The Database Report – July 2005

Welcome to another edition of The Database Report – where we review and analyze the quarterly activities of the DBMS market place. And the second quarter of 2005 was an interesting one. In this
installment of The Database Report we will take a look at some acquisitions, some announcements, and some marketing maneuvers.

Oracle’s Acquisitions, Part 1

In last quarter’s column we talked about the battle for Retek. Retek is a Minneapolis-based maker of software that supports large retail companies… and both SAP and Oracle wanted to acquire the
company. Well, Oracle won.

When last we reported on this story, SAP had the highest bid at $11 per share. But let’s recap: the whole shebang started in late February when SAP made a bid for Retek at $8 per share. SAP probably thought it could swoop in and purchase Retek on the cheap
because Oracle would be too busy swallowing PeopleSoft to notice. But one shouldn’t underestimate Larry Ellison. On March 8th Oracle upped the ante by offering $9 per share to acquire Retek. And Oracle announced that it had already begun to acquire
share of Retek amassing more than 5.5 million outstanding shares already.

By mid-March Retek’s stock was trading at over $10 a share. Then, on March 17th SAP boosted its bid, this
time offering $11 a share. Of course, this bid did not stand for long, as Oracle counterd by offering $11.25
per share for Retek
.

Then, on March 22nd, SAP indicated that it would not increase its bid any higher for Retek. Shortly thereafter Oracle announced that it had reached agreement to purchase Retek for about $670 million.

I think SAP was wise in not running up the bidding price. Keep in mind that Retek earned $8.2 million on revenue of $174.2 million in 2004. They are not a large company. Now we’ll get to see how
Oracle manages to integrate Retek while still (regardless of what Larry says) trying to integrate PeopleSoft.

SAP’s next move should prove interesting, too. It would not surprise me if SAP decides to scoop up Retek’s closest competitor, JDA Software. JDA reported annual revenues of $216.9 million for
2004. Of course, the SAP may simply decide to look elsewhere for acquisition opportunities.

In mid-April Oracle laid out its post-acquisition plans for Retek. Basically, it amounts to a globalization effort and pumping the software through Oracle’s marketing and sales channels. Oracle
will provide globalization resources to enable the Retek software to be translated into as many as 20 or 25 languages. This should enable the software to be sold more easily outside the
English-speaking world.

Oracle even plans to keep the Retek name. And Oracle announced an 18-month product integration strategy to incorporate Retek’s retail applications into the Oracle eBusiness suite. Additionally,
Oracle unveiled its plans for integrating additional technologies, such as RFID capabilities, into the Retek software. So if you were a Retek customer, there appears to be little to worry about.
Actually, things are likely to get better with the resources of a giant like Oracle behind the software.

And What of SAP?

One of the more bizarre rumors that followed Oracle’s Retek acquisition was that Oracle and SAP might be “merging.” Basically, all that happened was that SAP’s CEO, Henning Kagermann, had
answered a question honestly in a German business magazine (Wirtschaftswoche). And then those comments were taken out of context by the media and a lot of noise was made about nothing.

Here is what happened: the magazine asked Kagermann whether he would listen to acquisition and merger offers from other companies, even if an offer was made by Oracle. Of course, Kagermann answered
“yes.” It is his legal and fiduciary responsibility to listen to such offers as the CEO of a public company. How could he have answered anything else? The bottom line here though is that there
are no talks going on between SAP and Oracle regarding a merger or acquisition. It ain’t gonna happen folks!

In related news, SAP announced a stream of partnerships at its Sapphire user’s conference in late April. Among the companies SAP announced partnerships with were IBM, Macromedia, Microsoft, and
Siemens. Looks like SAP is taking the competition with Oracle to its partners. The biggest announcement though, had to be that SAP will jointly develop software with Microsoft to facilitate
combining SAP’s business applications with Microsoft’s Office desktop applications. If SAP can hook its core capabilities such as time and organizational management and travel and expense
management into Microsoft’s leading desktop applications, like Excel and Outlook, Oracle will have its work cut out for it trying to compete.

