Well, here we are at the end of the third quarter of 2010. It is hard to imagine that another year is just about over. I guess it is true, the older you get, the faster the years seem to go by! And the database market is moving just as fast… so let’s dive in and see what the happened during third quarter.
This Quarter’s AcquisitionsIn late July, after obtaining approval from the European Commission earlier in the month, SAP announced the completion of its acquisition of Sybase, Inc. It will be interesting to watch SAP now that it owns a reasonable RDBMS engine. Will the company attempt to transition its application users to Sybase Adaptive Server from Oracle and others? We’ll have to wait and see…
What we do know, though, is what was announced in the middle of August by SAP and Sybase regarding their integration plans. Not surprisingly, much of the initial focus is on the mobility front. Sybase and SAP had already co-developed a number of mobility applications, and SAP plans to accelerate those activities post-acquisition. Of course, SAP plans to add mobile capabilities to its ERP suite, but also to create new industry-specific applications.
Also not a surprise, SAP is already working on certifying Sybase’s Adaptive Server Enterprise (ASE) for use with its ERP Business Suite. If all goes according to plan, ASE should be certified sometime during the first half of 2011. Apparently, though, SAP has not yet decided whether to certify its older software, such as the R/3. Never fear, though, if you are an SAP MaxDB user. At this point, anyway, SAP does not intend for ASE to supplant MaxDB.
It was also announced that Sybase would operate as a separate division of SAP instead of being disseminated throughout the combined company.
In August, IBM announced it had closed on its acquisition of Sterling Commerce. The acquisition is planned to allow IBM to further its cloud delivery capabilities. With the acquisition of Sterling Commerce, IBM advances its ability to help clients integrate and automate business processes, with the goal being to improve demand generation, customer experience and fulfillment.
And also in August, IBM announced and then closed on an agreement to acquire Storwize, a privately held Marlborough, Massachusetts-based company that provides real-time data compression technology. Under the terms of the deal, Storwize becomes part of IBM Systems and Software Group.
The Storwize technology interested IBM because it can compress primary data, or data that clients are actively using, of multiple types – from files to virtualization images to databases – in real-time while maintaining performance. Most other storage compression technologies only compress secondary or backup data. By compressing primary data, Storwize users can store up to five times more data using the same amount of storage, preventing storage sprawl and lowering power and cooling costs.
“Real-time data compression helps address a significant client need – making it affordable to analyze and make sense of massive amounts of data in order to provide new services,” said Brian Truskowski, general manager, IBM System Storage and Networking. “By adding Storwize to our innovative portfolio of storage solutions, IBM is better equipped than ever to help clients handle growing quantities of data and make more of it available for analytics.”
Evidently, IBM was busy this quarter, especially so in August, as the company also announced its intent to acquire Unica Corporation. Unica is a publicly traded, Waltham, Massachusetts-based provider of marketing and web analytics solutions. IBM will acquire Unica in a cash transaction for $21 per share. This makes the deal worth about $80 million. Upon completion of the acquisition, which is planned for sometime in the fourth quarter, Unica’s 500 employees will be integrated into IBM’s Software Solutions Group.
In acquiring Unica, IBM expands its portfolio of software solutions designed to help companies automate, manage, and accelerate core business processes across marketing, demand generation, sales, order processing and fulfillment. “IBM understands the demands on today’s organizations to transform core business processes in functions such as marketing with intelligence and automation,” said Craig Hayman, general manager, IBM Industry Solutions.
Another interesting data-related acquisition this quarter comes from EMC Corporation, which announced an agreement to acquire California-based Greenplum, Inc. Although terms of the deal were not disclosed, the acquisition was an all-cash transaction. Greenplum is a privately held provider of data warehousing software and self-service, cloud-based analytics for enterprises.
Upon completion of the acquisition, Greenplum will form the foundation of a new data computing product division within EMC’s Information Infrastructure business. Greenplum’s CEO Bill Cook will lead the new product division and report to Pat Gelsinger, President and Chief Operating Officer, EMC Information Infrastructure Products.
