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Dell, Oracle to Expand Software/Server Pact

Dell and Oracle are expected to refresh and expand their existing relationship in order to embed more of Oracle's database software on Dell servers as part of a low-cost bundle.

Just like the deal they struck last year, the latest Dell-Oracle pairing would help Oracle position against rival Microsoft, whose SQL Server database competes with Oracle's database products in the low end of the market. Oracle has been cutting the cost of its database products in the past year, and offered a one processor, sub-$1,000 9i option for small businesses.

An Oracle spokesperson refused to comment to internetnews.com. According to numerous reports, however, the companies are expected to a unveil a software bundle similar to last year's deal, which put Oracle's 9i database real application cluster (RAC) software on Dell's two-processor PowerEdge 2650 servers, which also run Linux. All the reports cited unnamed sources familiar with the deal.

Dell CEO Michael Dell and Oracle CEO Larry Ellison are hosting a news conference call Tuesday in order to officially announce the relationship expansion.

Last year at this time, Dell and Ellison said they had inked a global sales agreement to implant Oracle databases and application servers on Dell servers in Europe and Asia, and create cost-effective servers powered by Oracle software for small- and medium-sized businesses (SMBs).

Dell agreed to build server and storage platforms primed for Oracle 9i Database with RACs for both Red Hat Linux Advanced Server and Microsoft Windows environments. This cluster computing allows multiple computers and systems on a network to work as one.

Both companies have grown since they last linked arms. Oracle split its time developing its next-generation 10g database, application server and management software, and aggressively pursuing PeopleSoft to bolster its enterprise applications offering.

Oracle believes its 10g database's new self-management and automatic storage management features will help make the new software the standard database for SMBs and departments. Acquiring PeopleSoft would also help make the Redwood Shores, Calif., concern the No. 2 player in a growing applications market.

At the same time, Dell spent 2003 expanding its server and network switch lines, and jazzed up its storage systems on the strength of its pact with storage player EMC .

Securities firm SG Cowen said the revised Oracle/Dell pact should raise Oracle's profile in the low-end market.

"The marketing deal extends Oracle's recent price cutting on its Standard Edition One database," the firm said in a research note. "The Dell-Oracle combination is available for as little as $4,108. Oracle recently cut the list price for its standard-edition database to $4,995."

SG Cowen also said Dell recently spoke of potentially more favorable component pricing environment for the Round Rock, Texas company, which has been building up its services offerings of late.