SAP also announced a version of IBM’s DB2 that will be optimized for SAP applications. This marks the first time IBM has ever customized its DBMS for one particular applications vendor. More on
that later.

Oracle’s Acquisitions, Part 2

In late March Oracle acquired yet another company. This time, it was Oblix, a maker of security and identity management software.

Gordon Eubanks, CEO of Oblix, indicated in a press statement that the “strength of Oblix’s leading identity management solutions combined with Oracle’s worldwide presence and its extensive
software and services business will bring to customers an unprecedented ability to build identity into their software infrastructure and applications.” Since security is a hot topic in this day
and age of regulatory compliance, this acquisition is nothing to be surprise about.

Oracle’s Acquisitions, Part 3

Then, in early June Oracle acquired TimesTen, Inc., a maker of software that helps to maintain data in memory. The deal is expected to close by the end of July.

TimesTen made its initial mark as a provider of “in memory” database systems. As opposed to storing data on disk, as traditional DBMS vendors do, an “in memory” database system stores data
cached in memory. “In memory” database technology embodies unique methods, algorithms, and data structures optimized around the guarantee that the database is memory-resident. The goal of such
technology, of course, is high performance. Some studies have shown as much as a 10 to 1 reduction in instructions (on average) as compared to a traditional disk-based DBMS.

TimesTen has combined its in memory technology in various ways to offer multiple products for improving the efficiency of database access. Oracle’s DBMS is the only one that works “out of the
box” with the TimesTen/Cache product (although other TimeTen products work with other DBMS products).

Oracle has indicated that it will continue to sell the TimesTen products on a stand-alone basis. It will also work to improve the software to work better with Oracle middleware and its database
engine.

This looks like it will be a wise acquisition for Oracle. As modern organizations continue to clamor for faster and faster access to data on a constantly available basis, the TimesTen technology
may help Oracle to get a leg up on the competition. And the fact that TimesTen’s products already work with Oracle’s DBMS will make it easier for Oracle to profit from this new technology.

Analyzing the Wake of Oracle’s Acquisitions

Overall, it would seem that Larry Ellison is making good on his earlier pronouncements that there would be great consolidation in the software industry: first PeopleSoft, then Retek, followed by
Oblix, and now TimesTen. Hey, software industry consolidation is rampant even if you only count Oracle’s acquisitions! And it is my educated guess that Oracle is nowhere near finished acquiring.

So, what should we think about all of these acquisitions and market gyrations? Well, one think is certain – the applications market is definitely consolidating. With J.D. Edward, PeopleSoft, Great
Plains, and Retek gone, what used to be a very crowded and robust market is quickly becoming a two horse race between Oracle and SAP. Most of the other players are very small or suffering sales
erosion (e.g. Siebel). The big question mark that remains is “what will Microsoft do in this market?”

As I wrote way back when Oracle first proposed acquiring PeopleSoft, such an acquisition would “diminish the competition in the ERP application software space.” I think we can clearly see that
happening. But the end-game, in my opinion, is that SAP will come out better than Oracle in the long term. Why? SAP has fewer big “enemies” than Oracle. IBM and Microsoft both compete with Oracle
on many fronts, but neither really competes with SAP. And both are SAP partners. Neither can realistically be considered Oracle’s partners. So, unless a company wants to sign up for Oracle
software from “soup to nuts,” they’d probably be better off going with SAP.

In Other Oracle News…

Oracle’s chief financial officer Harry You resigned to become CEO of BearingPoint, a technology consulting firm. Oracle co-president Safra Catz will become acting CFO until a new financial chief
is hired, the company said.

Taking a proactive stance with a positive spin on the virtual revolving door at Oracle, Larry Ellison stated that “We are proud of the numerous Oracle alumni that have gone on to become CEOs of
enterprise software and IT service firms.” We have reported previously on the many folks who have left Oracle for greener pastures. I think it was a master stroke of PR for Ellison to spin the
news this way. It really does speak highly of the talent pool at Oracle that they have spun off so many top executives. But it could also lead you to wonder what different course Oracle might have
taken if those folks had stayed around?

