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Anyone who watches these things will know that high-end software is a tough, dirty business and not for the faint of heart, and Larry Ellison knows that better than most. So it will interesting to see how he reacts to IBM’s (news, site) new financial incentives to companies that want to move up from Oracle to IBM.

We use the term “move up” carefully, because people can get annoyed about that kind of thing sometimes, but the usage is from IBM’s announcement of the financial packages, and reflects, more than anything, the jostling for position in this market, on which Ellison has had some choice words as recently as its Q2 results in December.

Financial Incentives

Before looking at that, though, what is it that IBM is offering? According to the announcement made today by IBM, Big Blue is basically offering any company that wants to jump ship interest-free loans to buy IBM software, and that kind of software is never cheap.

Along with that, IBM is also offering skills training and proof of concepts to help them during their move, which will speed the whole process, as well as after-move support.

The support and loans should add at least a few new clients to the 1000 Oracle Database clients that are already using DB2 and the 400 WebLogic clients that are now using WebSphere, according to IBM, that is. So details of the new packages are as follows:

  • Free financial analysis of costs and savings from Oracle Database and WebLogic to DB2 and WebSphere
  • A free technical evaluation and conversion plan
  • Certified DB2 and WebSphere expertise course
  • A proof of concept where IBM works with clients to perform a side-by-side cost/performance comparison

And then on top of all that, just like a financial stack to go with the technology stack, IBM Global Financing is offering zero percent financing for credit-qualified clients ready to make the switch.

Details of the financial offerings include:

  • Fast approvals on zero percent financing for 12 months
  • No interest for 12 months with flexible payment options
  • No hardware purchase required

Oracle vs. IBM, the Rest

We all know there’s no such thing as a free lunch, so what’s going on here? If we go back to the Q2 earnings release in December, we get some idea. During his usual talk explaining aspects of the figures, Ellison unusually held back on SAP (news, site), and targeted IBM instead.

And with Exadata finally building up traction, IBM was always going to be a target. Ellison claimed at the time that Oracle had beaten IBM 30 times on sales during the course of 2010, and that, in some cases, it had sold into IBM strongholds.

Version 2 of our Sun Exadata database machine outperforms IBM’s fastest computer in both data warehousing and transaction processing … some of IBM’s largest customers began buying Exadata machines rather than big IBM servers in Q4 of FY2010,” Ellison said at the time.

And then there was further evidence of moves from HP (news, site), which announced 18 months ago a partnership with Microsoft to invest US$ 250 million in simplifying the IT environments for companies of all sizes and developing products.

Those products were to be built on a new infrastructure-to-application model, and in January it released four new ones.

While this HP-Microsoft partnership would have caused some consternation at Oracle, even though Ellison has predicted that HP will start running into problems this year, it wouldn’t have been welcomed by any company providing complete stacks, including IBM.

IBM probably has little enough to worry about here, despite all these developments, but it’s better to be safe than sorry, and what safer way to be than poaching your competitor's customers.

After all, the real trench warfare here will fought in the CFO’s office, in a battle to win the pockets of companies that are still a long way away from the heady pre-recession spending excesses.