Some will tell you that Microsoft is slowly inching into the enterprise; others consider IBM’s relative silence about its flagship DB2 as a sign of giving up or loss of interest but the majority will agree that Microsoft is dominating the SME and Oracle is dominating the enterprise database market. That of course is not a great picture for CIOs who want to have more choices and need to see more competition in order to keep the cost down.
According to analysts the $20 billion database market is still growing at around 15% annually, Oracle is leading the pack with some 45% market share followed by IBM and Microsoft at 22% and 18% respectively. The top three vendors combined account for 85% of the market leaving everybody else to fight for the remaining 15%. That is a clear sign of market maturity, so from now onwards you should expect some mergers and acquisitions in that space. Surely a less competitive market can lead to less product innovation, another worry for today’s CIOs.
But despite Oracle’s market share dominance, the database war is not over yet, IBM DB2 remains very strong in the mainframe, data warehousing and in financial services segments. Microsoft’s SQL server has been growing generally faster than the market and Teradata continues to offer unique capabilities for large data warehouses while Sybase -now part of SAP- continues to show strength in the solution lead banking sector given its well established relationships with ISVs in that industry. Let us take a look at the key players.
Oracle has been the market share leader for many years and will continue to do so in the foreseeable future. Much of its revenues come from expansion within its user base as well as new accounts won mostly by working with key ISVs in the various market segments, industries and geographies. Oracle has been actively introducing and driving database options or -add ons- like Real Application Clusters and Database Vault. Such add ons enabled the company to go back to its base and sell more licenses while increasing the average deal size for new customers. We should also remember that many many websites run on MySQL which is now part of Oracle. The company could have seen much more market share growth if it wasn’t for its excessive discounting practice exhibited usually just before its quarter or fiscal year end.
IBM DB2 is undoubtedly capable of competing with Oracle in almost every situation but in some cases IBM is nowhere to be seen and Oracle is left to compete with Microsoft. DB2 has exceptional capabilities in terms of performance, storage requirements and data warehousing. Generally a very stable product that is said to require less admin work than Oracle and hence lower total cost of ownership. While Oracle powers most the SAP ERP sites, IBM DB2 continues to be at least unofficially the preferred database by the company. Having said that, some believe that Sybase will soon start figuring as SAP’s preferred database. IBM acquired Netezza for $1.7 billion last year, giving IBM an even stronger position at the high end of the data warehousing market. In general IBM may want to put more effort with the ISV community to get more applications to certify with DB2 and should look at tuning its coverage model in order to compete for more database deals.
Microsoft SQL Server has been the darling of ISVs especially in the lower end of the market, its ease of use, low cost and steady progress in functionality and scalability has helped drive Microsoft’s market share up over time. But much like IBM, Microsoft seems to be distracted at times. SQL Server has made great strides in terms of penetrating the enterprise albeit with smaller or departmental applications. One wonders whether SQL Server would have been in a different position now in the database market if it were to run on Linux which seems to be the favorite operating system powering millions of websites. But do not underestimate the power of Microsoft, sooner or later it may catch up with IBM and even Oracle.
I also want to refer to Teradata not because of its market share but rather because of its market weight as the world’s best database for enterprise data warehousing and because I will not be surprised if either Oracle or IBM makes an attempt to acquire it in 2011 despite its hefty $8 billion price tag. Terdata offers outstanding capabilities at the high end data warehousing market and is used by the who is who in banking, telecoms and retail among other industries.
Generally speaking, a competitive market is better for users and buyers so don’t automatically think Microsoft SQL Server for small applications and Oracle for large deployments. Both Oracle and IBM have repackaged their products for SMEs while Microsoft SQL Server has proved to be worth considering by the enterprise. The war is not over yet!