The Database Report – July 2006

Welcome to another edition of The Database Report – where we examine the activities in the DBMS market during the past quarter. It is time to examine what happened during
the second quarter of 2006.

As usual, there were some acquisitions made by the DBMS vendors and Oracle led the pack. And the analyst firms released their annual reports on DBMS market share, which is always interesting to
review. We’ll look at these stories, as well as many others including a look at some of the financials of the main players, in this edition of The Database Report.

Databases by the Numbers

Both IDC and Gartner have released their annual DBMS market share reports, and Oracle, once again, is the DBMS leader. But there are some interesting aspects to the numbers.

Gartner reports the share numbers for the RDBMS market for 2005 at $13.8 billion – growing at 8.3 percent over 2004. And,
according to Gartner, Oracle is the largest vendor in this space with 48.9 percent of the market.

Now, of course, IDC has different numbers, but at least they are more similar to
Gartner than in previous years. IDC indicates that the 2005 RDBMS market is $14.6 billion, which is a 9.4 percent increase over 2004. And IDC, too, shows Oracle on top with a 44.6 percent share of
the market, an 8.6 percent growth over 2004.

Now I remember a couple of years ago when one of these analyst firms had IBM in the number one position and the other one had
Oracle at number one. What happened? Did IBM stumble so badly? Were the analysts all rosy-eyed because IBM had just acquired Informix or did IBM lose a lot of those Informix customers? Or were the
analyst group’s figures or methods incorrect? I would guess the latter, but it is just a guess.

Of course, there is another big difference in this year’s studies. Both Gartner and IDC now include support revenue as well as new license revenue in their research numbers. Oracle actually makes
more revenue off of support then they do off of new licenses. In terms of just new license revenue, the race between IBM and Oracle was a lot closer.

Why was such a change made? Well, including support revenue helps to recognize the open source DBMS community where most of the revenues comes from support. As open source continues to make inroads
into the enterprise it will be important that analyst firms such as IDC and Gartner can recognize its growth – and examining support revenue helps to do just that.

The open source DBMS market is growing and, at some point, one or more of the open source players may become large enough to warrant being covered – instead of lumped into the “Others” bucket.
The open source DBMSes accounted for license, maintenance and subscription revenue of $100 million in 2005, an increase of 47%, according to Gartner.

But there is still a discrepancy between the two firms’ results. The two analyst firms obviously use different methodologies or the results would be the same. At least, in this case, the results
are “close enough.” What about the remainder of the players? The list goes like this (for both analyst firms):

  1. Oracle
  2. IBM (DB2)
  3. Microsoft (SQL Server)
  4. Sybase
  5. NCR (Teradata)

Of the top five Microsoft is the only company whose growth rate exceeds the industry average. The best guess is that this is due mostly to pent-up demand for SQL Server 2005. The last version of
SQL Server was SQL Server 2000 and five years is a lo-o-o-ong time to wait for a new version of DBMS software. The typical time is 18 to 24 months between releases.

Additional thoughts and issues raised by these reports:

  • Of all the operating system platforms for DBMS, Linux grew the fastest at 84 percent (according to Gartner).
  • Oracle’s biggest growth is coming on the Linux platform. But its biggest losses are coming on the Unix platform. So the easy assumption is that Oracle users are migrating from Unix to Linux.
  • According to IDC, the relative growth of Microsoft SQL Server, has resulted in a lower average selling price for the market overall. This is supposedly due not only to the lower price of SQL
    Server but also because of the lower prices for DBMS packages from IBM and Oracle aimed at competing with Microsoft.
  • Also, IDC indicates that non-relational DBMS uses – including XML document management – will help to drive future DBMS market growth.

Overall, though, I would say that the market for database management systems is healthy and growing. And that is a good thing for us in the data management business.

The Oracle Acquisition Binge Continues

As regular readers of this column undoubtedly know, Oracle has been on an acquisition binge of late. After completing sixteen acquisition the past five quarters, Oracle continued the trend and
acquired a seventeenth company: Portal Software.

In mid-April the company announced its intent to purchase Portal Software for around $220 million. This works out to a cash tender offer for $4.90 per share. Portal Software is (I should say was) a
provider of billing and revenue management software for the communications and media industry. Its software further bolsters Oracle’s growing suite of packaged applications.

