The years seem to be screaming past us faster and faster don’t they? Here we are at the end of 2009, and indeed, the end of the first decade of the 21st century. This past year was indeed another fast-paced, active year for data and database management. The year was rife with acquisitions and lawsuits and attempts to deal with a troublesome economy and the fourth quarter mirrored 2009’s activity very well. So before we embrace yet another New Year, let’s take a few moments to review the gyrations in the DBMS marketplace during the fourth quarter of 2009.
The Ongoing Saga of Oracle’s Acquisition of SunIt was not a particularly good quarter for Oracle in terms of trying to get its acquisition of Sun approved and closed. The EC (European Commission), which must review and approve the acquisition before it can continue, delayed its approval process so that it could conduct an in depth investigation of Oracle’s role in managing the MySQL database. This came as a bit of a surprise because way back in June, Oracle’s lead counselor Daniel Wall said in a statement: “We were almost able to resolve everything before the Second Request deadline. All that’s left is one narrow issue about the way rights to Java are licensed that is never going to get in the way of the deal.” It seems the esteemed counselor misinterpreted things a bit, doesn’t it?
The EC’s caution stems from the DBMS market that Oracle would control if the acquisition is permitted to go through. MySQL, which comes as part of the Sun acquisition, is the leading open source DBMS in terms of installation and usage. And Oracle Database is the leading enterprise DBMS, also in terms of installation and usage. And the EC wants more fully to understand the potential ramifications of Oracle controlling MySQL.
So what could happen? The EC could decide to disallow the acquisition in its entirety, but that is unlikely. They could require Oracle to divest itself of MySQL. That is a possibility, but Ellison has been on record as saying that he would not sell off MySQL. So if this scenario were to occur, I guess that would mean that Oracle would have to stop conducting business in Europe. I doubt that would happen; hopefully cooler heads within Oracle would prevail upon their CEO to back down and sell off MySQL. But who would buy it? You’d have to assume that Microsoft or IBM would raise similar problems for the EC (and even more serious problems for Oracle and Larry). HP? Cisco? Not really in their core competency areas. EMC? Maybe a better fit, but do they really want to become a DBMS vendor? In my opinion, the most likely landing spot for MySQL if divestiture is mandated would be Red Hat, or possibly Novell.
My guess is that the EC will eventually allow Oracle to proceed without requiring it to divest itself of MySQL. If EC members delve into the market for enterprise database software, they will see that MySQL and Oracle typically do not compete for the same customers and applications. Furthermore, removing MySQL as a “competitor” does not create a marketplace with insufficient competition for Oracle.
In other words, I agree with the following statement made by Oracle in a November 11, 2009, press release: “The database market is intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open source vendors. Oracle and MySQL are very different database products. There is no basis in European law for objecting to a merger of two among eight firms selling differentiated products. Mergers like this occur regularly and have not been prohibited by United States or European regulators in decades.”
Perhaps there will be some conditions that Oracle will have to agree to, but I doubt it will be anything so troubling as to derail the acquisition. But I could be wrong… we’ll have to watch and see.
Additionally, MySQL is open source code; therefore, it cannot be completely controlled by anyone. The MySQL can be forked, creating a new open source version of it that would not be under Oracle’s control. Indeed, MySQL co-founder Monty Widenius, has already developed his own branch of MySQL, called MariaDB (information available at http://askmonty.org/wiki/index.php/Maria). Of course, the original MySQL is still the biggest open source DBMS player and forked versions face a long, uphill battle for market acceptance.
EC spokesman Jonathan Todd seems to agree, saying “(d)espite MySQL being open source, Oracle would be the exclusive holder of copyright on the MySQL code, making it hard for competitors to do what they want with it.”
And various people and organizations are beginning to take sides in the battle. Monty Widenius believes that Oracle should be made to divest MySQL. No surprise there. And Richard Stallman, a free software activist, wrote a letter to the EC asking them to require Oracle to divest itself of MySQL. No surprise there, either. On Oracle’s side, favoring the company to be allowed to retain MySQL, we have the International Oracle User Group. Again, no surprise, but perhaps the IOUG position will carry some weight because it is based upon a practitioner’s viewpoint. IOUG President Ian Abramson said that “…recent objections from the EU inferring that competition and innovation will be reduced in the database industry through this acquisition does not translate to those in the IOUG community who support the profession.”
