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It’s Strike Three for Oracle in its ongoing argument with the Better Business Bureau’s National Advertising Division (NAD) and IBM over a series of 2012 ads in which Oracle claimed its servers were much less expensive and outperformed Big Blue’s machines.

NAD, the investigative unit of the advertising industry’s system of self-regulation, has now forwarded the complaints onto the Federal Trade Commission. The FTC is a government regulatory agency and it wields much more authority than the BBB or NAD.

At this point, Oracle would do well to give up gracefully. But given the history between these two long standing rivals, that is unlikely to happen.

The dispute revolves around three separate Oracle advertising campaigns in 2012, which ran in major publications including The Wall Street Journal. According to the NAD’s latest press release each of Oracle’s ads featured “an overbroad and unsupported comparison between one Oracle product and one IBM product.” Each campaign was reviewed by NAD following complaints lodged by IBM, which alleged Oracle’s claims were specious and hyperbolic. The NAD reviewed all of the complaints and agreed with IBM and recommended that Oracle discontinue making misleading claims in its advertisements.

NAD published its first decision regarding Oracle’s advertising in April 2012, and the second in July 2012. Oracle appealed NAD’s July 2012 findings to the National Advertising Review Board (NARB), which affirmed NAD’s decision. NAD examined a third Oracle campaign in October 2012. In the most recent occurrence, IBM contacted the NAD regarding a fourth Oracle advertising campaign, which claims that Oracle’s SPARC T5 has “2.6x Better Performance” as compared to IBM’s Power7+ AIX server.

In rendering the latest decision, NAD said in a statement that “the advertisement contrasts IBM’s with Oracle’s server and relies on the results of testing one particular configuration of the Oracle SPARC T5 against one particular configuration of IBM’s Power7+ AIX server to support an overall superiority claim for the Oracle line of products.” The NAD determined that the advertising in question “features the same stark, overbroad IBM-versus-Oracle comparison that NAD recommended against in the three previous cases.”

NAD’s decision notes that given “Oracle’s repeated failure to make any (much less a good faith) effort to bring its advertising into compliance with the guidance of both NAD and NARB, NAD has determined that self-regulation has failed to resolve this problem and is referring this matter to the appropriate governmental agency for additional review.”

Déjà vu and Caveat Emptor

Oracle’s antics are tiresome. Oracle Corp. shouldn’t need an oracle (pun intended) to figure out that the hyperbole stating its servers trounce rival IBM in price and performance by unbelievably wide margins are having the opposite effect of what Oracle intended. Few, if any customers are gullible enough to believe that Oracle hardware delivers up to an order of magnitude greater performance at one-quarter, one-third or one-half the cost of comparable IBM servers in equivalent configurations.

The real truth is that if IBM, Oracle or any vendor wishes to retain or up sell a crucial, existing customer account, it will offer huge discounts and undercut the competition to win the business. However, in today’s tough economic climate no hardware vendor, including Oracle, can afford to routinely under-price their products, without seriously compromising their own bottom line. It’s a well documented fact that Oracle’s hardware business has been contracting for over two years – almost from the day it purchased Sun Microsystems.

From a performance standpoint any IT manager or C-level executive (e.g. CIO or CTO) knows that performance is at least 50% due to user configuration, specific workloads and the state of the network environment. In short, claims of performance superiority in any vendor’s advertising campaign should be digested with a large block of salt. Until the organization is able to pilot test and compare products side by side and then deploy them in a production setting or has had prior experience with the vendor’s products and service and support there is no way of knowing when one product will outperform the competition. Product performance, reliability, manageability and interoperability are dependent on the vendor being proactive in these areas and delivering top notch technical service and support. In the latter instance, Oracle is woefully lagging behind IBM. According to ITIC’s 2013 -2014 Global Server Hardware and Server OS Reliability Survey which polled over 600 businesses earlier this year, Oracle x 86 servers experienced the highest percentage — 6% — of greater than four (4) hours of per server annual downtime of any of the 14 different server hardware platforms.

The independent, non-sponsored ITIC survey respondents also gave Oracle low market for technical service and support. The reliability and manageability of Oracle also products lagged well behind Dell, HP, IBM, Microsoft and others.

The survey data showed that 16% of Oracle customers rated service & support as “Poor or Unsatisfactory” compared with only two percent of IBM users who rated service and support as “Poor” and none of the IBM survey respondents gave Big Blue an “Unsatisfactory” score for support. Dissatisfaction with Oracle licensing and pricing policies remains high.

IBM server administrators spend the least time rebooting the server OS, including planned reboots to add or reconfigure system resources. Three-quarters – 75% of IBM administrators “rarely or never” reboot the server compared with 66% of HP managers and 51% of Oracle administrators.

Oracle’s decision –undoubtedly comes from the top down, e.g. a patented Larry Ellison directive that no PR or marketing type dare ignore. Saner heads are unlikely to prevail.

Oracle’s actions reek of desperation, are the height of stupidity and ultimately futile. The company would be better served by taking the money it’s spending on its anti-IBM campaign and providing rebates, discounts and better technical service and support to its own customers.

The NAD has thrice shot Oracle down and it has now referred the issue to the FTC. Oracle should quite while it’s behind. Oracle has about as much chance of eroding IBM’s hardware base as it does blowing on the Rock of Gibraltar and expecting it to fall into the Mediterranean.

Confusing, misleading hyperbole-filled vendor ads touting the superior price/performance of a particular high technology maker’s product over rival offerings are standard fare in the high technology industry. 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 and upcoming FTC investigation into Oracle’s price/performance claim against rival IBM is “Caveat Emptor” Latin for “Buyer Beware.”

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