When CEO Larry Ellison unveiled the Oracle Database Machine at its OpenWorld show last week, he made a claim that probably surprised many Oracle watchers and customers: that its new $2.3 million (£1.3 million) data warehouse-in-a-rack was far cheaper than competitors' wares.

According to Larry Ellison, the database Machine -- a pre-configured rack of 14 new, intelligent Exadata Storage Servers that were also introduced at OpenWorld, along with 8 Oracle Database 11g servers, all connected via high-speed InfiniBand pipes -- costs $14,000 per TB (terabyte), less than half comparable products from two leading data warehousing appliance vendors, Teradata and Netezza

However, analysts and competitors say Oracle used aggressive assumptions to come up with its price calculations. Using more realistic assumptions that factor in Oracle's penchant both for upselling so-called optional features as well as offering discounts, they say the Database Machine will still prove substantially pricier than competing products for all but large, existing Oracle database users.

"If you're buying from scratch, you'll have to add an extra $3 million," said Randy Lea, Teradata 's vice president of product and services marketing. "[Oracle] has done good marketing on their part to confuse the pricing issue."

"Oracle's typical pricing announcements talk about the most scaled-down, vanilla option," said Eliot Colon, President of licensing strategy firm Miro Consulting. "But there is always the option recommended by Oracle, and that always costs a great percentage higher."

Database Machine: nearer $5.55M, than $2.33M?

An Oracle spokesman declined to comment, instead directing Computerworld to a slide during Ellison's presentation last week (see 28:20 in the keynote video) comparing the Database Machine versus Netezza 10100 and the Teradata 2550.

Netezza's 43 TB data warehousing appliance lists for $1.25 million, or $29,000 per TB; while Teradata's 43 TB appliance costs $1.5 million, or $35,000 per TB.

Meanwhile, Oracle's costs $650,000 for the hardware and $1.68 million for the software, for a total of $2.33 million. A higher total price, but Ellison said with 168 TB of storage, the Database Machine's price-per-TB of $14,000 was cheaper than the others.

"We are closer to the price of a disk array," Ellison said. "And the price will continue to go down while performance goes up."

That keynote slide did have an asterisk next to its software price with a small note at the bottom, "Use your existing database licenses and 0% discount on storage server software."

That is a key assumption, say experts such as independent database analyst Curt Monash and Miro Consulting's Eliot Colon. Based on Oracle's recommended configuration and price list, customers who do not already own transferable enterprise Oracle database licenses with the given options would need to pay an additional $3.2 million (see Monash's detailed calculations.)

That increases the price 140%, and makes the price-per-TB of the Database Machine about $33,000 -- higher than Netezza's and slightly lower than Teradata's.

Netezza, which had blasted the Exadata and Database Machine as products that had been cobbled together "with glue and spit declined to confirm or dispute the price of its appliance listed by Ellison. But in a statement, Netezza said, "We do believe we will compete very favourably on price/performance with the Oracle Database Machine and Exadata entrants in the market."

Upselling customers to faster, pricier configurations

Teradata's Lea, meanwhile, says that Oracle's price-per-TB only applies if customers buy their Exadata Storage Servers configured with 1 TB SATA drives rather than the faster, smaller 300 GB Serial-Attached SCSI (SAS) drives.

Oracle charges the same price whichever drives that users pick. That means users who pick the faster SAS drives would pay 333% more per terabyte. That raises the price per terabyte for Oracle users with fully transferable licenses to $46,000, or 31% more than Teradata, and up to $110,000 per terabyte for those lacking any Oracle database licenses, which is 314% more than Teradata's price.

Colon says Database Machine customers shouldn't be surprised if they find themselves steered by Oracle's sales representatives toward the faster-but-pricier SAS drives.

"There is always the vanilla out-of-the-box solution that Oracle doesn't really recommend," Colon said. "You really have two options: buy what they recommend today, or buy it eventually down the road."

Also, Oracle's price-per-TB are based on the amount of raw storage you buy, rather than the amount of actual user data you'll be able to store. Databases typically need extra space to create indexes of the data, temporary read/write working spaces, and redundant and replicated data for backup purposes.

Some of that space can be reclaimed, says Monash, depending on how efficiently a database compresses the data. Still, a database with raw tables that take up 10 TB may actually require 20-30 TB of storage overall, even after compression.

Lea claims that Teradata data warehouses, despite less advanced compression technology than Oracle's, still require less disk overall to deliver peak performance.

"To optimise an Oracle environment, there is a lot of data duplication," Lea said.

What if users are scared off by the Database Server's price and are interested in adding just Exadata Storage Servers one by one?

Ellison hadn't disclosed the price during launch, but Monash estimates based on Oracle price sheets that a lone Exadata costs about $150,000, of which about $120,000 is attributable just to the storage software licenses for the 12 drives.

For these reasons, Lea says Teradata has no plans to cut its prices in the wake of the Database Machine announcement.

Colon, meanwhile, says that it was far too early to recommend the Database Machine to anyone.

"This needs to play out a little better, to see what unforeseen costs may arise," he said. "Let the announcement and the mood stabilise a bit, let the pricing become formalised, analyse it, and then maybe make an investment.”