I think Microsoft stands to lose the most from Oracle gaining MySQL. Although MySQL does not really compete for the same applications and installations as Oracle and DB2, it does compete for some of the SQL Server workload. Both MySQL and SQL Server are used by small to medium-sized businesses.
Anyway, as the battle wages on, troubles loom for Sun. In late September, Larry Ellison, CEO of Oracle, was widely reported as complaining that Sun was losing $100 million every month that the acquisition remains in limbo… which is obviously a problem for Oracle. One can only imagine the glee with which HP and IBM hardware salespeople approach Sun customers these days. And the longer the eventual fate of Sun remains uncertain, the more difficult it will be for Oracle to maintain Sun’s customers post-acquisition. Heck, there will be a lot fewer customers to even try to maintain.
Nevertheless, Oracle and Sun are trying to calm the waters. In October 2009 at Oracle OpenWorld, Sun’s Chairman Scott McNealy took the stage with Larry Ellison as they both reassured the crowd that Sun’s technology will not perish after the acquisition is completed. Ellison took the opportunity to reiterate his desire to compete with IBM saying “…we think the combination of Sun and Oracle is well-equipped to compete successfully against the giant (IBM).”
At present, the latest date for the EC to make a final decision on this case is January 27, 2010. So, hopefully we will have a resolution to all of this early next quarter!
Further News on the Acquisition FrontAlthough the Oracle and Sun discussions dominated the quarter, IBM made some news on the acquisition front, too. In late November, IBM announced that had acquired Guardium, a market leader in real-time enterprise database monitoring and protection. Essentially a provider of database auditing solutions, Guardium’s technology helps clients safeguard data, monitor database activity and reduce operational costs by automating regulatory compliance tasks.
Guardium, headquartered in Waltham, Massachusetts, was privately held. Although the financial terms of the deal were not disclosed, Internet rumors placed the deal around a quarter million U.S. dollars. Additional Internet reports indicated that IBM had been courting Guardium since January 2009.
“Organizations are grappling with government mandates, industry standards and business demands to ensure that their critical data is protected against internal and external threats,” said Arvind Krishna, general manager, IBM Information Management. “This acquisition is another significant step in our abilities to help clients govern and monitor their data, and ultimately make their information more secure throughout its lifecycle.”
IBM’s portfolio already included a database auditing offering, Audit Management Expert, but Guardium’s solutions were generally regarded as best of breed. The IBM offering delivers basic support for reporting, policies, and alerting, but lacks advanced features such as analytics and intelligence, integration with packaged and file-level auditing, and integration with other compliance solutions, such as Guardium’s. Additionally, Guardium’s cross-platform DBMS support will allow IBM to expand beyond just supporting DB2 for database auditing.
IBM plans to integrate Guardium into its Information Management Software portfolio. The acquisition of Guardium marks the 28th acquisition to support IBM’s Information Management strategy.
Although the Guardium deal was the highlight of the quarter for IBM acquisition-wise, it was not the only news. In early October, IBM finalized its buyout of SPSS Inc., a Chicago-based developer of analytics software; this acquisition was covered in last quarter’s edition of “The Database Report.” Also in early October, IBM announced plans to acquire the mortgage processing business of Wilshire Credit Corp from Bank of America. Financial terms were not revealed. Wilshire Credit provides BPO services to financial institutions in the mortgage lending sector. IBM plans to take on approximately 900 Wilshire employees.
Red Hat Invests in EnterpriseDBIn late October, Red Hat announced that it had made a financial investment in EnterpriseDB and that the two companies would be forming a partnership to help increase the adoption rate of open source software. For those readers who have not heard of EnterpriseDB, it bills itself as “the enterprise PostgreSQL company.” So, in essence, EnterpriseDB is attempting to be for PostgreSQL what Red Hat is for Linux.
“Red Hat pioneered the adoption of open source in the enterprise with Enterprise Linux and JBoss middleware. We believe the database will be the next major area of open source adoption,” said Ed Boyajian, president and CEO, EnterpriseDB. “Our partnership with Red Hat will accelerate the vision we share – worldwide enterprise adoption of open source IT infrastructure as an alternative to proprietary solutions.”
Partnerships happen all the time between IT companies and most of them are worthless. Unless money changes hands, it is usually quite safe to just ignore partnership announcements. Well, some money changed hands here, so this could become a significant partnership for both companies, especially with the market confusion surrounding MySQL during the Oracle/Sun acquisition.
