Re: Oracle Raising its prices

In unionised workforces the current rate of inflation is indeed a large piece of the bargaining for employee compensation. I don't know how unionised Oracle is (I'd guess not hugely). More generally rewarding employees consistently below the rate of inflation and thus making them worse off is pretty bad for morale and staff retention. A company like Oracle relies rather heavily on it's staff.

That all said, 18% is nothing so far as I can see to do with inflation and everything to do with attempting to set prices so as to maximise profit. In purely economic terms you'd expect a corporation that has significantly increased it's market share and reduced it's competition (by buying them) to be able to and to try to charge higher prices as a result of it's increased monopoly power.

Hey I knew that economics degree would come in handy one day! The pure monopoly case is set out well at
http://tutor2u.net/economics/content/topics/monopoly/monopoly_profits.htm though
Oracle is monopolistic competion rather than a pure monopoly - come to think of it I'd be interested to see how the open-source factor distorts the otherwise limited competion market for enterprise software.

Niall
On Mon, Jun 23, 2008 at 6:03 PM, Rich Jesse <rjoralist_at_society.servebeer.com> wrote:

> I'm (very very) far from an economics expert, but this doesn't make sense
> to
> me. Inflation forecasts (US at least) are trending down according to
> http://forecasts.org/inflation.htm And I've never heard of a publicly
> held
> company that responds to the inflation rate in determining employee
> compensation, unless perhaps it's part of union labor negotiations.
>
> If this rate increase is true, it's more likely to do with it being how
> much
> more revenue Oracle Corp figures they can get from customers before the
> customer reaches their FYO point (as so eloquitely put by one blog).
> Perhaps they're looking to more quickly reduce debt (and any interest paid
> on that) from a string of recent large aquisitions. Simple capitalism.
>
> As a customer, our FYO point is decreased by the constant quarterly
> reminders of "record revenues!" from Oracle, but I'm sure that's already
> been accounted for in this decision.
>
> My $.015 (adjusted for inflation),
> Rich
>
> > Hi
> >
> > Well rising inflation on oil has a spiralling effect on other areas as
> > oracle has to reimburse its employees higher gas allowances and need to
> > recover that from (wish they had recovered this from oil rich customers )
> > oracle customers :-)
> >
> > With rising inflation oracle has to increase the wages of its employees
> and
> > need to recover that from its customers :-)
> >
> > regards
> > Hrishy
>
>
> --
> http://www.freelists.org/webpage/oracle-l
>
>
>

-- 
Niall Litchfield
Oracle DBA
http://www.orawin.info

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