“The data warehousing world is about to change,” said Gelsinger. “Greenplum’s massively parallel, scale-out architecture, along with its self-service consumption model, has enabled it to separate itself from the incumbent players and emerge as the leader in this industry shift toward ‘big data’ analytics. Greenplum’s market-leading technology combined with EMC’s virtualized Private Cloud infrastructure provides customers, today, with a best-of-breed solution for tomorrow’s ‘big-data’ challenges.”
Although EMC is not one of the typical companies tracked by The Database Report, I am including it in this quarter’s run down because it is my guess that this acquisition could trigger a consolidation in the data warehousing industry. Companies that could become acquisition targets (or maybe acquirers) in a consolidating market include Netezza, Informatica, Teradata, Vertica Systems, and Aster Data.
Conspicuous by their absence in this quarter’s acquisition news is Oracle, which has been acquiring fast and furious over the past several years. Well, like a hurricane, it is probably just the calm before the storm. In the middle of July, Oracle issued $3.25 billion debt with part of the proceeds targeted for “future acquisitions.” This led to rampant speculation about possible acquisition targets for Oracle. I’m not going to spread any unsubstantiated gossip here in The Database Report, but if you are really interested a quick Google search will turn up some of the companies being bandied about.
Let’s just say that I will be surprised if we are not talking about an Oracle acquisition or two sooner, rather than later.
Lawsuit Central: The Quarter of Legal WranglingIf you paid attention to the news at all this past quarter, you will have noticed that it was rife with lawsuits. But let’s start with the biggest bombshell of the quarter: Oracle suing Google over Java.
In mid August, Oracle filed a complaint for patent and copyright infringement against Google, Inc. “In developing Android (Google’s mobile phone operating system), Google knowingly, directly and repeatedly infringed Oracle’s Java-related intellectual property. This lawsuit seeks appropriate remedies for their infringement,” said Oracle spokesperson Karen Tillman.
So it would seem that one of Oracle’s tactics following its acquisition of Sun Microsystems is to actively police its ownership of Java. It will be instructive to watch what happens not only with this lawsuit, but how the world of Java users reacts. Java is part of a large open source community that harbors disdain for this type of action. And this ecosystem is responsible, in large part, for Java’s success. Oracle risks damaging this ecosystem if it embarks on too many lawsuits like this.
One of Java’s big benefits is the vast array of open source tools and libraries that have been developed to support its use. And this lawsuit has certainly given pause to the developers of these tools.
But if we examine the basics of this lawsuit, it comes down to Dalvik. Dalvik is the Java-based runtime that powers Google’s Android smartphone operating system. Oracle alleges that Dalvik knowingly, willfully, and deliberately infringes on Java intellectual property. And Oracle’s claim seeks to halt any further Android development, as well as the destruction of all infringing Android software, and for Google to pay actual and statutory damages.
If I were a betting man, the logical conclusion of this would be for Google to license the Java technology from Oracle and pay a fee to Oracle for each Android sale. That will likely be cheaper than a long, drawn out legal action.
So, on the one hand, we see Oracle looking to profit from its software and that seems completely reasonable. On the other hand, we have a community of Java users who see the world changing as Java changes hands from the low-key Sun to the high-strung Oracle. It will be fun to watch this play out.
And Oracle is the target in another interesting lawsuit. A whistleblower filed a lawsuit against Oracle in May 2007, claiming that its sales practices led to millions of dollars in overcharges. In late June, the federal government joined the lawsuit against Oracle.
The accusation is that Oracle used a “scheme to defraud the United States by failing to disclose deep discounts” that it offered to some commercial customers. As anyone in the software business knows, federal regulations require General Services Administration contractors to follow standards assuring that government agencies will be able to obtain the best price given to the most favored customer. This lawsuit alleges that Oracle knowingly violated the rules by selling at greater discounts to some commercial customers.
In other legal news of the quarter, Microsoft sued a reseller for selling pirate copies of SQL Server. The suit, filed at the end of August 2010, alleges that Jigantic.com, an online reseller, engaged in a fraudulent bait-and-switch scheme. Microsoft’s filing with the court states: “Defendants (Jigantic.com) have switched and apparently are continuing to switch customer orders for Microsoft software licenses with less expensive Software Assurance which is not a license and creates no license rights.”
