OEM deals can be great for the original vendor. Just look at Oracle, whose relational database management system was embedded with large applications in the 1980s and 1990s. If vendors could get success like Oracle's through these partnerships, you would think that they would be begging other companies to resell their products.
With that in mind, consider the following details of Actuate's OEM partnership offer:
"'Actuate’s new OEM Quick Start Program provides our ISV partners with the software and services they need to enhance their applications and drive new sources of revenue,' said Nobby Akiha, senior vice president of Marketing at Actuate. 'With our Rapid-Time-to-Market methodology for addressing our partners’
development, marketing and sales challenges, they can reap the full benefits of Actuate-based applications and pursue the rewards of the increasingly heated Rich Internet Applications market.'
Additionally, the OEM Quick Start Program provides superior design environments for creating new products with increased performance, reduced development time, improved end-user experience and increased profit margins. Actuate partners also receive support and development platforms, providing a fast, effective means to deploy Actuate enhanced applications to customer communities of any size and add capacity easily and cost-effectively as their needs grow.
The OEM Quick Start Program provides participating partners with a kit that includes the following:
- Development licenses for Actuate BIRT-based environments for up to five users on a single server
- One online training course for one student
- One day of application installation and setup support
- Four days of consulting with an Actuate Professional Services expert (does not include travel and associated expenses)
- High-quality and responsive support via phone and email
throughout the development and prototyping process
- Significant discounts on deployment software when the Actuate-based solution is ready to go to market
The Actuate Quick Start OEM Program is immediately available and priced at $35,000."
For 35 grand (plus expenses, of course), you can get copies of open-source BIRT software, a single person trained for one day, one day of installation assistance, and four days with a high-paid advisor flown in from a far-away locale. When you are ready to sell your application to customers, Actuate will give you some discounts, because you evidently have to pay for even more software licenses at that time.
That's a hefty chunk of change to get the rights to resell Actuate. If application vendors have to incur this type of cost during the upfront development effort and then pay for additional licenses each time they sell their product, how can they be profitable? Well, they try to pass along the cost to the customer and inflate their asking price. But I wonder how long customers will continue to be willing to pay high costs for software applications, especially those made with open-source BI tools.
Back at the end of September, Christopher Dawson posted a ZDNet blog entry on how he looked into buying SAS to do statistical analysis for his local school district in Massachusetts. Christopher choked on SAS's quote of $5,000.
Having worked for software vendors most of my career, I can pretty much guess that the SAS sales rep thought he was being extremely nice to Christopher and basically giving away the product for an unrealistically low dollar amount. But no, Christopher thought that was too expensive and decided instead to try to use the open-source R statistics package.
Of course, Christopher is with a small, non-profit educational organization. His story may not represent a real trend for purchasing BI software. Perhaps the mega-companies are still willing to spend big bucks for BI software products.
What's this? Today, GM is selling for under $5 per share? Ford Motor is selling for $2 per share? P&G's value just lost $10 per share? Xerox just lost half its market value? Now, that is the trend making the news. That will change the way BI software is purchased.
Maybe Actuate's offer is more of an "Empty Your Pockets" deal, where they are looking for cash. Hopefully, those vendors who want to make an investment to play with Actuate will still be able to cover the $35,000 expense. Even more, I hope they will still have customers able to buy their finished application.