Red Hat is probably investing in EnterpriseDB as a hedge against Oracle’s pending acquisition of Sun (which, of course, includes MySQL). What Oracle will do with MySQL has been the subject of a lot of speculation over the past months… and nobody knows for sure. Oracle might be forced to divest MySQL, they could invest heavily in MySQL, they could view it as a threat to their database business and try to starve it, or [insert your favorite tactic here]. With many Red Hat instances running MySQL, Red Hat is likely concerned about there continuing to be viable alternatives to MySQL and EnterpriseDB is certainly one.
Of course, Red Hat is not the only investor in EnterpriseDB: last year IBM invested in EnterpriseDB (and this year IBM licensed EnterpriseDB technology for the Oracle compatibility capabilities in their DB2 9.7 release).
I doubt the Red Hat investment in EnterpriseDB will have an immediate impact on either PostgreSQL or MySQL adoption and use. The fate of MySQL will depend on the fate of the Oracle acquisition of Sun and what Oracle does after that. Furthermore, it is unlikely that Red Hat plans to eventually acquire EnterpriseDB, either. Red Hat probably just wants viable open source DBMS options for its core Linux business. With the confusion surrounding the market leader at this point, helping to prop up the number 2 player just makes good sense.
The ultimate winner here is the PostgreSQL user because the Red Hat investment helps to foster a continuing strong open source DBMS marketplace. With MySQL, EnterpriseDB, Ingres, and PostgreSQL there are many strong open source DBMS candidates from which to choose. With companies like Oracle, IBM and Red Hat investing in the open source DBMS market customers can be comforted knowing that not only is the technology backed by a strong development community, but also by some of the biggest software companies in the world.
Subscription-Based Pricing for Oracle’s ApplicationsIn late September, Oracle announced its intention to offer software as a service, or SaaS, for the business applications it sells to midsize companies. During a Web event staged for midmarket organizations, Oracle indicated that new pricing options would include “subscription-based pricing.” This extends the SaaS concept beyond its existing SaaS offerings, On Demand CRM and Beehive.
This came as no surprise because CEO Larry Ellison had already said that it planned to be the “number one on-premises applications company and the number one on-demand application company” during Oracle’s quarterly earnings call in June 2009. Ellison further noted that the shift would be gradual and would occur over the upcoming decade.
This move could pose some interesting ramifications on the market. First of all, keep in mind that Oracle markets the same applications to the midmarket as it does to large enterprises. Enabling large ERP systems like PeopleSoft and JD Edwards for SaaS will be challenging. And it could impact revenue if existing customers are allowed to switch to a subscription-based model. But Oracle is not known for its flexible terms and conditions, so I’m sure they have something planned to make the move revenue positive to the company.
The competitive landscape for SaaS applications will be put into some turmoil, too, as Oracle proceeds with its plans. It will be telling to see how companies like Salesforce.com, RightNow, and NetSuite react to Oracle’s move.
Oracle Talks Up ExadataLast quarter we covered Oracle’s announcement of its Exadata database machine. And Larry Ellison pitched the still beta technology during his keynote address at Oracle OpenWorld in October. Ellison, surely hoping to promote the wisdom of merging Sun hardware and Oracle software, called the Exadata database machine the “foundation for building dynamic storage grids.” Over a dozen different presentations at the conference were on the topic of Exadata.
The Sun Oracle Database Machine is available in a choice of configurations that scale from a basic system to a 42-unit rack complete with 8 database servers and 14 Oracle Exadata Storage Servers.
Exadata V2 has built-in smart storage software that offloads data-intensive query processing from Oracle Database 11g servers and brings it closer to the data. As a result, performance should be improved because less data will travel over the server’s InfiniBand interconnects.
IBM Announces DB2 pureScaleIn mid October, IBM announced DB2 pureScale, new technology that IBM touts as delivering unlimited capacity, application transparency, and continuous availability. With DB2 pureScale, you can scale your system simply by connecting a new node and issuing two commands. And no application code changes are required to take advantage of DB2 pureScale. A scalable architecture allows DB2 customers to grow their applications on demand to meet business requirements. DB2 pureScale provides continuous availability through the use of highly reliable PowerHA pureScale technology on IBM Power Systems and a redundant architecture. The system recovers nearly instantaneously from node failures, immediately redistributing the workload to surviving nodes.
