Oracle Exalogic/Exadata Raise Questions About Vendor Lock-In

At its Oracle Open World convention, which ended Thursday in San Francisco, the IT giant promoted its Exalogic Elastic Cloud machine for establishing private clouds, dubbed a "cloud in a box," and its Oracle Exadata Database Machine, version X2-8, for data warehousing as the next big things in enterprise computing. While Oracle touts the simplicity and reliability of an integrated system, some analysts warn about the dangers of having to buy so much technology from just one company.

David Vellante, an analyst and co-founder of the tech industry blog Wikibon.org, called Oracle's strategy the mother of all lock-ins. "Oracle is using its IP portfolio to 'stack the deck' with its integrated stack," Vellante wrote. "That means best-of-breed server, storage and networking vendors are going to have to fight for the leftover sales that are non-integrated." Exalogic and Exadata are largely the result of Oracle's $7.4 billion acquisition of Sun Microsystems, which was completed in January. With it, Oracle entered the hardware business with Sun's line of servers and storage, the chip business with Sun's SPARC line, the operating system business with Solaris and the software application development business with Java.

Exalogic and Exadata present enterprises with a fully integrated system that include all of those plus Oracle's middleware and database management software. "Our strategy is to take a lot of separate pieces that our customers used to buy as components and take those pieces and do pre-integration and deliver you complete working systems," said Oracle CEO Larry Ellison, in a keynote address at the convention Wednesday. "We think that will make your life simpler and deliver you something that you plug in and it works the first day." Ellison also claimed its systems will be cheaper to buy than those of competitors. An Oracle Exalogic system would cost $1.075 million while a comparable IBM Power 795 system would cost $4.4 million. An Exadata machine would cost $3.3 million, versus an IBM 795 with an IBM Systems Storage DS8700 that would cost $18.8 million.

But upfront costs aren't the only considerations a company should make in deciding to get locked-in with Oracle, Vellante stated. While recognizing the virtue of having software and hardware engineered together and pre-configured for best performance, the downside of vendor lock-in is less competition, less innovation, less openness and ultimately, higher prices. "Customers complain that Oracle gouges them in maintenance fees and they are fearful that buying integrated solutions from one company will only make things worse."

Vendor lock-in also puts enterprises at risk of paying too much for an integrated system compared to what they could get if they priced out individual components themselves, added Charles King, principal analyst at the research firm Pund-IT. "Many or even most of those companies are also used to dealing with system integration issues, either alone or with the assistance of trusted service partners, so factory integration may be less attractive than some vendors assume," King wrote in an e-mail interview. "Without significant tangible benefits and pricing transparency, the attraction of these solutions could be limited."