In mid-May Oracle agreed to pay $8 million to settle an outstanding whistleblower lawsuit. The lawsuit, filed by a former Oracle employee, claimed that Oracle fraudulently billed several federal
government agencies for training during 1997 through 2003. Under terms of the settlement agreement, Oracle denies all the allegations. Robert J. Makheja, the former Oracle employee who filed the
complaint, was previously vice president of North American sales for Oracle University. Mr. Makheja will receive $1.58 million from the settlement. The only comment I have on this situation is
this: $8 million is a lot to pay if the allegations were inaccurate.

Also in mid-May, during the International Oracle Users Group Live conference, Oracle CIO David Thompson brought to light updates the company had made to its maintenance policies. For example,
Oracle has increased support for releases of its DBMS and Application Server software for five years, instead of the old limit of three years. This support begins with Version 9.2 of the database
and Version 10.1.2 of the application server. Additionally, he emphasized the improvements made to MetaLink, Oracle’s online support system, including; live Web conferencing capabilities, hundreds
of tips for users, and an enhanced search engine. He also highlighted new web collaboration technology to assist during troubleshooting scenarios.

Mid-May was actually very busy for Oracle because they also uncovered a new open source database tool they are building in conjunction with Zend Technologies. The solution, Zend Core for Oracle,
provide PHP capabilities for Oracle databases and it will be available over the Oracle Technology Network.

Just a little later in May, Oracle talked about its Tsunami next-generation enterprise content management platform. Tsunami, still in beta, was revealed at the AIIM On Demand show in Philadelphia.
Actually, Tsunami is the code name for what will eventually be called Oracle Content Services 10g when it is finally released. Tsunami was first announced at Oracle’s Open World conference in
December; it is Oracle’s entry into the rapidly expanding ECM market for managing structured and unstructured data. IBM has provided DB2 content management products for quite some time now and
Tsunami will lift up Oracle as a competitor to IBM in content management.

Then in late May Oracle received some bad publicity when a report on “metalink hacking” came out. Red Database Security, a German research firm, announced that it found more than 40 bugs, some of
them quite serious, in Oracle’s Metalink knowledge base. Basically, the report indicates that it is possible to search Oracle’s bug database in a manner similar to “Google hacking,” where a
hacker can scan mounds of information looking for sensitive data (such as customer information, configuration details, security problem reports, and the like). Although these bugs are not covered
by Oracle’s latest security patches, the company has blocked access to the Metalink entries listed in the research report.

Project Fusion

In mid-June, John Wookey, Oracle’s senior vice president of application development gave an interview to ComputerWorld news magazine. In it Wookey discussed Project Fusion, a Java-based
best-of-breed suite of ERP and business applications. The goal of Project Fusion is to combine functionality from across Oracle entire applications portfolio. So, Oracle will be cobbling pieces of
its Oracle Applications together with pieces of J.D. Edwards and PeopleSoft applications. It will be interesting to see how that works. Integration is one of the most difficult software tasks and
failure is more common than success. The other interesting thing to watch will be to what degree the results of Project Fusion will support other DBMS products. Will DB2 and SQL Server be
supported, or just Oracle databases?

Of course, Oracle seems to be doing a lot of things correctly. Project Fusion is a smart step if it can be pulled off appropriately. By that I mean, Oracle has to make sure that the J.D. Edwards
and PeopleSoft code is as well-represented in the final product as is the original Oracle Applications code.

Additionally, Project Fusion relies on Web services, using an open-standards Java-based platform. The idea there is to help speed the integration process. But Oracle has a lot of work ahead of it,
especially when a focused competitor like SAP has them in its cross hairs.

If you want an early view of some of the “fusion” going on at Oracle, take a look at Enterprise Performance Management 8.9. EPM 8.9 takes data from PeopleSoft Enterprise, JD Edwards EnterpriseOne
and JD Edwards World, and condenses it into a single data warehouse environment. This will enable JDE customers to use all modules of the Enterprise Performance Management suite. A nice, small
first step, indeed.

