Measuring Up the OLAP Market
For many people the end of 1999 meant big parties and a fear of Y2K issues. But for some vendors the end of the past year meant it was once again time to see how well they competed in the OLAP market space.
The author of the OLAP Report (www.olapreport.com), Nigel Pendse, recently released the preliminary results of his annual OLAP market share report for 1999, which included a review of the market size in recent years.
Once again this year, Hyperion Solutions Corp. maintained its overall lead in the OLAP market space, while Cognos Inc. crept up closer to Oracle Corp. and tried to steal its second place position. The winner of the late entry contest was Microsoft Corp., which came on the OLAP scene late in 1998 and made its market debut this year in sixth place -- pumping up the size of the overall OLAP market.
The OLAP market has grown considerably in the past few years. In 1996 the market was estimated at about $1 billion, it then increased by about 40 percent in 1997. When 1998 rolled around the market topped off at about $2 billion -- at which point many analysts expected the growth of such a large market would slow. This past year finally slowed the growth of the market: 1999 figured at about $2.5 billion, a jump of only 20 percent. The next two years are expected to see small growth, but Pendse's report estimates that by 2001, the market is expected to grow to almost $4 billion.
The slowdown in future growth is expected for a few reasons, the report states. It is hard for large markets to continue growing at such high rates; the market is becoming more saturated each year; and average prices are expected to drop due to the presence of Microsoft in the OLAP market. Since this is the first year Microsoft has been included in the OLAP market, the real effects of its presence have not yet been seen.
The 1999 Preliminary Results
While some OLAP vendors retained their market share position, others steeply declined in rank. Once again in the top position is Hyperion, which holds about 24 percent of the market share, and rests comfortably above its nearest competitors -- Oracle and Cognos -- which each hold about 11 percent of the market share. With the merger of Hyperion and Arbor Software, Hyperion Solutions has been able to maintain its top position for a few years. "Hyperion and Arbor were two of the biggest in the market," Pendse says. Hyperion's market reign is expected to continue into 2000.
It is not only the size and strength of Hyperion that is causing it to lead the market, but the fact that Oracle seems to have forgotten about its OLAP products. "Oracle has done so badly because it has lost interest in Express. They do bundle it into a big package, but sales of Express seem to have fallen off," Pendse says.
Oracle still retains its second place position, but Cognos is closely gaining on its heels -- and has been gaining market share for the past few years -- while Oracle has slowly been slipping. Cognos will likely steal Oracle's second place spot in 2000. Microstrategy Inc., however, is not far behind Cognos, and has been steadily gaining market share despite its second year in the fourth place slot.
When calculating the figures for the OLAP market shares, Pendse had to consider different factors: who are the OLAP vendors; estimating the proportion of revenues coming from OLAP sales; looking at companies that bundle their OLAP products -- such as Microsoft; and whether or not a vendor is also a value added reseller (VAR) of other commercial OLAP products.
Microsoft Corp. made its first appearance into the OLAP market this year, and debuting in sixth place, and holding about 4 percent of the market share. Although Microsoft's OLAP products are bundled with others, and the company's revenues were not easy to determine, Pendse expects that the numbers are pretty accurate. "Our market share calculation probably errs on the low side for Microsoft in 1999, but it reflects the much lower than expected deployment rate for the new server, largely due to the lack of promotion by Microsoft," the report states. Microsoft is in the process of doing its own surveys, and Pendse admits he may have to go back and revisit their numbers, but he says, "it is still likely not far off."
Some of the big losers in 1999 were Seagate Software, which dropped from seventh to 13th place this year. Pilot Software, Gentia Software and Informix Corp. also took the plunge. A pertinent question to ask is, why do some companies take such big strides forward while others sink lower each year?
"Everybody now says they're into e-business," Pendse says. "The ones who are growing year on year, are focused organizations. The ones who are doing badly, such as Seagate and Informix, haven't focused on their OLAP products. It's pretty competitive, if you don't focus on the right thing, or don't focus at all you lose out to more focused competitors."
Despite that the results of this report are preliminary, we can expect most of the numbers to hold steadfast. "The top positions are not likely to change much. I wouldn't put too much weight on the decimals, but the numbers are pretty close," Pendse says.