The fit seems to be a good one for Oracle since most of Portal’s customers also use Oracle’s DBMS, and many of them also use Oracle’s applications. The Portal software is used at 240 different
sites in 60 countries with more than 150 million live subscribers.

“The combination of Oracle and Portal delivers the first end-to-end packaged enterprise software suite for the communications industry,” said Oracle’s President Charles Phillips. “We supply
technology and applications to over 90% of communications companies worldwide today, and billing is a logical and complementary addition for those customers.”

All was not smooth sailing after Oracle announced its acquisition intentions. Portal’s second largest shareholder, Berggruen Holdings North America, publicly disapproved of the deal, mainly
because it thought the sales price was too low. None the less, the acquisition was finalized on June 20, 2006.

Then, later in April, Oracle announced that it had acquired Net4Call. The company, based in Norway, is a provider of software that assists telephone network operators to deliver computer-based
services. Although Oracle did not disclose the purchase price for the small company, Net4Call is based is Oslo, has existed for six years, employs 12, and had sales of a little over $1 million.

Oracle also announced in early June that it was acquiring Demantra for an undisclosed amount. Demantra, founded in 1996 and based in Waltham, MA, has about 140 customers. The company specialized in
supply chain management and offers analytical software to assist businesses in forecasting product demand. It also offers applications for sales planning and promotional activities. Most of its
customers are in the include food service and consumer goods industries.

In the final bit of Oracle acquisition news, the company announced plans to acquire Telephony@Work. Once again, the financial terms of the deal were not disclosed. Telephony@Work develops
browser-based, carrier-hosted software that handles contact-center infrastructure tasks such as call queuing and distribution, outbound dialing, e-mail sorting and semi-automated response, as well
as voice mail and fax services. Siebel embedded Telephony@Work in its Contact OnDemand offering and Oracle inherited the relationship when it acquired Siebel. Acquiring the technology makes sense
for Oracle, because now it owns the technology within Contact OnDemand.

Interestingly, Net4Call and Telephony@Work are the third and fourth Oracle acquisitions this year that focus on telecommunications.

And, obviously, the acquisition engine continues to chug along up in Redwood Shores.

Oracle Linux is on the Drawing Board

In mid April, the Financial Times reported that Oracle is looking into offering its own version of the Linux open source operating system. With the trends shown by the IDC and Gartner reports, this
would seem to be a very good idea. Since much of Oracle’s growth is on the Linux platform, Oracle could score a big coup by providing both the operating system and the DBMS.

Larry Ellison, Oracle’s CEO, indicated that by launching its own version of Linux Oracle would be more armed in its long-standing battle with rival Microsoft. It seems that Oracle is intent on
offering a full range of software that includes both operating systems and applications.

Now there are two approaches that Oracle could take. The first would be to buy an open source company that offers a Linux distribution. But Red Hat, the largest such company, is probably larger
than Oracle wants to bite off on right now. The second largest is Novell Inc., which is probably a more likely target. However, Red Hat Linux is in place at more Oracle sites than is Novell’s SuSE
Linux offering, so it remains to be seen what Oracle will ultimately decide to do here.

Red Hat’s market capitalization is around $5 billion; Novell’s is about $3 billion. There are additional benefits for Oracle with either company. Red Hat now owns JBoss (see upcoming story); and
Novell offers security and identity management products that would complement Oracle’s line of products.

Of course, the other approach is to create and grow its own distribution. This approach though, would take longer in terms of creating an install base. But it would enable Oracle to tweak its Linux
offering to optimize its performance as a platform for Oracle databases.

We’ll have to keep an eye on this development to see what happens.

New Security Offerings from Oracle

On April 25th, Oracle unleashed two new security tools: Database Vault and Secure Backup. Database Vault can be used to restrict data access rights of powerful users such as DBAs. This is an
important new feature because it can help organization to be in compliance with the many regulatory and privacy directives (such as Sarbanes-Oxley compliance).

Database Vault offers security controls such that incremental restrictions can be placed on data access. Using the product, rules can be set to restrict operations based on business specific
requirements.

Secure Backup is encryption technology that can be used to protect data. With all of the data breaches in the news these days, this is an important feature because, properly used, it can render
data unreadable even if the backup tapes are lost, stolen, or misplaced.

Oracle first delivered Linux versions of Database Vault and Secure Backup. Versions for other platforms will be made available within the next six months.

Oracle Struggles With a Vulnerability

In early April, Oracle accidentally released details about an unpatched security vulnerability in its DBMS. The details were reported to include some sample code that could have been used to
exploit the problem. The details of the vulnerability were published, but then pulled.

