The gap between front-runner Oracle and competitor IBM in the database market is closing, and Microsoft last year gained more market share than either, according to a new report by Framingham, Mass.-based International Data Corp.
Oracle's revenue in 2002 dropped 5% compared with 2001, according to the IDC report. IBM and Microsoft increased their revenue 9% and 15%, respectively.
Oracle owns 39.4% of the market, and IBM 33.6%. Despite its double-digit growth last year, Microsoft SQL Server's market share was just slightly more than 11%.
Reacting in ways that IT pros have come to expect from the top three vendors of relational and object-relational database management systems, each of the companies yesterday expressed gratitude for having been cast in a more favorable light than their competitors by the technology industry research firm.
We're still No. 1, said Oracle. Also, our market share numbers are the only ones among the top three vendors that are available for independent audit. We might be No. 2, said IBM, but the report shows that that our product is picking up speed, while Oracle's pace is slowing. And our new DB2 Express offerings will make us more competitive in the midmarket. Forget all that, Microsoft said, and pay attention to the third-place RDBMS vendor, whose business is growing at a faster rate than either of the top two contestants.
The "feature wars" in which the top three database vendors continually participate could open the door this year for open-source vendors, the report states. There will be increasing opportunity for RDBMS vendors, "especially in the embedded database channels through third-party independent software vendors (ISVs)," wrote IDC research director Carl Olofson.
"Those ISVs will want a simple product management scenario and will seek to avoid getting caught up in the top vendors' feature wars," Olofson wrote.
The report, titled "Oracle hears footsteps: IBM and Microsoft gain on RDBMS leader in 2002," dug deeper than rankings.
Regarding Microsoft, the IDC report states that SQL Server's challenge, now that it "practically owns the small and medium-sized space," will be to serve larger clients.
Sheryl Tullis, Microsoft SQL Server product manager, pointed to the soon-to-be-released 64-bit version of SQL Server as Microsoft's response to this need.
Tullis said sales in her division were boosted by SQL Server's business intelligence features, which have become a priority for customers trying to understand their data and business processes in order to cut costs.
"We have put out a lot of ways that the third party can build on top of the SQL Server platform," Tullis said. "In the end, that's what it's all about, what you can do with the data."
Addressing the growth enjoyed by competitors last year, Oracle's vice president of database marketing, Robert Shimp, said the report made clear that IBM enjoys a large annual revenue base from its mainframe and AS/400 sales. Licensing plans for those products require renewal, and therefore remain consistent each year. Oracle's growth, Shimp said, can be traced to its new and improved offerings.
Oracle, Shimp said, is better prepared for the future, and is seizing upon Linux popularity in ways its competitors are not. "We're the only vendor that is providing front-line technical support, support not only for our database but for the underlying Linux platform," Shimp said. That strategy, Shimp said, is appealing to those in the midmarket, where the IDC report said Oracle must make strides.
Olofson's report also addresses the performance of Sybase and NCR's Teradata division, whose database systems round out the list of top five vendors in the space.
Teradata, ranked fifth, was highlighted as having had a "surprisingly good year, considering that its shared-nothing RDBMS systems is typically popular with large-scale data warehouse deployments," which are just the sort of projects the IT economy of 2002 made hard to find.
It was Teradata's "strong message" in the CRM area that helped make the last year a good one for the company, Olofson wrote.
Olofson said that while it's true IBM's mainframe and AS/400 revenue provided a stable base, all of IBM's growth last year can be attributed to their distributed platform. "That's the growth platform for them," he said. Whether IBM's DB2 Express program can deliver on its promise to meet the needs of SME's, Olofson said, remains to be seen.
"It looks promising," Olofson said. "But I think it's a little too soon to see any measurable results."
Oracle must find some middle ground, Olofson said, and find an offering that is priced somewhere between their Standard database, and the whiz-bang Enterprise edition. "Oracle has priced their application server very competitively," Olofson said. "But when it comes to their databases, if you really want them for the purposes of setting up some sort of data integration, then you have to upgrade usually, and that comes at a cost."
One thing that surprised Olofson, he said, is that the database market remained flat in 2002, when compared with the year before. IDC analysts had expected it would worsen.
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