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Grid Computing Is Growing

Oracle's Ellison says he sees it in Oracle's sales figures, and analyst research points to an upward tick, too.

Oracle Corp. has been one of the loudest voices promoting grid computing, and now it looks like demand for the technology is on the rise. At the vendor's analyst day on Wednesday, CEO Larry Ellison told Wall Street analysts that there's significant momentum behind the company's Real Application Clusters technology, the foundation of its grid strategy, in terms of sales growth and technology trends playing out within corporate IT departments.

The challenge of trying to consolidate fragmented information within companies will most easily be solved by grid architectures in which lots of smaller databases are linked to create one virtual database, Ellison said. Oracle predicts that the 60% growth in Real Application Clusters sales posted during the 2004 fiscal year is just the beginning. "The future isn't 64- or 128-processor machines," Ellison said. "The future of computing is two-processor machines or four-processor machines grouped together in a grid."

Other evidence that grid computing is starting to catch on is emerging. Market researcher Evans Data Corp. last week said a June survey of 502 database developers found that 37% are implementing or plan to implement a grid-computing architecture. That's up from 21% in a similar survey last December. The survey found that six out of 10 developers will eventually implement grid systems to support database applications, transaction databases, data warehouse and analytic software, and specialized scientific and engineering applications. Still, while many developers expect faster database performance, improved database availability, and more memory space from grid computing technology, fully one-third see no tangible benefits.

The Statue of Liberty-Ellis Island Foundation Inc., which uses the Oracle 9i database to maintain 30 million immigrant records, plans to install a grid system later this year using the Oracle 10g database, RAC software, and multiple rack-mounted blade servers. The architecture will spread the workload among multiple inexpensive blade servers that will be easier to operate and maintain, says IT director Sam Daniel. The current system uses two database servers kept in sync using RAC. "Grid is where we want to go," Daniel says.

Ellison pointed to a growing RAC customer base that numbers 4,200 as evidence that Oracle is ahead of grid competitors. But Burton Group analyst James Kobielus says there's no one leader, largely because there's no one right approach. "Basically, they're playing a game of true grid--my grid is bigger than yours, my grid has more muscle than your grid, my grid is a true grid and yours isn't," says Kobielus. "This is a bunch of bunk. There are a lot of ways to do grid."

Meanwhile, Oracle continues to push the applications it expects will increasingly run on grid architectures. The company provided early details of Oracle's 11i.10 E-business software, due for release later this year, promising a relaunch of the sales and marketing modules of the CRM suite, a beefed-up service module, and more integration with front- and back-end business processes.

Ellison reiterated his position that the application market was an overcrowded one, and that it wouldn't be long until a few mammoth apps vendors emerge--Oracle among them--surrounded by innovative companies developing new technologies around the periphery. But some analysts want to see Oracle devote less attention to applications and concentrate on its core database business.

"Apps are under pressure," says Charles Di Bona, analyst with Sanford C. Bernstein & Co. LLC. Di Bona says apps vendors are being forced to eat into margins by offering products at discounts of as much as 80%, and that prime markets, such as ERP, are saturated. "They're competing over table scraps."

While Oracle remains bullish on its apps business, it was clear that its executives were cautious last week in the wake of a rash of unexpected earnings warnings from software vendors. The company wasn't willing to back off its expectation that overall revenue will grow 6% to 9%, and that new software license revenue--both database and applications--will rise 5% to 15%, but the recent news cast a pall over any enthusiasm.

"It's not at all clear to me that something has fundamentally changed to make things a lot worse," said chairman Jeff Henley, who last week handed off the CFO role to former Accenture CFO Harry You. "I hope we're not being naive with our pre-announcement, but we don't think we're seeing the bubble burst."

To the contrary, Ellison said. "This is the recovery--enjoy it," he said. "We're not going back to the lunacy."

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