Evidently Microsoft used an investigator to order SQL Server 2008 Standard edition from Jigantic.com. Again, from Microsoft’s court filing: “Microsoft determined that Defendants did not forward the investigator’s actual order for the SQL Server 2008 Standard with 5 CALs to Microsoft, but instead switched the order to less expensive Software Assurance without any software licenses; and distributed to the investigator (Defendants’ customer) a disc containing Microsoft’s copyrighted…software which the investigator had no license to install or use.”
Here’s hoping that any fraudulent software practices like those alleged in this lawsuit are tracked down and stopped.
And let’s not forget the ongoing lawsuit between Oracle and SAP. As a quick refresher on the topic, it all started way back in 2007 when Oracle sued SAP claiming that the German software firm stole Oracle’s trade secrets. Basically, the claim is that TomorrowNow, then a subsidiary of SAP, had accessed Oracle’s software documentation inappropriately. If you want to read the complaint in its entirety you can find it here: http://www.oracle.com/sapsuit/complaint.pdf.
At any rate, this quarter – on August 17, 2010, to be exact – the Court issued an order on summary judgment in Oracle v. SAP, which serves to focus the damages discussion in this case. Earlier in the month SAP agreed to accept liability for some of Oracle’s claims, but intended to fight what it insists are “exaggerated” claims by Oracle of billions of dollars of damage. The summary judgment would seem to back up SAP’s assertion. SAP said, “As we indicated in our August 5 statement, SAP is committed to compensating Oracle for the harm the limited operations of TomorrowNow actually caused. That compensation must be reasonable and it must be tethered to reality and the law. We are pleased with today’s ruling by the Court, which serves to narrow the scope of damages and help focus this case. We look forward to continuing to work through the process to bring this case to an appropriate resolution.”
So after three years of legal wrangling could this case be coming to a reasonable conclusion? We’ll see, I suppose.
Product Announcements in the Third QuarterThere were a slew of new and upgraded products announced in the database realm during the third quarter of 2010.
Very late in June, Sybase announced SQL Anywhere 12. SQL Anywhere is a database and synchronization solution that Sybase markets as a core component of the Sybase Mobility Platform.
Sybase claims that it is the first database vendor to offer database and synchronization support for iPhone, Blackberry, and Windows Mobile Smartphone devices as well as the first to offer spatial data support in its mobile database and synchronization platform. “SQL Anywhere is a best kept secret among more than 20,000 developers who relish its ease of embedding and minimal database administration,” wrote Merv Adrian, Principal Analyst, IT Market Strategy.
The new features and enhancements of SQL Anywhere 12 include: enhanced spatial support, improved scalability, additional mobility tools, improvement in its self management capabilities, and a host of developer productivity enhancements.
Of course, Sybase was not the only database vendor with product announcements; Oracle had a few of its own. In early July Oracle unleashed its Oracle Business Intelligence Enterprise Edition 11g (OBIEE) suite. Many Oracle users were eagerly waiting for OBIEE as it had been in development for more than three years.
From a business intelligence (BI) perspective, Oracle had multiple products sets. Not only did it have its legacy BI tools, but also the BI solutions it inherited upon acquiring Hyperion and Siebel. OBIEE is the result of bringing these technologies together into a single solution. With BI and analytics at the forefront of many organizations these days, and some of Oracle’s largest competitors being leaders in that space (IBM, SAP), there was a lot of focus on OBIEE upon its announcement this quarter. It would seem that OBIEE is predominantly based upon Siebel analytics.
As part of the OBIEE hubbub, Oracle also introduced its new Common Enterprise Information Model, which allows administrators to manage and monitor BI performance. With it, users can access data directly from all Oracle applications, such as ERP, HR, CRM, finance, and so on. And there is no need to build a separate data warehouse or mart to do so. Another OBIEE selling point is the Action Framework, which allows users to initiate an action, such as a Web service, directly from their dashboard. These features help to differentiate Oracle in this space.
And finally, at least in terms of Oracle’s product news, in mid August the company was in the news regarding its plans for OpenSolaris. Evidently, an internal company memo that outlined Oracle’s Solaris strategy was leaked on the Internet.
According to the memo: “All of Oracle’s efforts on binary distributions of Solaris technology will be focused on Solaris 11. We will not release any other binary distributions, such as nightly or bi-weekly builds of Solaris binaries, or an OpenSolaris 2010.05 or later distribution.”