Oracle Database 10g R2

In more technology-focused news, in late June Oracle announced the roll out an updated release of its Database 10g offering. Oracle Database 10g R2 is not a major release, but it does offer some
nice features. Many of the new features revolve around better manageability.

For example, Oracle’s Automatic Storage Management (ASM) tool will be able to handle multiple disk operations. And performance will be improved allowing DBAs to more quickly archive, move, and
copy large data sets through the grid infrastructure. And in terms of automation, Oracle Database 10g R2 can collect statistics directly from memory, instead of requiring SQL query to be run.
Furthermore, automatic database workload comparisons can be conducted to provide DBAs with detailed information about workload changes and their performance impact. And Oracle has boosted the
ability to protect its data as it improves with row- and column-level security, embedded data encryption and key management.

This new release of Oracle’s DBMS will deliver tighter Visual Studio and .Net CLR integration, too. Oracle will ship R2 on Linux first, with other platforms to follow throughout the summer.

IBM News of the Quarter

Oracle was not the only DBMS company in the news. IBM made quite a bit of noise itself this past quarter.

IBM and SAP

The first bit of news from IBM is the SAP-specific DB2 DBMS we mentioned earlier in this column. The product was jointly developed by IBM and SAP and is based on the DB2 UDB V8.2.2 code. This new
DB2 offering has been configured and tweaked to perform well and integrate smoothly into SAP environments.

One particularly intriguing aspect of this SAP/DB2 offering is the autonomic capabilities built into the SAP Tuner feature. Using SAP Tuner DBAs can more easily setup DB2 for SAP operations with
support for dynamic storage allocation, multidimensional clustered tables (for optimizing SAP’s Business Information Warehouse), and improved optimization of SAP-specific SQL.

This move makes sense for both SAP and IBM. For SAP, it partners them with Oracle’s most feared DBMS rival. For IBM, it partners them with the number one ERP vendor in the world. Of course, this
is just the next logical step for the close relationship that has existed between these two vendors since 1999.

Into the Viper’s Nest

IBM has started to talk up the next version of DB2, code-named Viper. The code for Viper is now in alpha, with a beta test scheduled for the second half of 2005. General availability is anticipated
for some time in 2006.

What is the big deal about Viper? Well, IBM is touting its ability to handle both structured and unstructured data and to enable queries using either SQL or XQuery. This is a big change. Yes, all
of the major DBMS vendors provide varying degrees of support for XML data in their database offerings; but not natively as Viper promises to do. Viper will eliminate the need to translate XML data
into rows and columns. Instead, Viper will be able to store both structured and unstructured data in their respective formats and enable both types of data to be queried using SQL or XQuery code.

Such a dramatic change is a big gamble. Yes, XML is a growing data format and many developers are using it for web development. But XML is not relational, but hierarchic in nature. With native XML
support, DB2/Viper will be able to process XML more efficiently than the other major DBMS players (e.g. Oracle and Microsoft). And it will do away with the need to shred XML into relational rows
and columns.

But at what cost? All of the major DBMS products have relational technology at their foundation. Of course, the implementations are not purely relational. But by adding support for native XML data
Viper will veer even further away from relational purity, and the benefits of the relational model.

Of course, these days marketing is king, and XML is on a rolling technology bandwagon. If IBM is successful with Viper it could be a boon to DB2’s market share. A hybrid DBMS with native XML
support could win big with modern developers; and using the same DBMS to conduct traditional SQL database queries could help to further the success of DB2.

One big question that remains is this: How will existing applications perform? Of course, the expectation is that existing applications will run against Viper with no changes to the code required.
But how will they perform? Obviously, a lot of tinkering was required to get the core database engine to support multiple data formats. Such tinkering can exact a price in terms of lowered
performance. But that remains to be seen.

