup meets the needs of what they’re saying.”

Workgroup Edition will ship with 2 CPUs, 2GB of RAM, unlimited database size and the same management tools as other editions, including Management Studio, Import/Export, limited Replication Publishing and Back-up Log shipping.

The repackaging and the new relationship with Dell are defensive measures against the encroachment of both freebie open-source databases and, ironically enough, offerings from purveyors of the priciest databases out there—those from IBM and from Oracle Corp. Noel Yuhanna, an analyst with Forrester Research Inc., in Santa Clara, Calif., said that recent low-cost offerings from Oracle and IBM are picking up traction in the market, as are open-source databases, threatening Microsoft’s long-held position as the bargain-basement RDBMS (relational database management system).

Next Page: Workgroup Edition is Microsoft’s garlic against open-source vampires.

“Basically, [Workgroup Edition] is focusing against the open-source database community,” he said. “The fact is that the penetration of open-source has been in the lower-level, entry-level database deployments, and that’s where the traction is today. Having a Workgroup [Edition] works for customers looking for small scale. A few CPUs is good enough, and the lower price will certainly help. It’s a good strategy to look at [to attract] customers looking at low-cost DBMSes.”

Meanwhile, Yuhanna said that Oracle has been gaining traction in the entry-level database market with its Oracle Database 10g Standard Edition One, which it released last year. “We have seen customers moving to using Oracle for entry-level, small-scale deployments,” he said. “SQL Server dominated in the past.”

The database price wars have been going on for a while: For its part, in June 2003 IBM released DB2 Express, a low-cost version of its DB2 UDB (Universal Database) aimed at SMBs.

As far as the new Dell relationship goes, Yuhanna said that the partnering will help customers to get a more robust and reliable solution in a bundle—particularly attractive to the small-scale deployments Microsoft is seeking to target. “Oracle, as you know, has been very successful in partnering with Dell and Intel, especially with its Linux strategy,” he said. “Customers are looking for solutions in the entry level, and they don’t want just a database component. … It’s a good strategy for Microsoft. They really have to partner with someone to roll out these lower-end entry-level databases. In the high-end deployments, things change. You need specialized hardware, specialized storage, to make it work. But in low-to-medium deployments, it’s a solution that really makes a difference.”

Besides fending off advances from IBM, Oracle and open-source databases in the market for entry-level databases, Microsoft is also fighting for market share in the high end. As such, in its packaging and pricing announcement, Microsoft is playing up the fact that enterprises get high-end features included in the basic database price, as opposed to having to pay more for BI (business intelligence) tools or performance monitoring and tuning tools. “Our mantra is ‘No expensive add-ons,’” Rizzo said. “You get it all in the box: performance monitoring and tuning, BI, all that.”

For example, Oracle’s Tuning Pack costs $3,000 over its $40,000 per-processor base database system, $3,000 for its Diagnostic Pack, and $10,000 for partitioning. IBM’s DB2 Performance Expert costs $10,000 over its $25,000 per-processor base price. Other add-ons include RAC (Real Application Clusters) for Oracle at $20,000 and a BI bundle at $40,000, while both IBM and Oracle charge per core on multicore chips.

Next Page: Microsoft wants to play with the big boys, too.

Microsoft scored brownie points with enterprise players by declaring in October that it wouldn’t charge extra for dual-core chips, although analysts at the time pointed out that it didn’t cost Microsoft much, since it didn’t have many large enterprise customers who would use such technology.

Rizzo said that customers also told Microsoft that they didn’t want to pay for passive failover servers. Thus, with SQL Server 2005, Microsoft won’t require an additional license for a secondary server, as long as it’s just used for passive failover. Microsoft is also offering discounted versions for ISVs for redistribution. Any edition can be shipped with volume discounts for partners.

Related to the news, Dell and Microsoft are announcing a new benchmark that tagged the Dell/SQL Server combination as the top database/platform for price/performance, breaking the previous $1.50 per-transaction barrier by delivering 28,000 transactions per minute at $1.40 per transaction.

Chris Alliegro, an analyst for Directions on Microsoft, in Redmond, Wash., said that Microsoft can’t be beat when it comes to cost per transaction. “I think Microsoft is really stressing the point that SQL Server, from a cost-per-transaction standpoint, from any cost/competitive standpoint, looks very, very attractive compared to IBM or Oracle products. It’s hard to identify feature areas where Microsoft is not at least on parity with those players. I think they’ve got a great story from a cost-competition standpoint.”

Alliegro was also impressed with changes to the Workload Governor in MSDE. As it was, the Governor was limited to five concurrent workloads in the engine. When any queries over five came in, the server would be throttled.

It was confusing for customers, who thought it was throttled to five users or five connections, as opposed to five concurrent workloads. Rizzo claimed mea culpa, saying that Microsoft “didn’t do a good job of figuring that one out.”

The confusion will be eased in the Express Edition, which will just be limited to 1GB RAM and to a 4GB database size.

“Removing the throttling restriction, that kind of mysteriously degraded database performance after a certain amount of connections, so that’s a good thing,” Alliegro said. “They’ve also increased size: It’s now 4GB, so it gives you more headroom before you have to think about moving up.”

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