This would seem to sound the death knell for OpenSolaris, the open source version of the Solaris operating system released by Sun prior to the Oracle acquisition. Solaris 11 is the next major version of the operating system, and Oracle had previously indicated that it will be available sometime in 2011. Oracle, however, does plan to release a free developer edition of Solaris 11 to be called Solaris 11 Express.
Oracle made no official comment on the leaked memo or any of its contents.
Things weren’t quiet on the product front at IBM this past quarter, either. In late July, the company announced the IBM Smart Analytics Optimizer for DB2 for z/OS. The Smart Analytics Optimizer is a high-performance, integrated combination of hardware and software for mainframe DB2 that improves analytic query responses in a manner that is transparent to users. The product is only offered as an integrated solution that combines IBM software and hardware. The pieces cannot be sold or used separately.
The Smart Analytics Optimizer integrates into a DB2 9 for z/OS data warehouse environment, providing high-performance query software that is based on advanced data in-memory technology and executed on an IBM zEnterprise BladeCenter Extension attached to and managed by the System z server.
The Smart Analytics Optimizer is basically an appliance for improving database query performance. It can help minimize operational cost and speed delivery of services while requiring no application changes, in most cases. So here we have another offering, albeit of a different kind, to help organizations improve their business intelligence and analytics capabilities.
IBM also announced a new iteration of its pureScale technology running on System x servers with Linux. As IBM announced its pureScale technology for Power6 and Power7 systems in October of 2009, this is basically just a new platform announcement. The pureScale technology is an availability solution. If you are familiar with DB2 Data Sharing on IBM mainframes, pureScale brings that level of availability and reliability to distributed DB2 implementations.
Next up we have Ingres, which released its VectorWise Database Engine, a new type of database system aimed at the analytics crowd. Ingres claims that VectorWise can cut the amount of time needed to process complex queries in half.
According to Ingres, this can be accomplished through exploitation of the latest generation of computer chips in a manner similar to game software. The company partnered with Intel to deliver these capabilities. “As a result of this collaboration, Ingres VectorWise is able to unlock and exploit the full processing power of today’s chip technology. Now, business applications can gain the full benefits of Moore’s Law with consequent reductions in hardware costs, project risk and complexity,” said Roger Burkhardt, CEO, Ingres.
So it looks like Ingres is gunning for the analytics market, too!
In early July, a new version of the popular open source DBMS, MySQL Community Server 5.1.49, was released. The highlight of this version is an updated version of the InnoDB plug-in, as well as many of bug fixes. Not a major release, but 5.1.49 is now the recommended version for production MySQL work.
EnterpriseDB and Netezza
Also this quarter, EnterpriseDB announced a partnership with Netezza Corporation in which Netezza will resell EnterpriseDB’s Postgres Plus Advanced Server. It will include the EnterpriseDB Oracle Compatibility Layer, be compatible with the Netezza TwinFin appliance, and be resold as Netezza Migrator.
“This partnership with EnterpriseDB gives Oracle customers a clear and painless migration strategy,” said Jim Baum, president and CEO of Netezza. “This is a long-term strategic agreement that provides organizations new options to more easily manage their migration to TwinFin, therefore increasing performance and reducing cost.”
Two major enhancements to CouchDB make it worthy of this production designation according to Chris Anderson, the chief financial officer and a founder of Couchio, the corporate sponsor of the CouchDB project: performance has been greatly improved and it now works on Microsoft Windows. Work on CouchDB began in 2005 at IBM as a Lotus Notes project for the off-line replication of data. In 2008, CouchDB became an independent open-source project.
On Why You Need a Database Auditing PlanAnd now for a cautionary tale… In early July, a former database administrator at Gexa Energy, a Houston-based electricity provider, was sentenced to a one-year prison term for hacking. In addition to the prison term, the judge ordered the DBA to pay $100,000 in restitution to his former employer.
Evidently, the DBA was disgruntled after being fired, and he used his home computer to connect to a database containing customer information. And he copied that information – including names, addresses and Social Security numbers – to his home computer. Gexa contended that the computer network and database were damaged in the process, too.