Another looming question is this: Will the native XML support in DB2 cause an Oracle shop with significant XML requirements to consider chucking Oracle for DB2? That is doubtful, in my opinion.
Oracle provides XML support in their database engine today, albeit not in a native format. So the difference in terms of speed, cost, or easing the administrative burden would have to be orders of
magnitude to cause large scale conversions. And if IBM is successful, look for Oracle and Microsoft to copy that success – sooner rather than later.

And, of course, there are multiple additional questions that remain unanswered, at least for now. Will the GA edition of Viper actually be the next version of DB2, or something different? Will you
have to license the XML engine separately from the traditional, SQL engine?

IDUG in Denver

The International DB2 User Group held its annual North American conference in Denver this past May.

One of the interesting announcements made at the conference came from Virtual Iron Software. The company announced that its VFe virtual computing platform is certified to work with applications
using DB2 for Linux. Virtual Iron VFe is a comprehensive software-based virtual computing platform. It combines multiple independent servers to create dynamically scalable, multiplatform virtual
servers. John C. Thibault, President and CEO of Virtual Iron noted that “Virtual Iron’s customers are seeking completely transparent virtualization across the data center and it is vital that
mission-critical programs like DB2 for Linux operate in a virtualized environment.” Virtual Iron demonstrated its software at the IDUG conference.

Additionally, Computerworld reported that DB2 users at the show wanted IBM to push harder on its marketing message. Evidently, IBM’s most ardent customers are not satisfied that IBM is doing
enough to promote its leadership in the DBMS market. In light of the next section below, IBM’s DB2 users are probably correct.

Gartner Releases DBMS Market Share Figures

According to analysts at Gartner Group, IBM and Oracle finished in a dead heat for the top position in the database market. The difference between the two vendors was deemed to be statistically
insignificant at just under $30 million. IBM came in at 34.1 percent of the market, with Oracle just behind at 33.7 percent. Microsoft came in third place (20 percent), followed by NCR Teradata in
fourth place with 2.9 percent and Sybase in fifth at 2.1 percent. At the same time, Garner tallied the overall market for relational DBMS software at $7.8 billion, indicating growth in excess of 10
percent.

IBM’s growth was spurred by strong mainframe sales, followed by the Unix platform. Oracle’s growth came predominantly on the Linux platform. Microsoft, of course, took in all of its revenue on
Windows platforms. Gartner indicated that the relational DBMS market for all of Windows grew by 10 percent to $3.1 billion.

Of course, these numbers need to be viewed in conjunction with the IDC numbers that were released last quarter. Those figures showed Oracle in the lead with 41.3 percent of the market, followed by
IBM (30.6), Microsoft (13.4), Sybase (3.1), and then NCR Teradata (2.6).

Someone has to be wrong, right? My guess is that they are both wrong in terms of exact percentages. But Gartner seems to get the basic trends right (DB2 is big on mainframes, Oracle on Unix and
growing on Linux). Who is number one? Who cares? DB2, Oracle, and SQL Server are all solid, reliable choices for your enterprise quality database management needs.

And in Microsoft SQL Server News…

At the annual TechEd conference in Orlando this June Microsoft confirmed that it would deliver both SQL Server 2005 and Visual Studio 2005 in early November. Both of these releases have been
greatly anticipated by the Microsoft development community. Indeed, it has been five years since Microsoft has unleashed a new version of SQL Server. And that is a very long time between releases
for a DBMS when the competition averages a new version every 12 to 18 months.

In additional news from TechEd, Microsoft revealed that it would add Reporting Services to all editions of SQL Server 2005. There will be four editions of SQL Server 2005: Enterprise, Standard,
Workgroup and Express. Furthermore, the Report Builder for the client will be provided in all versions of SQL Server 2005 except for Express.

Microsoft also came out with SQL Server Migration Assistant, a free tool designed to simplify the task of converting from Oracle to SQL Server. The tool is available as a free download from
Microsoft’s web site.

