October 2, 2000

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Oracle gets back to its roots with a major upgrade to its

By Aaron Ricadela and Rick Whiting

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iven Oracle's penchant for diversion--application software, E-marketplaces, app hosting, network computers, even dumpster diving--it's easy to forget the company's core business is developing database management software. Get ready for a reminder. CEO Larry Ellison is about to introduce a major upgrade to the product that has made him the world's second-wealthiest person.

At its annual conference in San Francisco this week, Oracle will describe for the first time Oracle9i, the next iteration of its flagship software. Oracle officials say it represents "the most significant software engineering effort" in the company's history--no small claim for a 23-year-old business--and analysts say it will be Oracle's most important database release in several years. The system will boast new clustering software that, at minimum, will double performance and boost some applications by a factor of 10, Oracle says.

The veracity of those claims remains to be seen. But it's remarkable that Oracle's relational database--introduced before the World Wide Web ever existed--not only survives, but thrives.

Sales of database licenses surged 32% during Oracle's first quarter ended Aug. 31, to $1.73 billion. That's up from a 12% fourth-quarter increase--partly because a new, no-haggle pricing policy pushed contract closures into the first quarter--and a long way from the single-digit growth rate of three years ago. "Database growth stole the highlight film this quarter," said Morgan Stanley Dean Witter analyst Charles Phillips when Oracle's numbers came out. He had expected growth in the 20% range.

"People are building worldwide databases and global computer systems and moving their business processes onto the Internet," Ellison said during a recent interview. "The larger a database gets, the more important it becomes." Power-lunching on a protein-packed tuna-and-egg sandwich in a conference room overlooking the company's Redwood Shores, Calif., campus, Ellison clearly thinks his company's database is still the greatest thing since, well, sliced bread. "We have millions of users, and the biggest Web sites rely on Oracle."

Blue-chip accounts include AT&T, Chevron, General Electric, and E-business pure plays such as Amazon.com, eBay, and Yahoo. "Oracle's right in the fray of our most critical systems," says Dick Anderson, chief technology officer at AT&T Solutions, the $2.85 billion Florham Park, N.J., network services and consulting arm of the telecommunications company. The unit's revenue rose 24% to more than $1.6 billion during the first half of this year. This means Anderson's team is accumulating more information in databases containing hundreds of millions of records that detail the network design, purchasing rules, user rights, and other policies of its business customers.

AT&T Solutions has to coordinate the flow of orders internally and among customers and their suppliers, while tracking service levels and analyzing trends. "We're going to be pushing the edge of Oracle's capabilities," says Anderson. "We're putting pressure on them with the number of records, the number of transactions, and the number of geographic locations. They know we have to scale and that E-business is creating enormous transaction volumes."

Oracle9i and another product called Real Application Clusters--known as Cache Fusion during its six years of development--use a new, shared cache architecture to speed database performance for transaction processing. Real Application Clusters succeeds Oracle Parallel Server, which relies on a shared disk architecture to improve availability and create a single database image for multiple processors within a cluster. But that design has performance bottlenecks that limit the system's scalability.

Cache Fusion uses faster memory cache, rather than disk, to record changes made to a database, with the change made to disk later, so there's no bogging down of machine-to-machine communication. Cached transactional data is also recoverable in the event of a failure, Oracle says.

"We're trying to get scalability on nonexotic hardware," says Roger Bamford, Oracle's principal architect and the brains behind Real Application Clusters. "Fusion's going to take these big symmetric multiprocessing systems and make them the exotic hardware." Due next spring, the database will be available for Unix, Windows, Linux, and OS/390 servers, and the clustering software for all except OS/390.

Real Application Clusters should improve Oracle's scalability in transaction-processing environments, says Richard Winter, a consultant and expert on very large database systems. "Up until now, clustering with Oracle has been used mainly to increase availability" and improve query throughput in read-only applications, says Winter. "Now, it can buy you scalability in update-intensive applications." What about overall database size? Theoretically, Oracle9i supports up to 250 petabytes of memory.

