Dataquest Unveils Database Market Numbers

• 05/24/2000

Analysts at Dataquest say 1999's numbers are surprisingly high -- reaching almost $8 billion, an 18 percent increase over 1998 revenue. Numbers were expected to lag due to Y2K issues draining database spending funds.

The results were announced by Norma Schroder, senior analyst for database and data warehousing software at Dataquest (www.dataquest.com), during the Dataquest Predicts 2000 conference in Santa Clara, Calif., earlier this month.

While sales increased greatly in 1999, the positions of top market share holders remained steady. Oracle Corp. (www.oracle.com) retained its first place position, upping its market share to 31.1 percent from 30.7 percent in 1998. IBM Corp. (www.ibm.com) held the second place position with 29.9 percent of the market, down slightly from 30.0 percent the year before. "Oracle and IBM are still virtually neck and neck for the top position in the database market," Schroder observed.

"IBM had a robust year, with strength on the mainframe platform, a spurt of almost 70 percent growth in its relational Unix database products, and 125 percent growth in its NT relational database products," Schroder said. IBM will probably experience another strong year, especially due to its expected June release of IBM DB2 version 7.1 -- a product that focuses on e-business applications and scalability (see story here for more). This product should make competition with Oracle more fierce than ever.

The big jumper was Microsoft Corp. (www.microsoft.com). The company emerged with 13.1 percent of the market, up from 1998's 10.7 percent of the market. Analysts say the increase was due to the late 1998 release of SQL Server 7.0 -- the most recent version of the company's RDBMS.

"Microsoft came roaring back this year in the relational NT segment, driven by its new version of SQL Server 7.0," Schroder said. Microsoft may soon prove to be tough competition for the top two shareholders. Redmond's SQL Server 2000 is in Beta 2 testing, and with many promising new features -- including data mining capabilities and an enhanced core storage engine -- the latest version of SQL Server could put a strain on both Oracle's and IBM's market hold.

Other companies holding top market share positions lost some footing in 1999 -- including Informix Corp. (www.informix.com) and Sybase Inc. (www.sybase.com), among others.

Dataquest estimates the worldwide database industry will grow to $12.7 billion by 2004. The firm also predicts NT platform revenue will be near equal to Unix platform revenue by that time. Major proponents of the growth are likely to be Internet applications, e-business applications, e-commerce, evolving business intelligence (BI) solutions, and growth of mobile consumer and business applications.

Jeremy Burton, vice president of Internet platform marketing at Oracle, agrees with Dataquest's observations. "The Internet has really taken a grip on the database market. Back in 1997 they [analysts] were predicting database growth would be flat, but they underestimated the power of the Internet."

Oracle has been able to use the Internet to its advantage -- employing it to help propel sales of its Oracle8i server -- thereby retaining its top market share for the past two years. "A few years ago, the way we sold our database was through direct sales. But now that's all changed. We can now sell products over the Internet which gives us reach to places we haven't been able to go to before," Burton says.

This year will be a tough one in the database market. Each of the top market share companies have either delivered or are planning to soon ship new databases that are positioned primarily as Internet platforms. The new wave of products will focus on e-business, Internet applications, scalability, reliability, and security -- all areas companies, especially dot-coms, are looking to address as they try to build a strong presence.

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1999 Worldwide Database Market Share Estimates

Source: Dataquest Inc.