All of these moves make sense for Microsoft. Providing the same reporting interface for SQL Server users across all editions will provide greater consistency for users and administrators. And
making it easier for prospects to convert from Oracle – Microsoft’s biggest competition – is a no-brainer.

In other SQL Server 2005 news, Forrester Research published a report that questions the scalability of Microsoft’s as-yet-unreleased DBMS. The report cited the lack of TPC-C benchmarks and no
pre-release customer references for the product. Of course, every analyst is entitled to their opinions, but in my opinion it is much too early to cast doubt on the eventual capabilities of SQL
Server 2005. Of course, Oracle and DB2 still are viewed as more scalable and performance-focused than is SQL Server. So Microsoft could use some good news on the benchmark front – and the earlier
it gets the news out, the better.

Finally, in early June Microsoft invited Michael Tiemann, president of the Open Source Initiative (OSI), to participate in a productive conversation with the company. Given Microsoft’s previous
public animosity regarding open source, it will be interesting to watch how this “conversation” progresses.

Speaking of Open Source

Actually, quite a bit of database-related open source activities were afoot this past quarter.

In late May, a new company named EnterpriseDB Corp. announced the availability of its flagship open source DBMS product, called EnterpriseDB 2005. Basically, EnterpriseDB 2005 is based on the
PostgreSQL open source DBMS.

EnterpriseDB 2005 is available immediately in beta. During the beta period the company will offer commercial quality technical support. When the DBMS becomes generally available EnterpriseDB Corp.
will provide tiered technical support offerings to its customers.

Actually, EnterpriseDB is more than just a DBMS. The product consists of the Database Server, EDB Studio (a graphical console for interfacing with the DBMS), and EDB Connectors (to provide access
from JDBC, ODBC, .Net, ESQL/C++, PHP, Perl and Python). Furthermore, the company has taken steps to add Oracle compatibility to the database engine to simplify conversion of Oracle applications.

The company is positioning itself as offering the enterprise class open source DBMS. The unquestioned leader in open source DBMS is MySQL, but it lacks some features and capabilities that
EnterpriseDB offers (for example, BLOBs, triggers, UDFs, and views).

EnterpriseDB Corp. offers an interesting proposition, but it has been tried before. Anyone remember Great Bridge? A few years ago Great Bridge formed and tried to duplicate for PostgreSQL what Red
Hat did for Linux. They failed. But perhaps the time was not ripe for such an offering.

At any rate, EnterpriseDB has an uphill battle to fight. Not only must they compete with the Big Three (DB2, SQL Server, and Oracle), but they also have to contend with MySQL, which currently has
the lead in the open source DBMS market.

In early June, Computer Associates made some noise about its Ingres open source DBMS. CA announced the winners of its Ingres million dollar challenge contest. The contest was created to encourage
developers to create tools to help users migrate to Ingres from Oracle, SQL Server, DB2, Sybase, and MySQL. The result of the challenge: in five months CA now has some nice tools to enable its
customers to convert off of most of its major competitors (although there was no winning entry for converting from DB2).

Sybase Made Some News, Too

In mid-May Sybase announced a partnership deal with Sun Microsystems. Sybase will offer its customers the ability to run Sybase Adaptive Server Enterprise on Intel-based Solaris servers. Sun will
work with Sybase to provide software to assist Sybase customers in migrating to Solaris.

This is a nice win-win agreement for both companies. Sybase gets to offer its customers support for a lower-cost platform and Sun gets additional support for its Intel-based version of Solaris.

Summary

And so ends another edition of the Database Report. It was an active quarter, and the remainder of 2005 looks to be just as exciting. Be sure to check in again next month to track the activity in
the DBMS market.

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About Craig Mullins

Craig S. Mullins is a data management strategist and principal consultant for Mullins Consulting, Inc. He has three decades of experience in the field of database management, including working with DB2 for z/OS since Version 1. Craig is also an IBM Information Champion and is the author of two books: DB2 Developer’s Guide and Database Administration:The Complete Guide to Practices and Procedures. You can contact Craig via his website.

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