NAD recommends Oracle discontinue certain Exadata performance claims

I Received the following press release in my inbox today from the National Advertising Division (NAD) recommending that Oracle stop making certain performance claims about Exadata after a complaint from IBM.

In case you are not familiar with ExaData, it is a database machine or storage appliance that only supports Oracle database systems (learn more here). Oracle having bought Sun microsystems a few years back moved from being a software vendor that competed with other vendors software solutions including those from IBM while running on hardware from Dell, HP and IBM among others. Now that Oracle is in the hardware business, while you will still find Oracle software products running on their competitors hardware (servers and storage), Oracle is also more aggressively competing with those same partners, particularly IBM.

Hmm, to quote Scooby Doo: Rut Roh!

Looks like IBM complained to the Better Business Bureau (BBB) National Advertising Division (NAD) that resulted in the Advertising Self-Regulatory Council (ASRC) making their recommendation below (more about NAD and ASRC can be found here). Based on a billboard sign that I saw while riding from JFK airport into New York City last week, I would not be surprised if a company with two initials that start with an H and end with a P were to file a similar complaint.

I Wonder if the large wall size Oracle advertisement that used to be in the entry way to the white plains (IATA:HPN) airport (e.g. in IBM’s backyard) welcoming you to the terminal as you get off the airplanes is still there?

The following is the press release that I received:

For Immediate Release
Contact: Linda Bean
212.705.0129

NAD Finds Oracle Took Necessary Action in Discontinuing Comparative Performance Claims for Exadata; Oracle to Appeal NAD Decision

New York, NY – July 24,  2012 –TheNational Advertising Division has recommended that Oracle Corporation discontinue certain comparative product-performance claims for the company’s Exadata database machines, following a challenge by International Business Machines Corporation. Oracle said it would voluntarily discontinue the challenged claims, but noted that it would appeal NADs decision to the National Advertising Review Board.

The advertising claims at issue appeared in a full-page advertisement in the Wall Street Journal and included the following:

• “Exadata 20x Faster … Replaces IBM Again”
• “Giant European Retailer Moves Databases from IBM Power to Exadata … Runs 20 Times Faster”

NAD also considered whether the advertising implied that all Oracle Exadata systems are twenty times faster than all IBM Power systems.

The advertisement featured the image of an Oracle Exadata system, along with the statement: “Giant European Retailer Moves Databases from IBM Power to Exadata Runs 20 Times Faster.” The advertisement also offered a link to the Oracle website: “For more details oracle.com/EuroRetailer.” 

IBM argued that the “20x Faster” claim makes overly broad references to “Exadata” and “IBM Power,” resulting in a misleading claim, which the advertiser’s evidence does not support.  In particular, the challenger argued that by referring to the brand name “IBM Power” without qualification, Oracle was making a broad claim about the entire IBM Power systems line of products. 

The advertiser, on the other hand, argued that the advertisement represented a case study, not a line claim, and noted that the sophisticated target audience would understand that the advertisement is based on the experience of one customer – the “Giant European Retailer” referenced in the advertisement.

In a NAD proceeding, the advertiser is obligated to support all reasonable interpretations of its advertising claims, not just the message it intended to convey.   In the absence of reliable consumer perception evidence, NAD uses its experienced judgment to determine what implied messages, if any, are conveyed by an advertisement.   When evaluating the message communicated by an advertising claim, NAD will examine the claims at issue in the context of the entire advertisement in which they appear.

In this case, NAD concluded that while the advertiser may have intended to convey the message that in one case study a particular Exadata system was up to 20 times faster when performing two particular functions than a particular IBM Power system, Oracle’s general references to “Exadata” and “IBM Power,” along with the bold unqualified headline “Exadata 20x Faster Replaces IBM Again,” conveyed a much broader message.

NAD determined that at least one reasonable interpretation of the challenged advertisement is that all – or a vast majority – of Exadata systems consistently perform 20 times faster in all or many respects than all – or a vast majority – of IBM Power systems. NAD found that the message was not supported by the evidence in the record, which consisted of one   particular comparison of one consumer’s specific IBM Power system to a specific Exadata System. 

NAD further determined that the disclosure provided on the advertiser’s website was not sufficient to limit the broad message conveyed by the “20x Faster” claim. More importantly, NAD noted that even if Oracle’s website disclosure was acceptable – and had appeared clearly and conspicuously in the challenged advertisement – it would still be insufficient because an advertiser cannot use a disclosure to cure an otherwise false claim.

NAD noted that Oracle’s decision to permanently discontinue the claims at issue was necessary and proper.

Oracle, in its advertiser’s statement, said it was “disappointed with the NAD’s decision in this matter, which it believes is unduly broad and will severely limit the ability to run truthful comparative advertising, not only for Oracle but for others in the commercial hardware and software industry.”

Oracle noted that it would appeal all of NAD’s findings in the matter.

###

NAD’s inquiry was conducted under NAD/CARU/NARB Procedures for the Voluntary Self-Regulation of National Advertising.  Details of the initial inquiry, NAD’s decision, and the advertiser’s response will be included in the next NAD/CARU Case Report.

About Advertising Industry Self-Regulation:  The Advertising Self-Regulatory Council establishes the policies and procedures for advertising industry self-regulation, including the National Advertising Division (NAD), Children’s Advertising Review Unit (CARU), National Advertising Review Board (NARB), Electronic Retailing Self-Regulation Program (ERSP) and Online Interest-Based Advertising Accountability Program (Accountability Program.) The self-regulatory system is administered by the Council of Better Business Bureaus.

Self-regulation is good for consumers. The self-regulatory system monitors the marketplace, holds advertisers responsible for their claims and practices and tracks emerging issues and trends. Self-regulation is good for advertisers. Rigorous review serves to encourage consumer trust; the self-regulatory system offers an expert, cost-efficient, meaningful alternative to litigation and provides a framework for the development of a self-regulatory to emerging issues.

To learn more about supporting advertising industry self-regulation, please visit us at: www.asrcreviews.org.

Linda Bean l Director, Communications,
Advertising Self-Regulatory Council

Tel: 212.705.0129
Cell: 908.812.8175
lbean@asrc.bbb.org

112 Madison Ave.
3rd Fl.
New York, NY
10016

Ok, Oracle is no stranger to benchmark and performance claims controversy having amassed several decades of experience. Anybody remember the silver bullet database test from late 80s early 90s when Oracle set a record performance except that they never committed the writes to disk?

Something tells me that Oracle and Uncle Larry (e.g. Larry Ellison who is not really my uncle) will treat this as any kind of press or media coverage is good and probably will issue something like IBM must be worried if they have to go to the BBB.

Will a complaint which I’m sure is not the fist to be lodged with the BBB against Oracle deter customers, or be of more use to IBM sales and their partners in deals vs. Oracle?

What’s your take?

Is this much ado about nothing, a filler for a slow news or discussion day, a break from talking about VMware acquisition of Nicira or VMware CEO management changes? Perhaps this is an alternative to talking about the CEO of SSD vendor STEC being charged with insider trading, or something other than Larry Ellison buying an Hawaiian island (IMHO he could have gotten a better deal buying Greece), or is this something that Oracle will need to take seriously?

Ok, nuff said for now

Cheers Gs

Greg Schulz – Author Cloud and Virtual Data Storage Networking (CRC Press, 2011), The Green and Virtual Data Center (CRC Press, 2009), and Resilient Storage Networks (Elsevier, 2004)

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