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Oracle Corp. on Tuesday plans to announce a price cut for a lower-end version of its database, part of an effort to lure potential customers away from Microsoft Corp.'s SQL Server software, according to a source familiar with the plan.

The 10g version of Oracle's Standard Edition One database, aimed at small and midsize companies, will be listed at $4,995, a $1,000 price drop, the source said. It will also allow customers to run the software on up to two processors. Currently, Standard Edition One is for use on only single-processor machines.

Oracle is also considering adding limited RAC (Real Application Clusters) capabilities to the Standard Edition of its 10g database, which is also aimed at small and midsize businesses, for no additional charge, according to the source. The company has positioned the technology, which lets companies run their database across a group of servers, as an important differentiator from its competitors.

An Oracle spokeswoman declined to comment on any planned announcements. The company has invited media to a conference call Tuesday morning to discuss "10g-related topics."

Oracle President Chuck Phillips alluded to the price cuts in a presentation to financial analysts this week. Having established itself as an ardent Linux supporter, the company is going to make more of an effort to promote its database on Windows in the hope of stealing some business from Microsoft, he said in a speech that was webcast from San Diego.

"This is the first time ever we've had the same list price per processor as Microsoft," Phillips said, apparently preempting Tuesday's announcement. Pricing for SQL Server 2000 starts at $4,999 per processor.

Microsoft did not immediately respond to requests seeking comment.

News source: InfoWorld - Oracle to cut price on lower-end database

It was unclear Friday whether Oracle plans to announce any pricing changes to the higher-end versions of its database. Oracle 9i Enterprise Edition is priced at $40,000 per processor.

While Oracle's database is known for performance and its ability to scale, the company has battled a reputation for complexity and high costs when compared to Microsoft, Phillips acknowledged in his speech. New ease of use features in Oracle 10g, combined with its pricing strategy, will help the company compete more effectively with Microsoft, he said.

Oracle's Standard Edition One database was released in October. A few months earlier IBM Corp. also released a version of its database software for the midmarket. It retails for $499 for the base server package plus $99 per user, and is available for one- and two-processor systems.