IT managers are intrigued by Oracle's claim that adding a second computer to a 9i system running Real Application Clusters nearly doubles transaction processing performance; and beyond four nodes, it reaches linear scalability, where a doubling of hardware translates to twice the performance. Sharing data on disk via Oracle Parallel Server adds CPU power to a system, but more I/O means "the database can always be the bottleneck to speed," says Eric Parnell, chief technology officer at RetailersMarketXchange, a Walnut Creek, Calif., spin-off from Chevron Corp. that's owned in part by Oracle. "If I don't have my architecture right, as I add nodes to an SMP environment I'll reach a point of diminishing returns."

Still, Oracle has something to prove when it comes to the most heavy-duty transaction environments or super-sized data warehouses. "We're experimenting with Oracle on the mainframe," says Jerry Skaggs, a VP in United Parcel Service Inc.'s IT department in Mahwah, N.J. But UPS's 32-terabyte, 39-million-transaction-per-day package-tracking system relies on IBM mainframes running DB2. "It's imperative for us to have that scalability," he says, and he's not sure Oracle does.

RetailersMarketXchange, built on Oracle8i, plans to launch a supply-purchasing Web site for 3,000 Chevron gas station and convenience store retailers this month. While scalability won't be an immediate problem, transaction volume will increase when food and beverage companies join next year. Says Parnell, "We're not Amazon .com--yet."

Oracle expects similar requirements from the growing number of online exchanges, business-to-consumer E-commerce sites, and app hosting companies. "We used to think supporting 10,000 users was a lot. Now it's a million," Ellison says. "It's a whole different world."

Oracle is also improving the database's online analytical processing and data-mining features. Until now, its Express OLAP engine and Darwin data-mining algorithms have been separate products. Oracle says building those technologies into the database will speed business-intelligence applications and real-time personalization. "Personalization requires more data access than just serving up static Web pages," Ellison says. "It's more performance-demanding on systems. Because we go faster, we enable more personalization."

This month, Oracle plans to ship Oracle9i Application Server, which will work with the forthcoming database to cache certain types of personalized information on a Web site. That should mean fewer database calls and faster performance.

Oracle has lagged behind competitors in offering integrated data-analysis features, says Betsy Burton, an analyst at Gartner Group. For example, IBM has already built statistical analysis algorithms from its Intelligent Miner data-mining tool into DB2, and tightly integrated the database with Hyperion Solution Corp.'s Essbase OLAP server, which IBM resells. Microsoft's SQL Server 7 has built-in OLAP technology, and SQL Server 2000, released last week, includes a data-mining engine.

Microsoft admits it has much to do to catch up with Oracle in high-end features, but it's far from conceding the market to Oracle or IBM. Oracle last year claimed 31% of the $8 billion worldwide database market, compared with IBM's 30% and Microsoft's 13%, Dataquest says.

Microsoft says SQL Server 2000 scales well for transaction throughput by adding nodes, though work remains on improving server management and achieving greater scalability for data analysis. "The challenge is to get management overhead down so it's approximately the same as on a single box," says general manager and architect Hal Berenson, hired by Microsoft from Digital Equipment Corp. six years ago for his database expertise. "Complex queries on the relational side don't scale out as well as we'd like," he says.

SQL Server may be less of a threat at the high end because of these limitations, but Oracle wants to make sure it can compete where Microsoft has made its biggest gains--among small and midsize companies. Smaller companies increasingly turn to application service providers for their data processing needs, says Jeremy Burton, Oracle's senior VP of product marketing. "We want to own the hosting centers that serve midmarket customers," by making those providers loyal Oracle clients.

Oracle won't say which of its customers have signed on to test 9i, but Ellison insists it's "a lot." And he says that when those customers talk, they'll back him up. "You won't believe me," says Ellison of Oracle's claims about 9i, "but if enough people say it, you'll believe it."

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