The Database Market

Databases are the sleeping giants beneath today's most powerful technologies.

Sleeping Giants
Databases are the sleeping giants beneath today's most powerful technologies. Whether it's e-commerce, customer relationship management, personalization, customization or content management, chances are there's a database somewhere in the middle.

Today's $8-billion database market is dominated by a handful of players: Oracle, IBM, Microsoft, Sybase, NCR and Borland. The market sees steady double-digit growth every year, with a strong relational DBMS segment accounting for nearly 80 percent of the total market. The market for object DBMSs and pre-relational DBMSs continues to decline. Gartner predicts that by 2005, relational DBMSs will account for 86 percent of the overall DBMS market.

XML Rocks the Boat
With the rise of XML, many wondered if databases would be rendered obsolete. By virtue of providing a self-descriptive data stream, XML provides its own organizational structure for data.

For the most part, these concerns have proven to be unfounded. XML simply can't provide the depth of functionality that databases can, especially in terms of processing power. Many analysts recommend that XML and databases be paired together, as in the case of XML-enabled content management systems. Although these systems store XML in different ways, Nicholas Wilkoff from Forrester Research insists, "The right way is to break it down and keep it in a relational database."

The Cost Factor
In their continued pursuit of low- and mid-market segments, DBMS vendors are changing licensing fees and modifying cost structures. The most recent example came when Oracle released Oracle9i in June 2001 after only 60 days of general beta testing. With this upgrade—the database's first major upgrade in almost two years—Oracle ended its long-criticized "power-unit" pricing model. Now, instead of customers paying licensing fees based on machine or processor type, they pay a flat fee per processor.

Although this will be a blow to Oracle's competition, it will also hurt those customers wanting to take advantage of the product's clustering abilities. Gartner Group's Betsy Burton believes this will only curtail Oracle9i's adoption by small and midsize enterprises.

Who's Next?

Analysts predict that Sybase is the next target for acquisition, as it's the last of the second-tier database players. Explains META Group analyst Philip Dawson, "The enterprise software market is moving increasingly toward a situation of extremely large players—such as IBM, Oracle, Sun and Microsoft—offering end-to-end products and capabilities."


Future Directions:
From Warehouses to Mines

In the late '90s, databases saw significant growth in the data warehousing market. Today, however, companies need to process large volumes of data in shorter and shorter timeframes. Warehouses, with their lengthy data extraction, cleansing and migration processes, are now giving way to simpler data-mining solutions.

IBM, Oracle and NCR offer data-mining capabilities within their DBMSs, and we should expect to see more DBMS vendors offer this functionality in the near future. In its 2000 DBMS Market Size, Trends and Forecast report, Gartner Dataquest explains this trend. "As storage technology continues to improve, and as business intelligence software allows enterprises to track vast amounts of internally and externally generated data, the demand for DBMSs to support data warehousing and data markets will continue to drive growth in the DBMS market."

Bottom Line
Finally, META Group's Mark Shainman advises people to take a broad approach when considering costs. "Specific DBMS platforms might have cheaper licensing costs than a comparable platform," he explains, "but if skilled workers are not available within the existing organization or generally in the market, the lower licensing costs are negated."

Major Moves: IBM Buys Informix
Consolidation among database vendors narrows the ranks every year. In April 2001, IBM acquired mid-market database vendor Informix. Although Informix had been failing since the late '90s, the acquisition still cost IBM almost $1 billion. The acquisition gave IBM a foothold in the Unix database market, which IBM desperately needed. (IBM's DB2 grew from the OS/390 and AS/400 markets.)

What does IBM plan to do with its purchase? Although the company has promised support of Informix products in the short term, it's generally understood that IBM will incorporate Informix technology into its own products and migrate Informix's 100,000-plus customers to DB2.

It remains to be seen just how many of those customers will agree to IBM's plan. By September 2001, IBM had still failed to provide a clear migration path for Informix customers, and many companies have begun plans to migrate away from Informix and DB2 altogether. "Although IBM will develop a DB2 'wrapper' to provide some Informix compatibility," explains Gartner's Kevin Strange, "IBM may lose the opportunity to easily retain these customers by providing them with a solid migration plan and technology." Gartner had originally predicted that 75 percent of Informix customers would migrate to DB2 within the next 24 months.

Open Source Opens Possibilities
In a market dominated by closed-source database vendors, many customers are turning to open-source database solutions in pursuit of lower cost and greater integration flexibility.

The open-source DBMS market has relatively mature players as well. Most notable are mySQL and NuSphere's revved-up Enhanced mySQL and PostgreSQL. In February 2000, Borland released the InterBase code, making it a fully standards-compliant, open-source database.

The benefit of these open systems is easier integration with less reliance on proprietary technology. But most of them (with the possible exception of InterBase) still lack the power, scalability and reliability of their closed-source cousins.