So there are two lessons here:
- Companies, protect and monitor who accesses your databases and quickly terminate access when you terminate folks;
- Employees, do not try to damage your former employers after leaving… it is just not worth it.
Examining the Quarterly ResultsIBM reported its fiscal second quarter results in mid July. Although the earnings disappointed analysts, there was a lot of positive news, too. Second quarter net income was $3.4 billion compared with $3.1 billion in the second quarter of 2009, an increase of 9%. Total revenues for the second quarter of 2010 of $23.7 billion increased 2% from the second quarter of 2009. Earnings per share were up 13% at $2.61, and IBM raised its full year 2010 earnings per share expectations to at least $11.25.
So why were analysts disappointed? Overall revenue rose just 2%, which was short of Wall Street expectations.
However, keep in mind that IBM has experienced 30 consecutive quarters of earnings per share growth, with 12 of last 14 quarters at double-digit growth. “In the second quarter we again delivered double-digit earnings per share growth, increased margins, as well as improving constant currency revenue performance in our ongoing software, services and hardware businesses, and in all geographies,” said Samuel J. Palmisano, IBM chairman, president and chief executive officer.
From a database perspective, IBM Software revenue grew to $5.967 billion, representing a 3.2% year-to-year rate of growth. Even more impressive was the 33.3% pre-tax margin IBM earned on its Software business. IBM’s Information Management software brand, which includes its DBMS software, grew by 7%.
In late June, Oracle announced fiscal 2010 Q4 total revenues were up 39% to $9.5 billion. New software license revenues were up 14% to $3.1 billion. Operating income was up 14% to $3.3 billion, and operating margin was 35%.
For the 2010 fiscal year, total revenues were up 15% to $26.8 billion, while new software license revenues were up 6% to $7.5 billion. Software license updates and product support revenues were up 11% to $13.1 billion, while operating income was up 9% to $9.1 billion.
For the quarter, Oracle’s Database and Middleware software category, which includes its DBMS, was flat for at $3.947 billion, but was up for the year at $12.772 billion, which represents 10% growth.
Oracle’s Applications business did not fare as well. Applications software came in at $1.849 billion for the quarter and $6.105 billion for the year, representing 9% and 2% declines, respectively.
And up in Redmond, Microsoft posted better than expected results for its fiscal fourth quarter. Revenue of $16.0 billion was up 10.6% sequentially and 22.4% year over year. The primary revenue driver came in the Windows and Servers & Tools business lines. OEM sales of Microsoft’s Windows 7 installed PCs grew 26%.
Microsoft’s Server & Tools segment, in which SQL Server is reported, boasts 25% of total revenue. The line grew 12.2% sequentially and 14.3% year over year.
This quarter I’d also like to present some additional facts and figures on the Big Three: IBM, Microsoft, and Oracle. The following chart outlines some of the important financial characteristics of the Big Three. These numbers were accurate as of the middle of the third quarter of 2010:
Financial Statistics of the Big Three DBMS Vendors
|Market Cap||$164.1 billion||$212.7 billion||$117.5 billion|
|Revenue||$96.9 billion||$58.69 billion||$26.82 billion|
|Shares Outstanding||1.282 billion||8.764 billion||5.026 billion|
These numbers help to tell the financial story for these industry giants.
Finally, let’s take a look at Sybase’s revenues for the quarter. The company reported its fiscal second quarter results with total revenue growing 9% to $302.0 million, compared to $278.0 million in the second quarter of last year. License revenue grew 6% to $100.1 million, services revenue grew 5% to $147.2 million, and messaging revenue grew 24%. So it looks like SAP is acquiring a healthy business, doesn’t it?
And in Other NewsThis quarter also had its share of interesting “people” news. First let’s discuss the saga of Mark V. Hurd. Hurd was the CEO of Hewlett Packard until a sexual harassment investigation uncovered a personal relationship Hurd had with a contractor who received inappropriate payments from the company. Mr. Hurd resigned from Hewlett Packard in early August amid pressure from the company’s board of directors.
But that was not the end of this particular story. Larry Ellison, CEO of Oracle and friend of Mr. Hurd, wrote an e-mail to The New York Times decrying the treatment of his friend. “The H.P. board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago,” wrote Ellison. “That decision nearly destroyed Apple and would have if Steve hadn’t come back and saved them.”
