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NetSuite relaunches, Oracle delays small-business suite

By , IDG News Service
August 19, 2004 01:58 PM ET

IDG News Service - Two months after ending a licensing deal with Oracle, midmarket business applications vendor NetSuite is using its entry-level software relaunch to woo customers of Intuit's QuickBooks.

NetSuite said this week it upgraded its NetSuite Small Business application, formerly known as the Oracle Small Business Suite, with usability features and data migration tools targeted at QuickBooks users. NetSuite hopes its Web-based bundle of sales, accounting and e-commerce technology will entice customers outgrowing older and less scalable accounting-based software systems.

The NetSuite Small Business application, which starts at $99 per month for the first user and $49 per month per additional user, is NetSuite's starter package. While the company would like to expand its presence at the smallest end of the business applications market -- it claims to have converted 1,000 companies from QuickBooks to NetSuite in the past five years -- only a small fraction of NetSuite's customers use the entry-level package, according to CEO Zach Nelson.

To address the needs of the upper midmarket, NetSuite plans to launch a new, more advanced version of its software at the end of September, Nelson said. The addition will expand its portfolio of products from software aimed at tiny organizations with a few dozen employees to larger businesses doing more than $100 million in annual sales.

San Mateo, Calif.-based NetSuite, which reports a customer base of 7,500 companies, competes in the hosted CRM market with vendors such as Salesforce.com. Its differentiator is a focus on integrated front- and back-end systems for small and mid-size companies. In addition to CRM, NetSuite sells ERP and commerce applications, which can be bundled together into its eponymous NetSuite software.

The company's co-founder and majority owner is Oracle CEO Larry Ellison. Ellison still takes an active interest in NetSuite, according to Nelson, but Oracle and NetSuite have taken steps to distance themselves as their products compete more directly. In June they ended a licensing deal that loaned Oracle's name and branding power to NetSuite's software. Meanwhile, Oracle is casting a spotlight on its managed-software services, which it recently renamed "Oracle On Demand."

Oracle has been edging toward the small-business market, though Oracle's definition of "small" remains significantly above that of most vendors dedicated to that market -- it was only last year that Oracle ended a requirement that customers spend at least $250,000 to be eligible to license its E-Business Suite applications.

Oracle executives disclosed last year that the company planned to introduce a lower-cost, midmarket applications bundle called the E-Business Suite Special Edition. The package was first released in Asia in late 2002, and in Europe shortly after, but plans to bring it to the U.S. have fallen seriously behind. Initially intended to launch last year, the bundle is still in the works; a spokeswoman said the North American version is now expected to roll out within the next three months. Oracle declined to comment on what the package includes, and how it will be priced, until closer to the launch.

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