Oracle indicated that it was aware of the information that was posted and that they plan to provide a patch in a future quarterly critical patch update. But there was no patch provided in Oracle’s
next quarterly update on April 18.

However, the April 18th quarterly critical patch update did include a useful new tool to scan passwords. It is designed to look for commonly used default passwords that could be misused by hackers.
For example, earlier versions of Oracle’s DBMS came with well-known default passwords and user names, like the infamous “scott / tiger”.

Many of these accounts have been identified and locked out in current Oracle versions but users of older versions, and even some who upgraded from an older version, may still have default
passwords.

The password tool is basically a SQL script that scans the database and prints a report of any well known and unlocked accounts.

Oracle’s Record Year

In better news for Oracle, revenues are up. At the close of the quarter Oracle announced its fourth quarter results, as well as the full results of its fiscal 2006 year – and the results were very
good, indeed. Fourth quarter net income was $1.3 billion, growing 27 percent over the same quarter last year. Revenue was up 25 percent to $4.9 billion. This translates into earnings per share of
24 cents, which is an increase of 24 percent. The results were in line with the expectations.

For fiscal 2006 as a whole, Oracle reported net income of $3.4 billion on revenue of $14.4 billion and earnings of 64 cents per share. New software license sales rose 32 percent to $2.1 billion
from $1.6 billion last year. This number is significant because investors watch it closely as a strong indicator of future performance.

For the quarter, new license revenue from applications increased significantly, up 83 percent; new license revenue for Oracle’s traditional database and middleware software grew at a more modest
18 percent. Still, 18 percent is a higher growth rate than the database market as a whole (which, as we learned above, is 8.3 percent).

So, it would appear that Oracle’s acquisition binge is paying off.

Oracle Enterprise Manager Adds DB2 Support

Last quarter we reported that Oracle had added Microsoft SQL Server support to its Oracle Enterprise Manager (OEM) database administration tool. In April, Oracle announced even more heterogeneous
DBMS support by adding the ability to manage IBM DB2 databases.

The management support is delivered via a plug in than allows customers who use both Oracle and DB2 to monitor their applications and services through a single, integrated OEM solution. Using the
plug-in, customers can monitor DB2 v8.1.9 and higher, gather configuration data and track configuration changes for IBM DB2 instances, raise alerts and violations based on thresholds set on
monitoring and configuration data, and run pre-built reports.

This is clearly a challenge to the third party DBA tool vendors like BMC Software and Embarcadero Technologies who make a living providing heterogeneous database administration. Of course, OEM
cannot provide all of the capabilities that these vendors can offer, but Oracle is clearly on the march in this space.

Into the Viper Pit

In early April IBM released a preview of the next version of DB2, known by its code name DB2 Viper. This preview is being called an “open test drive” by IBM. You can download Viper from the IBM
web site at http://www.ibm.com/db2/viper if you want to take it for a test drive.

The most highly-touted capability of Viper is its ability to handle both XML data and traditional “relational” data. The XML does not have to be reformatted to be stored and accessed by Viper; it
is stored as native XML instead of being forced into a VARCHAR column or a CLOB structure, for example. This is quite different than the existing XML support in the other leading DBMSes. IBM claims
that Viper’s XML abilities will enable more rapid SOA development. It will be interesting to see if, and how, that actually plays out when Viper is ready to go.

In April IBM also uncovered some additional details of upcoming Viper features. One such feature is row compression using a dictionary-based approach for compressing data. Row compression offers an
additional option for space saving in addition to the value compression, index compression in multidimensional clusters, and back-up compression technology already available in the current version
of DB2. Evidently row compression can save disk, I/O and memory for large tables where data patterns repeat.

Another new feature made know by IBM is the automatic storage technology, nicknamed “Venom,” which is appropriate for a Viper to have, no? Automatic storage in Viper enables more autonomic
storage management for multiple table spaces at the database level. The technology is designed to alleviate the need to watch individual table spaces for out of space conditions, as well as
removing the need to manually enlarge containers or add stripe sets.

When these features were uncovered in April, IBM indicated that it still planned for Viper to become generally available sometime before the end of this summer. In mid June, though, IBM announced
its intent to ship DB2 Viper beginning on July 28, 2006.

