Oracle’s New Pricing Model Ignores the Value of Java

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Java remains one of the world’s most popular programming languages and application platforms, powering millions of enterprise applications across a plethora of use cases. It was, therefore, unsurprising to see the confusion and shock customers experienced when Oracle announced its new Java pricing model earlier this year. Under the new terms, customers will pay for Oracle Java based on the number of employees in their company, regardless of how many actually ever use Java.

It’s bad enough that this is Oracle’s fourth Java pricing or licensing update in four years, but this latest change means that nearly everyone will pay more – as much as 2 to 10 times more by some estimates. Oracle built its Java business with a fairly logical pay-for-what-you-use approach, but this switch to employee-based pricing makes no sense.

A company with 1,000 employees —including full-time, part-time and contract workers — must pay for 1,000 licenses, even if only 100 of them need Java. If a single instance of Oracle Java is running somewhere deep in the enterprise, a company is liable to pay the full cost for every employee. Paying for the development team’s use of Oracle Java makes sense, but paying for the marketing and finance teams (who may not use Java) as well doesn’t add up. With Oracle’s latest pricing, the amount a company pays for Oracle Java is completely decoupled from the value they get from the software. For years, Java has provided immense value to customers — and not just tech companies, either. Businesses — from airlines to banks to entertainment providers — essentially run their entire IT infrastructure on Java. 

So what choice do these companies have? In previous years, customers could more easily manage their Oracle Java support costs by cutting back on their use of Oracle Java (i.e., reducing the number of instances used). Oracle Java licensing costs were a thing to be managed, but not a black-and-white decision. However, the new model makes it more complicated to wean an organization away from Oracle. Companies are left with a binary choice – continue dealing with uncertainty, audit risks and increased prices – or switch to an alternative. 

Thankfully, there are excellent alternatives: third-party Java runtimes based on open-source OpenJDK are on the rise, with some experts predicting that more than 70% of Java applications will be deployed on third-party Java runtimes over the next two years. This trend was already growing before Oracle’s pricing changes, and it is poised to accelerate even more in an uncertain economy where every company is watching its costs closely. The growing frustration with Oracle pricing could be the final straw that causes many enterprise customers to finally walk away.

About the Author

Scott Sellers – President, CEO & Co-Founder of Azul Systems. With more than 30 years of successful leadership in building high-technology companies and delivering advanced products to market, Scott provides the overall strategic leadership and visionary direction for Azul Systems. Scott has a consistent, proven track record of vision, leadership, and success in enterprise, consumer and scientific markets. Prior to co-founding Azul Systems, Scott founded 3dfx Interactive, a graphics processor company that pioneered the 3D graphics market for personal computers and game consoles. Scott served at 3dfx as Vice President of Engineering, CTO, and a member of the board of directors and delivered seven award-winning products and developed 14 different graphics processors. After a successful initial public offering, 3dfx was later acquired by NVIDIA Corporation. Prior to 3dfx, Scott was a CPU systems architect at Pellucid, later acquired by MediaVision. Before Pellucid, Scott was a member of the technical staff at Silicon Graphics, where he designed high-performance workstations. Scott graduated from Princeton University with a bachelor of science, earning magna cum laude and Phi Beta Kappa honors. Scott has been granted eight patents in high-performance graphics and computing and is a regularly invited keynote speaker at industry conferences.

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