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The always heated ongoing rivalry between Oracle and IBM, just got more contentious, with the recent news that the National Advertising Division (NAD) has called out Oracle for publishing misleading ads in The Wall Street Journal and The Economist claiming Oracle’s T4-4 server is 2x faster and 66% cheaper than IBM’s comparable P795 server.

NAD, a division of the Council of Better Business Bureaus, based in New York City recommended that Oracle discontinue “certain comparative performance and pricing claims” in the national newspaper ads and on the www.Oracle.com website. Specifically, the NAD took exception to Oracle advertisements claim that “Oracle’s SPARC SuperCluster T4-4 system retails for $1.2 million whereas IBM’s P795 high end server costs $4.5 million – an improbable $3.3 million price discrepancy.

The NAD functions as an objective and impartial self-regulatory forum for the advertising industry. In its official determination, the NAD took pains to remain objective. It noted that both the advertiser (Oracle) and the challenger (IBM) produce high quality computer systems.

It’s par for the course for all vendors to claim that their products are bigger, better, faster and cheaper than competitors’ offerings. But what got the NAD’s attention and sparked the investigation was whether or not Oracle’s “…superior comparative performance and pricing claims conveyed a truthful, accurate and on-misleading message regarding the performance and price of the Oracle SPARC SuperCluser T4-4 compared to the featured IBM computer system,” the NAD said in an April 11 press release recommending that Oracle discontinue making the comparative price and performance claims against IBM.

Specifically, the NAD recommended that Oracle expressly inform consumers, in the main body of its advertisements that IBM included a separate storage unit as part of the overall price. The NAD also concluded that Oracle’s superior performance claims were “not supported by the advertiser’s evidence and could not be cured by the disclosure at the advertiser’s website.” The NAD specifically recommended that Oracle “permanently discontinue” claiming that “the SPARC SuperCluster T4-4 runs Oracle and Java twice as fast as IBM’s fastest computer.”

Additionally, the NAD advised that in order to “avoid consumer confusion regarding price comparisons for the Oracle SSC T4-4 and the IBM Power 795, that Oracle disclose the following information:

  • The specific model and configuration of the IBM Power 795
  • The Specific storage unit included in the price comparison
  • The assumed prices for both units

In its own advertiser’s statement, Oracle said it disagreed with “certain of NAD’s findings.” “Nevertheless,” Oracle said, “it wishes to inform the NAD that the advertisement at issue in this proceeding has been discontinued and Oracle does not intend to disseminate it in that form in the future…”

What it All Means: Caveat Emptor

Although the current Oracle vs. IBM NAD inquiry seems settled for now, customers haven’t seen the last of confusing, misleading hyperbole-filled vendor ads touting the superior price/performance of a particular high technology maker’s product over rival offerings. The ongoing rivalries between competitors like Oracle and IBM will only intensify. Users should read the fine print and not accept claims from any vendor at face value.

The continuing economic crunch, puts users in a position of power and lots of leverage to negotiate better deals. Vendors are more willing than ever to offer many types of incentives from deeper discounts, better licensing terms and conditions and extras that may include items like: free or discounted training, technical service and support, price caps or even some free products or inclusion into select alpha or beta test programs.

The moral of the NAD’s investigation into Oracle’s price/performance claim against rival IBM is “Caveat Emptor” Latin for “Buyer Beware.”

There are good deals to be had but customers must fight for them. That means wading through the vendor hype, perform due diligence and do an apples-to-apples comparison of the specific features, functions and capabilities of their intended infrastructure purchases including servers, desktops, storage, virtualization and cloud as well as doing a thorough review of the Terms and Conditions of your current licensing agreements.

Businesses are also advised to do perform their own price/performance comparisons and challenge vendors to back up their claims. In order to get the best deals, organizations should:

  • Regularly review the performance and after-market technical service and support they receive from their vendors and provide the vendors with constructive feedback – both good and bad.
  • Challenge all vendors to match or better pricing on specific products. While it may be difficult to get a big discount on a hot item like an Apple iPad, that’s an exception. Corporations – from the smallest SMBs to the largest enterprises – can almost always negotiate a better deal. This assumes that the business is in compliance with their current licensing T&Cs.
  • Familiarize yourself with the standard list prices and discounted street pricing of all computer equipment. This will make it difficult for a less than reputable sales person to oversell an item that could cost your firm thousands or millions.
  • Conduct an itemized list of everything that’s included in the Total Cost of Acquisition (TCA). Organizations should involve all pertinent parties in purchasing decisions, including the C-level executives such as chief executive officers (CEOs), chief technology officers (CTOs); VP of IT, IT managers and network administrators. It’s crucial to perform a head-to-head comparison of everything that’s included in the purchase price, so your firm won’t be duped by misleading ads and get a nasty surprise when presented with the bill.

Finally, if something looks too good to be true, it probably is. Or if a vendor claims to be undercutting the competition by vast amount — such as Oracle selling its’ SSC T4-4 server for over $3 million less than IBM’s competing Power 795 Server, then it is most likely specious.

To view the full NAD findings on the Oracle SSC T4-4 versus IBM Power 795 Server price/comparison go to: http://www.narcpartners.org/DocView.aspx?DocumentID=9053&DocType=1. You can also go to the NAD’s website for more information about the organization as well as to view other advertising disputes at: http://www.nadreview.org/start.aspx

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