IBM’s First Quarter

In late April IBM announced its fiscal first quarter financial results with net income for the quarter coming in at $1.7 billion, up 21 percent from the year-earlier period. Per-share earnings were
$1.08, which is up 27 percent over the year-ago quarter handily beating analyst’s expectations of $1.05 per share.

Let’s break things down into the big three categories of IBM revenue: hardware, software, and services. On the services front, which comprises more than half of IBM’s overall revenue, IBM brought
in $11.6 billion in revenue, which is a 1.2 percent decline over the same quarter last year. But the services group’s gross profit margin increased to 26.6 percent from 24.3 percent, and IBM
signed services contracts worth $11.4 billion in the quarter, up from $10 billion for the year-earlier quarter.

The hardware group took a big hit though, coming in at $4.6 billion. This represents a decline of 32.3 percent over the same quarter last year. But revenues last year included the PC unit, which
IBM has sold to Lenovo.

Software revenue was up 2 percent over last year coming in at $3.9 billion. IBM indicated that the results were driven by stronger middleware sales, spurred by customer interest in service-oriented
architecture (SOA) deployments.

And Up in Redmond

There was not a lot of news from Microsoft this quarter, but the company did release the first service pack for SQL Server 2005 in late April. The service pack provides fixes for about 40 bugs, as
well as sneaking in a few new features. And with bugs fixed, and the bleeding edge subsiding, more businesses are likely to upgrade to Microsoft’s latest and greatest DBMS offering.

The new features provided by the service pack include a production-ready database mirroring function, a couple of new components to SQL Server 2005 Reporting Services (SSRS), and a
peer-to-peer-like technology for transactional replication.

The service pack also includes a link to SAP NetWeaver Business Intelligence software that enables customers to
import SAP Business Information Warehouse data and more easily create and manage reports.

Interested users can download Microsoft SQL Server 2005 Service Pack 1 here: http://www.microsoft.com/downloads/details.aspx?FamilyID=cb6c71ea-d649-47ff-9176-e7cac58fd4bc&DisplayLang=en.

Ingres Active On the Open Source Front

Ingres, the independent open source DBMS company, made some moves this quarter to expand its business. In early April, Ingres announced it had formed a partnership with IT systems integrator
Cognizant Technology Solutions. The goal of the partnership is to bolster deployment of Ingres database systems. As such, Cognizant has agreed to develop a services practice around the Ingres DBMS.

With the open source market continuing to expand, Ingres is trying to position itself to be one of the major open source DBMS players. Through marketing, partnerships, technology, and good people
it may succeed. Ingres spun off with about 100 employees, currently employs around 160 folks, and is actively hiring with the goal of employing more than 200 this year.

And in early June, Ingres announced it had settled on official relationships with about 100 partners (of the hundreds it had inherited from CA). The new partnerships eliminated the up front costs
of using Ingres, since Ingres is now an open source offering. This tactic seems to be a sound one – that is, partnering with service providers to reduce their costs. By choosing Ingres, the cost of
the DBMS is lowered as compared to choosing a non-open source offering.

Other News on the Packaged Applications Front

Lately, the big news on the packaged applications front has been coming from Oracle and SAP, the two gorillas in this market. But there is another, smaller applications player that made news this
quarter, Lawson Software.

In late April the company approved the acquisition of Swedish software company Intentia International AB. Intentia was founded in 1984 and serves over 3000 customer sites in 40 countries. It offers
applications such as customer relationship management, supply chain management, and asset management. By combining the Intentia applications with Lawson’s strong offerings in financials and human
resources, Lawson seems to be building a company that can compete effectively with Oracle and SAP.

At Lawson’s annual meeting at its St. Paul headquarters, the company highlighted that the deal will more than double Lawson’s annual revenue to about $750 million, from $335 million last year.
Additionally, the deal opens up the company to international business, considering that Lawson traditionally does about 95 percent of its business in North America. Intentia does 85 percent of its
business in Europe and 10 percent in the Asia-Pacific region.

So, Lawson is coming out to compete with guns a blazin’. Of course, they are still a lot smaller than the behemoths they are aligned to compete against.

An Interesting Open Source Acquisition

In early to mid April Red Hat Inc. announced that it was acquiring JBoss, Inc.. JBoss is the popular open source application server. For many quarters now it had been rumored that Oracle was intent
on snapping up JBoss, but it didn’t happen. Instead, Red Hat bought them for $350 million.

