Re: TERM LICENSES - ANY Experience

Thanks for the explanation of the term licenses, Tim. I have to admit, I didn't know that there was such a thing called term license for Oracle. I had a blurb of an idea about software leases, but always thought the support costs were based on lease, not on perpetual license.

Arup

• Original Message ----- To: "Multiple recipients of list ORACLE-L" <ORACLE-L_at_fatcity.com> Sent: Sunday, June 01, 2003 11:24 AM

> This is my understanding of the situation for the US only; your mileage
may
> vary and I could be very much out of date. But I don't think things have
> changed a lot...
>
> ---
>
> The perpetual licenses are supposed to be a one-time payment for the
> software, after which you have rights to the software going forward into
> "perpetuity". Yes, forever is a long time; we'll see...
>
> The 4-year and 2-year "term" licenses are merely leases on the software
that
> expire. After the term is over, you no longer have a license. The 4-year
> term license usually costs 60% of the perpetual license and the 2-year
term
> license usually costs 35% of the perpetual license. The upsides of the
term
> licenses are obvious: less upfront cost. The downside should be equally
> obvious: you have to make another decision and potentially another
payment
> in 2 or 4 years. Oracle sales folks hate going through the decision
process
> again, so they try not to mention the term pricing if they can.
>
> The rationale for term licensing is either startup companies or other
> uncertain projects. Why pay for "perpetuity" when you are unsure that you
> are still going to be around in several years?
>
> Of course, there is some game theory involved. Oracle changes its
licensing
> schemes every once in a while, and market conditions can always shift. If
> you pay 35% now, you might have more favorable terms and conditions in two
> year's time. On the other hand, those shifts in conditions can also work
in
> Oracle's favor and against you, so you may end up missing an opportunity
to
> lock in now.
>
> You rolls the dice, you takes your chances...
>
> If you think you're going to use the software for only 2- or 4-years
total,
> then obviously the term licensing is a good deal overall. However, let's
> say you use the software for 6 years overall (after which you switch to
> freeware PostGreSQL, which by now has features comparable to Oracle15z).
If
> you buy three successive 2-yr term licenses, you have paid 105% of a
> perpetual license (i.e. 35% times three). And so on...
>
> ---
>
> Another thing to note: besides these license costs, you have to factor in
> the on-going support fees, which are charged annually for the duration of
> the license. They are still (I believe) 22% of a perpetual license. Note
> that support fees are not discounted into terms the way licenses are. You
> are always charged a percentage of the full (perpetual) license cost, not
of
> your discounted term license cost.
>
> Of that 22%, 15% goes toward allowing you free upgrades of the software
and
> 7% goes toward the use of Worldwide Support (i.e. MetaLink et al). So,
when
> you pay the initial license, you are licensing one version of the
software.
> In order to be able to upgrade your license, you have to pay the 15%
annual
> fee. In order to use MetaLink, you have to pay the 7% annual fee.
>
> Nice business to be in, no?
>
> Hope this helps...
>
>
>
>
> on 6/1/03 1:14 AM, rabbit_at_emirates.net.ae at rabbit_at_emirates.net.ae wrote:
>
> > We are concerned on licensing especially as we are setting up a
> > Disaster Recovery Site. During our Investigation it seems that
> > TERM licensing can come out cheaper. Anyone have any idea on
> > this or any disadvantages of leasing the software as opposed to
> > owning it,
> >
> > thanks
> >
> > Sam
>
> --
> Please see the official ORACLE-L FAQ: http://www.orafaq.net
> --
> Author: Tim Gorman
> INET: tim_at_sagelogix.com
>
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-- 
Please see the official ORACLE-L FAQ: http://www.orafaq.net
-- 
Author: Arup Nanda
  INET: orarup_at_hotmail.com

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