Welcome to another edition of The Database Report – where we examine the activities in the DBMS market during the past quarter. This time around we look at the first quarter of 2006, and it was an active quarter. Oracle was back on the acquisition path not only acquiring new stuff, but closing some previous acquisitions. IBM released a free version of its distributed DB2 DBMS. And the open source database market was all in a tizzy. We’ll look at these stories, as well as several others including a look at some of the financials of the main players, in this edition of The Database Report.
Oracle Completes Acquisition of Siebel
At the very end of 2005, Siebel Systems Inc. released a statement announcing that its shareholders will vote on January 31, 2006 to approve Oracle’s $5.85 billion buyout of the company. And that vote was in the positive because on January 31st Oracle announced the completion of its acquisition of Siebel Systems, Inc. This completes another major acquisition for Oracle in the applications space and clearly places Oracle in the leadership position for Customer Relationship Management (CRM) software.
In terms of support, Oracle announced the extension of its Lifetime Support Policy to cover Siebel version 7.8 and the upcoming version 8 of the Siebel major product lines. Any new versions of the Siebel product line released after the acquisition is completed will fall under Oracle’s Lifetime Support Policy, as well.
Oracle plans to make the Siebel CRM software the foundation for its next-generation Fusion CRM suite. Fusion is Oracle’s long-term project for combining the best of breed functionality from its home grown Oracle applications and the applications it has acquired (PeopleSoft, JD Edwards, and Siebel). The eventual success of Fusion will, of course, depend on many factors including how adept its developers will be at integrating disparate lines of code and whether or not Oracle plans any more acquisitions in the applications space. So stay tuned.
And In Other Oracle Acquisition News
Oracle continued its acquisitive ways this quarter by scooping up another open source DBMS and a telecommunications specialist. The first acquisition, of Sleepycat Software, follows on the heels of last quarter’s acquisition of Innobase. The acquisition, announced in mid-February, strengthens Oracle’s position in the embedded database space where it currently offers Oracle Lite and TimesTen (another recent acquisition). It also confirms Oracle’s stated intent to materially participate in the open source software market.
Berkeley DB is the open source, embedded database software offering of Sleepycat Software. Berkeley DB is pervasive in the open source world as it is embedded in several popular open source products including Apache web server and the OpenOffice productivity suite, among others.
The acquisition of Sleepycat also closes down some speculation that MySQL would move to replace its transaction engine (which is currently powered by Innobase) with Sleepycat technology. That move would be useless now that Oracle controls both technologies.
It will be interesting to keep an eye on Oracle’s next moves in the open source space. Many open source proponents are worried that Oracle will move to remake their recent open source acquisitions as more commercial offerings. Of course, it is possible for open source developers to fork the existing code and continue it without Oracle if the company tries such tactics. It might not be easy, but it would be possible.
Don’t immediately assume, though, that Oracle’s intentions are anything other than what they publicly state which is that they are interested in participating in the open source market and plans “business as usual” with its open source acquisitions.
And the Berkely DB product could be a lucrative one for Oracle in the long term. Most of its revenue comes from the embedded database market, which is not currently Oracle’s strength.
Then, the day after announcing the Sleepycat acquisition, Oracle announced that it would be acquiring HotSip AB, a Swedish provider of telecommunications infrastructure software. Its primary offering is a J2EE Session Initiation Protocol application server. HotSip also offers messaging, telephony and conferencing applications. This move will bolster Oracle’s middleware product line and the rumor mill is rampant that it may not be Oracle’s last acquisition in the middleware market. Many analysts and journalists are speculating that Oracle next may acquire JBoss, an open source application server. Such a move would make sense to help Oracle deliver on its Fusion project.
At any rate, Sleepycat and HotSip are Oracle’s fifteenth and sixteenth acquisitions over the past 5 quarters. If I were a betting man, I would wager that we’ll be reporting on the seventeenth next quarter!
Oracle Enterprise Manager Adds Microsoft SQL Server Support
Oracle also made some news in the world of database management tools. Typically, the major DBMS vendors supply tools to help users manage their own databases: IBM manages DB2, Microsoft manages SQL Server, and Oracle manages Oracle databases. Organizations wishing to manage multiple different types of databases had to rely on third party tool vendors like BMC Software, CA, Embarcadero Technologies, and Quest Software. But the landscape is changing.
This quarter Oracle released several plug-in modules for its Enterprise Manager tool that extend its database coverage to include Microsoft SQL Server, instead of just Oracle databases. Actually, Oracle now offers plug-ins for a wide range of Microsoft products, not just its SQL Server database. If Oracle is serious about morphing Enterprise Manager into a heterogeneous management tool it will give the traditional ISVs a run for their money. And they do seem to be serious; these plug-ins appear to be the first steps in Oracle’s making good on its August 2005 promise to provide functionality to manage other vendor’s products.
Of course, it remains to be seen how thorough the non-Oracle functionality will be as compared to the database agnostic vendors. Initial support in Oracle Enterprise Manager is for SQL Server 2000, with SQL Server 2005 support planned for release during Oracle’s next fiscal year.
In additional news on the tools front, Oracle debuted its long-awaited developer tool. Previously known by the code name Project Raptor, SQL Developer provides easy access for database developers to run SQL statements and scripts, edit and debug PL/SQL code, view and update data and browse and create database objects.
Basically, Oracle SQL Developer is the first visual development environment for developing and debugging SQL and PL/SQL code available from Oracle itself. This is another attack by Oracle on the third party DBA tools vendors. Oracle’s SQL Developer is available as a free download – so the price is right. Its functionality is similar to Quest Software’s TOAD for Oracle or CA’s SQL Station. Of course, Oracle’s SQL Developer tool only works for Oracle databases – at least for now; whereas Quest, for example, offers editions of TOAD for SQL Server and DB2.