Mr. Hurd received a package of nearly $50 million, including $12 million in severance and the rest in stocks; and things began to quiet down. But in early September, Oracle hired Hurd as co-president to serve along with current co-president Safra Catz. Hurd also will have a seat on Oracle’s board of directors. In the press release announcing the hiring of Hurd, Larry Ellison exclaimed that “Mark did a brilliant job at HP and I expect he’ll do even better at Oracle. There is no executive in the IT world with more relevant experience than Mark. Oracle’s future is engineering complete and integrated hardware and software systems for the enterprise.”
In a separate release, Oracle announced that Charles Phillips has resigned his position as president and as a member of the board of directors. Earlier this year, Mr. Phillips admitted to an eight-year relationship with a woman other than his wife. The press release spins this as Phillips’ request and that he had only stayed on during the Sun integration at Ellison’s request. Hmmm… not sure about that one.
In an SEC filing Oracle detailed Hurd’s compensation package: a base salary of $950 000 a year, eligibility for a fiscal 2011 bonus of as much as $10 million, and 10 million stock options. Not bad, huh?
So Oracle gains an executive with experience running a very large company with a hardware focus. Don’t forget prior to his gig at Hewlett Packard, Hurd was the CEO of NCR. Prior to that, he was ran the Teradata division. So Oracle should benefit not only from Hurd’s experience at HP, but also from the data warehousing background he gained during his tenure at NCR. But it will be particularly interesting to see how Hurd’s knowledge of HP’s strategy and market will be used for Oracle’s benefit.
Given all of the above, it seems that Hurd would be a good choice to get the hardware side of things working well at Oracle. Well, Hewlett Packard seems to agree, as the company chose to sue Hurd after the announcement of his hiring at Oracle. The lawsuit claims that Hurd violated the terms of his severance agreement by accepting employment with Oracle. Now I’m no lawyer, but I have been involved with severance agreements before and it would be very surprising if Hurd were to receive millions of dollars without having to agree to certain stipulations.
Oracle was quick to respond, issuing a statement the same day the lawsuit was filed. “Oracle has long viewed HP as an important partner,” said Oracle CEO Larry Ellison. “By filing this vindictive lawsuit against Oracle and Mark Hurd, the HP board is acting with utter disregard for that partnership, our joint customers, and their own shareholders and employees. The HP Board is making it virtually impossible for Oracle and HP to continue to cooperate and work together in the IT marketplace.”
I guess that this one will be interesting, especially so with Larry Ellison involved. So here we have yet another lawsuit to track in future editions of The Database Report.
The personnel-related news in the database market was not limited to Oracle this quarter. IBM made its share of waves, too. In late July, IBM CEO Sam Palmisano reorganized the company’s executive leadership.
IBM reorganized to place its hardware and software divisions under the control of a single executive, Steve Mills. Mills previously led IBM’s software business. After the reorganization, Rod Adkins, senior VP for the Systems & Technology group, will report to Mills instead of directly to Palmisano. Mills’ new title will be Senior VP and Group Executive for Systems and Software.
IBM’s goal with this move seems to be an effort to better deliver plug-and-play systems combining IBM software and hardware. The timing is interesting, too, given Oracle’s recent push in this direction after its acquisition of Sun Microsystems.
Although the promotion of Mills was the biggest news, it was not the only change made during this reorganization. Mike Daniels, who had been running the Global Technology Services division within IBM Global Services, was promoted to lead all IBM Global Services. Frank Kern, who was general manager of the Global Business Services unit, will report to Daniels.
Ginni Rometty was promoted to Group Executive for Sales, Marketing, and Strategy. And Mark Loughridge, IBM’s Chief Financial Officer, is now Senior Vice President of Finance and Enterprise Transformation. This means that Palmisano now has only these four direct reports… and it would seem that perhaps Steve Mills now has the inside track toward being the eventual successor to Palmisano when he eventually decides to retire.
Summing Things UpAnd so we wrap up another edition of The Database Report. With all of the lawsuits and product announcements and hirings and firings and reorganizations, it was a whirlwind of a quarter. I wonder if the fourth quarter will be as active? There is only way to find out – check in with us again next quarter as we digest what happens in the database market during the final quarter of 2010.