Oracle hopes to reignite sales of its flagship database software, Oracle 9i, by shipping its next-generation product and introducing a new pricing plan. Oracle, which ranks first in database market share, has spent the first half of the year combating listless sales caused by the economic slowdown and renewed competition from IBM and Microsoft, which sell their databases at much lower prices than Oracle. The new pricing arrangement is expected to bring Oracle's software pricing in line with pricing models from IBM and Microsoft. Details of the new pricing plan have not been disclosed. Bob Austrian, an analyst with Banc of America Securities, said the company will ditch a controversial pricing plan, called "power unit" pricing in favor of a new model. "Power unit pricing was criticised sharply (by customers), so getting rid of it is a good thing," said Austrian. He said power unit pricing forced customers using servers with faster processors to pay more. "Whether the new model actually improves revenue generation remains to be seen," Austrian said, adding that he had no details of the new plan. "One can only guess if the new model will be less or more expensive to customers -- or less or more embraced by them." The new pricing plan "is important because the number one competitive pressure for Oracle is probably price," said analyst Jacqueline Coolidge of the Hurwitz Group. The announcements, to be unveiled by Oracle Chief Executive Larry Ellison at a press conference at the company's Redwood Shores, Calif. headquarters on Thursday, comes at a crucial period for the company. Database sales, which make up the bulk of Oracle's revenue, saw six percent year-over-year growth last quarter, far below the 19 percent to 32 percent growth rates reached last year. Some Wall Street analysts predict database sales will be remain flat or fall as much as 10 percent year-over-year when the company announces its fourth-quarter financial results next Monday. And while Oracle has widened its lead in the overall database market, a recent study of last year's sales found that rival Microsoft narrowly surpassed Oracle in the market for databases that run on the Windows operating system. IBM is also gaining steam after gobbling up database maker Informix in a recent $1bn acquisition. In an interview last week, Bob Shimp, Oracle's senior database marketing director, declined to elaborate on Oracle's forthcoming announcement. "We will tell people about packaging and pricing," he said. Analysts say a new pricing plan for Oracle's 9i database is vital to jumpstarting sales. They say Oracle alienated its customers in the past year with the power unit pricing model that increased costs for some customers, driving them to competitive products from IBM and Microsoft. In the past, Oracle charged customers two ways: "named users," where the databases are licensed to specific users' machines; and "concurrent users," where the database can be accessed by a set number of users, no matter who they are. About a year ago, Oracle stopped offering concurrent pricing and started offering pricing based on power units, where Oracle charges based on the size and power of server processors. The change forced about 70 percent of Oracle's customers to move to power unit pricing, which often resulted in overall higher costs, analysts say. In some cases, Oracle's database software costs three to five times more than products from its competition, said analyst Terilyn Palanca of Giga Information Group. "It's a substantial price increase and it drove people crazy. Customers were having heart attacks. And that's why you saw some attrition and growth rates for IBM and Microsoft," she said. IBM and Microsoft also sell databases with power unit pricing. The difference is, Oracle charges for not only the number of processors but also their speed, Palanca said. Outside of pricing, analysts say Oracle 9i has a technological advantage over IBM's DB2 and Microsoft's SQL Server 2000 databases. Oracle executives have marketed Oracle 9i as faster, better performing, more secure and easier to manage than the company's previous products. Database-management software is used by businesses and Web sites to store, manage and retrieve fast amounts of data. The product features new "clustering" technology--called Real Application Clusters--that will make the company's databases perform more reliably than before. Clustering lets businesses harness multiple servers to run a very large database, allowing servers to share work or take over from each other if one fails. Oracle executives have touted the clustering technology as a way to reduce costs because companies can buy smaller and cheaper servers to run their databases, rather than having to buy one huge expensive server. The 9i product also includes built-in analysis tools designed to help managers and executives make better business decisions. The built-in tools for "data warehousing" let companies examine business information, seek out patterns and trends, and predict the future. "Oracle has been pushing a lot of features, and they are staying ahead of the competition," Palanca said. Jeff Grant, founder of T-Swat Consulting in Vancouver, Canada, said he was impressed when he tested out the 9i database. "It rocks," Grant said. "A lot of stuff I do is e-commerce and security-based and the security enhancements (in 9i) are pretty important. They've come a long way since five years ago." Grant, a longtime Oracle customer who builds networks and computing systems for businesses, said the new clustering software is easier to use than Oracle's previous versions. Oracle's older clustering software, called Oracle Parallel Server, required specialized database administrators and also required developers to change software code to take advantage of clustering. "It was a nightmare to set up," said Grant, who added that he expects to save money because the clustering software lets him use lower-cost smaller servers. "It's a solid release," he added. "I haven't had any problems with the beta version. I haven't had it crash on me. And the Java is faster." Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet news forum. Let the editors know what you think in the Mailroom. And read other letters.