DB2 pureScale utilizes the global locking and caching coherency interfaces of the DB2 cluster nodes through DB2 Cluster Services. In a system performance test with more than 100 Power servers, DB2 pureScale achieved a total system productivity of more than 80%. In comparison, competitive offerings have only demonstrated 60% system productivity with less than half the number of servers. In fact, with 64 servers, DB2 pureScale generated a system productivity of more than 90%. These results are quite impressive.
“Clients are constantly fighting a battle of IT economics and increasingly choosing DB2 and Power to help reduce the costs of managing their growing business data,” said Arvind Krishna, general manager, IBM Information Management. “DB2 pureScale on Power Systems helps clients grow their IT infrastructure more reliably and economically than ever before to meet today’s business needs.”
If you are familiar with Parallel Sysplex technology and data sharing on DB2 for z/OS systems, DB2 pureScale brings the same level of scalability to UNIX and x86 systems. DB2 pureScale is not a preconfigured rack of database and storage servers, like the Exadata V2 appliance from Oracle and Sun. And it appears to scale more efficiently and effectively than Oracle RAC. This flexibility would seem to give IBM an advantage in this space.
As of early December 2009, the IBM website still reads: “IBM currently intends to make DB2 pureScale available later in 2009. An early access program is underway.” Until the offering is generally available, it remains to be seen how effective this will be in the marketplace against similar Oracle offerings, but it looks like a promising new technology for IBM and DB2.
Other Oracle Software Announcements and UpgradesIn early October Oracle announced Enterprise Single Sign-On (ESSO) Anywhere, which enables enterprises to host single tenant ESSO in a private cloud, delivering secure access to heterogeneous enterprise resources to users.
Oracle’s enhanced Enterprise Single Sign-On Suite provides users with unified sign-on and authentication across all their enterprise resources. It includes components that help improve authentication capabilities, decrease security costs and deliver efficient access and self-service capabilities, including Oracle ESSO Logon Manager, Oracle ESSO Password Reset, Oracle ESSO Authentication Manager, Oracle ESSO Provisioning Gateway, and Oracle ESSO Kiosk Manager.
In mid October Oracle launched Oracle Fusion Middleware 11g, including WebLogic Suite 11g. Oracle obtained the WebLogic offering as part of the BEA acquisition in 2008. The new release, which was announced July 1, 2009, is the first release of Oracle middleware to be based entirely on BEA’s WebLogic Server.
In early November Oracle introduced a new support portal to supplant its popular Metalink site. Evidently the switch was not without issues as users complained about the Flash interface it used. Oracle reacted swiftly though to offer an HTML interface. Even so, many users were still complaining about ease of use difficulties and bugs.
What’s Up With Microsoft?In mid November, Microsoft announced that its Oslo modeling technology would be coupled with its SQL Server database family. Oslo is Microsoft’s data modeling initiative composed of three parts:
- M, a modeling language,
- Quadrant, a modeling tool, and
- A repository.
The big question now is what will become of Oslo? Can it become a competitor for large enterprise modeling initiatives if it is viewed as just another part of the SQL Server DBMS?
Oslo was included in the new Community Technical Preview (CTP) of SQL Server 2008 R2 made available by Microsoft later in November. The biggest new feature in the CTP was in memory analysis capabilities: PowerPivot for Excel and PowerPivot for SharePoint. The company also announced the Parallel Data Warehouse edition of SQL Server, which should be generally available in the first half of next year.
Microsoft also added IBM and EMC to its list of hardware partners; a list that previously included only HP, Dell and Bull. The partnership is for IBM’s X Series and Intel processors, so no, there is not a mainframe version of SQL Server on the horizon! You have to wonder, though, is Microsoft cozying up to IBM in anticipation of Oracle owning Sun… and MySQL?
October: Database Conference MonthThe fourth quarter is a big quarter for database conferences, and this year, most of them occurred in October. The month started with the European IDUG conference, held the first week of October in Rome, Italy. Oracle OpenWorld followed the week of October 12th, in San Francisco, as always. And the IBM Information on Demand conference was held in Las Vegas the last week of the month. And then the SQL Server PASS Summit was held in Seattle, the first week of November (not technically part of October, I know).
As usual, streams of database professionals attended these events and learned the latest and greatest news and techniques regarding their favorite DBMSes. Of course, the biggest bit of news from all of them was this: attendance was down… way down in some cases. It seems that conferences are one of the first cuts to be made in an economic downturn.
The DBMS Vendors: By the NumbersLet’s review the revenue performance of the Big Three DBMS vendors: Microsoft, Oracle, and IBM.
