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MONEY WATCH: Relating to Mature Database Market
By David Rubinstein.
 June 15, 2002 — In markets that feature very high barriers to entry, it is inevitable that only a few companies will come to dominate. Such, according to a recent report by research firm IDC, is the case with the relational database market.
In that space, it’s Oracle, IBM and Microsoft, in that order. IDC’s latest numbers show Oracle retaining its position as the overall relational database market leader despite some slippage last year, and describe Microsoft as posting “robust” growth. These three companies basically have a market that IDC says grew to $12.7 billion in 2001 all to themselves; while a handful of challengers own a portion of the market, it’s not enough to seriously challenge the leaders. Think about that…for most companies, a 3-plus-billion-dollar annual revenue would be phenomenal. But for these three, the database doesn’t even account for all of their revenue, although for Oracle it’s at the heart of its products.
Is the market overly dominated by the Big Three? Not according to Carl Olofson, IDC’s research director for application development and deployment, who said the fact that three companies basically control the market is fine. “In a mature market, some [companies] dominate, but others fill important roles within certain segments of that market.”
According to Olofson, among the niches where smaller database players (and there must be at least 30) can survive are in the application-specific database route—in which the DBMS is embedded in other software—or deep within vertical markets, where providing soup-to-nuts functionality specific to that market is critical. For instance, if a database vendor does a good job of joining objects to relational tables, perhaps that vendor can really learn to excel in one or two types of objects to grab a niche share of the object-relational segment.
For a time, it appeared that object databases would actually pose a threat to the relational database players. But Olofson said, “The marketplace made up its mind that it wouldn’t be an alternative. It won’t be the database of record.” Another perceived threat, XML databases, also will end up as a role player in larger configurations, Olofson opined. That is because the top RDBMS vendors are adding XML capability, recognizing that organizations have a need to hold XML data in its original form and to retrieve it quickly as part of a larger business process.
Such is life in a mature market. While XML provided a technological leap and created some opportunities for XML database vendors such as Excelon Corp. and Software AG, it already is clear that they will not threaten to unseat the Big Three.
Then there is Sybase, the acknowledged No. 4 player in the market. The company told SD Times earlier this year that it was all but abandoning the fight for RDBMS market leadership, focusing instead on an e-business development platform to grow its business.
Sybase, Olofson acknowledged, is no longer a serious threat to the Big Three, despite what he called its vertical-oriented strategy in financial markets and the fact that the company “was making headway until last year. They’re attacking the market with other things in their arsenal. The danger is it looks like your focus has changed from the database. People begin to infer where the company’s emphasis is.”
Also, through its iAnywhere division, Sybase has targeted the embedded device market as a new home for its database solutions. The embedded device market, in fact, is a hotbed of competition. Among the vendors vying in that market are iAnywhere, Empress and PointBase, while MySQL and PostgreSQL are among more than two dozen open-source RDBMS offerings. That leaves vendors such as Computer Associates, NCR and Progress to figure out where they will ultimately play in the enterprise database space.
Growth opportunities will exist in the future, Olofson said, as service providers that require high-volume databases with specific needs in terms of scalability and security look to ramp up. And there is always the possibility of further acquisitions; IBM used its purchase of the Informix database product line to catapult itself near the top of the RDBMS market.
Olofson pointed out, however, that while the market grew at only 1.9 percent from 2000 to 2001, IBM’s DB2 solution grew ahead of that on its own, showing that IBM was gaining in the space even before the Informix acquisition. The slow growth in the market, as in the rest of the industry, revealed that companies dependent upon large contracts did not fare as well as those that could find life in middle-market installations, according to IDC’s report.
At this point in the market, product differentiation is not as important, Olofson said—most offer similar functionality and features. It is in the areas of price, performance and service that the war over customers will be fought.
David Rubinstein is executive editor of SD Times, and can be reached at drubinstein@bzmedia.com |
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