The acquisition brings more power to Red Hat, which prior to this acquisition was simply a distributor of the Linux open source operating system. Now it must compete in the middleware space against
such titans as BEA Systems, Sun Microsystems, and IBM. Of course, Red Hat is used to huge competitors (like Microsoft, HP, IBM, and Sun). But now the pot has been raised and it is clear that both
IBM and Oracle will view Red Hat as more of a threat with JBoss in their pocket. JBoss competes directly with IBM’s WebSphere products.

Another really interesting aspect of this acquisition is that one open source company has bought another. And they are two big open source companies. This deal actually may signify an important
phase of the maturation of the open source market. If open source is significant enough that its companies are large enough to acquire other companies, then maybe there is something to this open
source stuff after all, huh?

A New Storage Engine for MySQL

In mid April, Solid Information Technology Inc., a maker of embedded databases, announced its plans to release an open source version of its storage engine that will be compatible with the MySQL
database.

Let’s quickly recap as to why this is important. The MySQL DBMS allows users to choose different methods for storing data. Although MyISAM is the default storage engine, users can opt to utilize
another engine. InnoDB is popularly used for this purpose because it is faster for transaction processing. However, InnoDB’s parent company, Innobase, was recently acquired by Oracle. This has
caused rampant speculation that Oracle might choose to use its ownership of the InnoDB engine to damage MySQL. Of course, that is just speculation.

Meanwhile, as reported last month, MySQL acquired Netfrastructure, and as a result picked up Jim Starkey, a well-respected database architect and former founder of Interbase Software. Word is that
Starkey is developing a faster storage engine for transaction processing for MySQL.

At any rate, it seems like MySQL users will have multiple options, because Oracle and MySQL have renewed their agreement for the InnoDB engine, MySQL is developing its own engine, and Solid will
release a beta version of the solidDB Storage Engine under the GNU Public License this July.

And that is all good news for MySQL users.

Sybase Updates SQL Anywhere Database<</strong>/p>

In mid April Sybase announced that it was shipping a beta release of Version 10 of its SQL Anywhere embeddable database. This is a significant release because it has been three years since
the last version – SQL Anywhere 9. Anything longer than 24 months between DBMS releases is considered to be abnormally long.

Of the many new features supported in this new version some of the more intriguing ones include: data mirroring for safe backups, materialized views, intraquery parallel computing, encryption, and
snapshot isolation.

Sybase Acquires German Company

In mid June, Sybase got into the acquisition game itself by purchasing Solonde AG, a German data software company. The purchase price was not disclosed, but Sybase did reveal that it paid for the
transaction in cash.

Solonde supplies products that automate data exchange between multiple sources and targets, including databases, web sources, XML, spreadsheets, and flat files. Sybase bought Solonde for its ETL
functionality in hopes that it will complement Sybase’s IQ analytics server and Sybase Adaptive Server Enterprise (ASE).

“Solonde enables Sybase to build upon a newly architected ETL platform,” said Raj Nathan, Ph.D, senior vice president and general manager, Information Technology Solutions Group, Sybase, Inc.
“This acquisition complements our existing technology, expands our data integration portfolio and supports our Unwired Enterprise strategy.”

CA Offering Free Management Software for DBAs?

In April, CA Inc., notorious for its pricing practices, announced that it was offering a free tool for heterogeneous database administration. The tool, Unicenter Database Command Center (DCC), is
browser-based, and provides an integrated user interface for administering DB2 for Linux, Unix and Windows, DB2 for z/OS, Oracle and Ingres databases. A subsequent version, still free, will support
Microsoft SQL Server, too.

Of course, the software is limited in what it can do, and CA will offer add on modules to expand the capabilities of DCC. These modules will not be offered for free, though.

I think this is a wise move on CA’s part. With Oracle Enterprise Manger moving into the heterogeneous database administration space on the one hand, and the open source movement expanding on the
other, this marketing approach by CA is a realistic reaction to what is going on in the market.

It will be interesting to see if CA’s major competitors in this space – IBM Tivoli and BMC Software – will provide similar offerings.

Summary

And so ends the second quarter of 2006. It was a good quarter for those of us in the database industry. We saw more acquisitions, new technology, and the analysts have verified that the DBMS market
is continuing to grow. The future for database technology looks bright indeed. To keep up-to-date on what is happening, though, you should be sure to read The Database Report in each quarterly
issue of TDAN.com. See you next quarter!

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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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