Microsoft: In late October, Microsoft released its fiscal 2010 first quarter results with quarterly revenue of $12.92 billion, a 14% decline from the same period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $4.48 billion, $3.57 billion and $0.40 per share, which represented declines of 25%, 18% and 17%, respectively, when compared with the prior year period. At the same time, Microsoft reduced operating expense guidance to $26.2 billion to $26.5 billion, for the full year ending June 30, 2010.
Keep in mind, though, that about $1.47 billion of revenue was deferred due to the Windows 7 upgrade Option program. Adding that revenue back in would have amounted to a grand total of $14.39 billion, or a 4% drop when compared to the same quarter a year ago. Windows 7 and Windows Server 2008 R2 launched globally on October 22, 2009, as anticipated – but that did not materially impact revenue this quarter.
Revenue for the Server division, which produces Microsoft SQL Server, was flat coming in at $3.4 billion, the same as the first quarter last year. And income for the Server division rose 23% from $1.04 billion in 1Q2009 to $1.28 billion in 1Q2010. Both of these results can be viewed as success because the Windows division, the Business division, and the Online division all experienced quarter over quarter revenue and income declines. The only other division within Microsoft with flat revenue and income growth was the Entertainment and Devices division (XBox).
I guess the bottom line for Microsoft this quarter is that its quarterly results were not as bad as they have been recently. So, if you are an optimist, it wasn’t that bad of a quarter for Microsoft.
And, not surprisingly, that is the approach Microsoft chose to take. “We are very pleased with our performance this quarter and particularly by the strong consumer demand for Windows,” said Chris Liddell, chief financial officer at Microsoft. “We also maintained our cost discipline, which allowed us to drive strong earnings performance despite continued tough overall economic conditions.”
Oracle: For its fiscal first quarter, Oracle’s revenues were down, but profits were up. Revenue was down more than 6% to $5.06 billion for the quarter, but net income was up 4% coming in at $1.12 billion versus $1.08 billion for the same quarter last year.
Both of its core software businesses experienced new license revenue declines for the quarter. Database & Middleware new license revenue dropped from $906 million to $711 million for the same quarter, a 22% decline. For Applications, new license revenue was down 4%, from $331 million to $317 million.
Annual maintenance fees were up 6% to $3.117 billion, but Services revenue was down 22% at $909 million.
Oracle Executive Vice President and CFO Jeff Epstein put a positive spin on things saying “Software license updates and product support revenues grew 11%, to $3.1 billion, for the quarter when adjusted for the change in the U.S. dollar since last year.”
IBM: Of the Big Three, IBM seems to have had the most successful quarter. Net income for its fiscal third quarter rose to $3.2 billion, a 14% increase over the same quarter last year. Total revenues for the third quarter came in at $23.6 billion, a 7% decrease (5%, adjusting for currency) from the 3Q 2008.
Software revenues were $5.1 billion, a decrease of 3%, or flat when adjusting for currency, compared with the same quarter last year. Middleware revenue was up 2% (or 5% adjusting for currency). This is the group that includes Information Management, WebSphere, Tivoli, Lotus and Rational products. Revenue from Information Management software, which includes DB2, was flat, though.
Samuel J. Palmisano, IBM chairman, president and chief executive officer, highlighted the quarter, saying “We continued to invest for growth in areas where clients see potential for value creation including Smarter Planet solutions, cloud computing and advanced business analytics. We are optimistic about 2009 as we again raise our full-year expectations and we remain well ahead of pace for our 2010 roadmap of $10 to $11 per share.”
And Let’s Not Forget the EconomyThe economic downturn continued to wreak havoc on IT jobs with both Oracle and Microsoft employees experiencing layoffs. In mid November, Oracle made deep cuts in its consulting division. Exact numbers were not provided by Oracle. Also in November, it was reported that Microsoft eliminated 800 jobs as part of its previously announced intent to lay off as many as 5,000 during 2009. Interestingly enough, Microsoft’s headcount actually increased 2% during the fiscal year that ended June 30, 2009, due to acquisitions. Yet during that same period Microsoft spent $330 million on employee severance payments.
Goodbye 2009, Hello 2010As we come to the end of another edition of “The Database Report,” we also come to the end of another year and the first decade of the 21st century. The DBMS marketplace continues to be active and exciting, and “The Database Report” will continue to provide quarterly coverage of everything database in 2010. So be sure to check in again next quarter, and every quarter, to keep track of the DBMS market.
