Oracle next week will unwrap the latest version of the company's Java application server and preview the next version of its flagship database.

The products will be released at Oracle OpenWorld - the annual Oracle users' conference - which this year expects to see an estimated 40,000 attendees. Oracle is hoping for a record turnout as it promotes the combination of database and Java application server as a foundation for Web-based e-business transactions.

The company's moves are critical as Oracle9i Application Server and Oracle9i Database will now support the standards that make up so-called Web services. Key Oracle competitors IBM and Microsoft have also jumped into the Web services pool.

In a nutshell, Web services provide chunks of reusable code that could be cobbled together on the fly using XML and its variants, the Simple Object Access Protocol (SOAP), a system of service directories based on the Universal Description, Discovery and Integration (UDDI) specification and other standards.

Version 2.0 of Oracle9i Application Server will be available this week in a developer's edition on Oracle's Web site. The new version, which will ship early next year, has more than 250 new features.

There are several key changes in the new version. One is expanded support for Web service standards, such as the UDDI 2.0 registry. Also new are:

-- Faster XML processing.

-- Easier techniques for getting Java programs to work with SOAP.

-- Support for the latest Java 2 Platform Enterprise Edition (J2EE) APIs (in the 1.3 specification) such as user authentication and the Java Connector Architecture, which is a standard interface for accessing packaged, and legacy, enterprise applications.

-- Single sign-on, a technique that lets users work with the same ID and password across a range of applications.

"Oracle9i AS is a pretty decent product," says Peter Urban, an analyst with AMR Research.

"It has come a long way. It's now [with Version 2.0] compliant with J2EE 1.3, and this is key if you want to play in the Java world. Oracle has a good Web services strategy, and has agreed to work with UDDI," he adds.

Oracle's approach with the application server won over CargoSmart, a Web site that brings together companies that transport products by ocean-going cargo ships. The company plans to roll out 9i Application Server in a few weeks, says Joe O'Brian, CargoSmart's marketing director.

"We're upgrading to take advantage of the improved performance and the new J2EE compatibility, which is really important for us [because CargoSmart applications are being written in Java]," he says.

With Version 1.0 of Oracle9i Database barely out the door (it was released in June), Oracle executives will demonstrate key new features this week that will be part of Version 2.0, due out next year.

The demonstrations will show the Oracle database storing, retrieving and managing XML documents, as if they were existing data types already supported. A new feature, dubbed XDB, exploits the database's object-relational data management program. By contrast, the existing database typically treats XML as an undifferentiated large object, which can't be processed or manipulated easily.

But Oracle customers have barely begun testing the new features in 9i Version 1.0. Phoenix company ON Semiconductor is building a data warehouse based on the 8i database product - although it's using the 9i Application Server to let end users access the data through a Web browser.

Jim Hill, data warehouse manager at ON, is interested in the new online analytical processing (OLAP) features that have been incorporated in the 9i database. "Before, you had to put data in a separate product, [called] Oracle Express, to run these kinds of analytical applications," he says.

The 9i database lets ON have one data store, and use the Java OLAP API and new SQL extensions being released by Oracle. With these build and run analytical queries on data already stored in the database. Hill's team has just begun testing 9i and will likely deploy it later next year.

Senior Writer Kathleen Ohlson contributed to this story.