Oracle Searches and Finds
In March Oracle announced Oracle Secure Enterprise Search 10g, an enterprise search engine for corporate use. The search engine seeks out and indexes enterprise data, including internal and external web sites, databases, file servers, document repositories, enterprise content management systems, portals, e-mail systems and business applications. And, importantly in this day and age of regulatory compliance, it is aware of corporate security policies and rules, so it won’t enable employees to dig through data they are not authorized to see.
Although the major DBMS vendors are all working on search capabilities, the gorilla in this market is Google. Google is attacking the enterprise search market as the domain expert in search engine technology, whereas the DBMS vendors are attacking the market as the domain experts in data management and information technology.
As the market for enterprise search shakes out, it will be interesting to see whether Google can monopolize that market, the way it has dominated Internet search – or will Oracle (or Microsoft or IBM) come out on top? Corporate search users do indeed have different needs than Internet searchers, so it would seem that the DBMS vendors would be better poised to capitalize on their knowledge of corporate data management. But time will tell..
Oracle Security Issues
Much ado was made about security problems in Oracle software this quarter. Even analysts at Gartner published a critical report on Oracle’s security policies that basically takes Oracle to task for not being aggressive enough in responding to known flaws. Then there were the specific news bytes?
First up, in early January news was broadcast of a malicious worm capable of attacking Oracle databases. The exploit enables a cracker to rename the Oracle log file and thereby create a new database account. Although the worm has not yet been taken advantage of, the potential for damage is extreme. If you are interested in the details of this worm information can be found here.
Later in January, David Litchfield, a well known security researcher, called attention to a flaw in the Oracle PL/SQL Gateway. Litchfield called attention to the flaw because Oracle had not created a patch three months after they were made aware of the problem. According to Litchfield attacks can be made against the software allowing access to the back-end server without a user ID or password.
Then, in late February Oracle released a critical security patch almost two months ahead of its regularly scheduled security update cycle. The patch, released for Oracle’s E-Business Suite 11i, fixed several vulnerabilities in the Oracle Diagnostics troubleshooting component.
It would seem that the company that once marketed itself as “unbreakable” has a bit of an ongoing security problem on its hands.
Oracle Wins a Lawsuit
In mid-March Oracle announced that it had won a summary judgment in a lawsuit brought by MangoSoft, Inc. The lawsuit had claimed that Oracle’s shared memory for database clustering infringed on a MangoSoft patent. MangoSoft was seeking in excess of $500 million in damages from Oracle.
At any rate, the U.S. District Court in New Hampshire ruled in Oracle’s favor affirming that it did not infringe on the MangoSoft patent. Although the proceedings against Oracle are ended, Oracle may still move forward on its claims that the MangoSoft patent is invalid and not enforceable.
Oracle’s Fiscal Third Quarter Revenue
In early February Oracle announced that it expected to earn from 13 to 14 cents per share in its fiscal third quarter – with total revenue expected to be up within the range of 17 percent to 19 percent. In a filing with the U.S. Securities and Exchange Commission, the company also indicated that revenue for its fiscal fourth quarter is expected to come in at 21 cents to 23 cents per share and total revenue is expected to be up 13 percent to 17 percent. So Oracle’s early revenue expectations were very rosy, indeed.
And Oracle indeed posted a higher quarterly profit when its fiscal third quarter revenue was announced on March 20th. Net income for the third quarter rose to $765 million, which is $225 million more than Oracle posted in the third quarter last year. This equates to 14 cents per share, as Oracle previously announced it expected.
Actually, after subtracting acquisition costs and other charges unrelated to ongoing operations Oracle announced earnings of 19 cents per share – a penny higher than industry financial analyst estimates.
Sales of new software licenses in the third quarter were $1.1 billion, which represents a 16 percent increase over the same period last year. But the best news came from the applications software business. New license sales for applications were up 77 percent to $269 million. However, it is hard to tell what part of this growth is simply due to the numerous acquisitions Oracle has made in the applications spaces versus true organic growth in the sector.
Oracle attributed the profitable quarter to growth for applications in Europe where the company indicated it doubled sales. This is a positive for Oracle as they compete heavily for applications business in Europe with German applications company SAP AG.
News from Oracle’s database software business was not quite as stellar. The growth rate for database and middleware software new licenses was 5 percent over the third quarter of last year. The database business grew over the same quarter last year by 16 percent in the Americas and by 1 percent in Asia Pacific region, but it shrank by 3 percent in the Europe / Middle East / Africa (EMEA) region. Oracle must ensure that it keeps growing database revenue even as it expands its application business. This clearly may be an on-going challenge for the company.
IBM Opens Its Checkbook for Data Management
Late in February IBM announced a data management initiative in which it plans to spend $1 billion over the next three years. IBM also plans to boost the number of workers in its services group who are dedicated to data management work by 65% from the current level of 15,000 to approximately 25,000.
The goal is to expand IBM’s data management software capabilities to take advantage of industry trends including increasingly powerful computers, more data intensive technologies (RFID, for example), and business’ ever increasing desire for information.
At the same time IBM unveiled a set of six solution portfolios related to managing data, as well as an upcoming data integration product to be called WebSphere Information Server.
IBM Tops Street’s Income Expectations
Early in the quarter, in the middle of January, IBM announced its fiscal fourth quarter earnings and the results were good enough to beat Wall Street expectations. Net profits rose 13 percent, even with softness in its service business. IBM’s quarterly profits came in at $3.19 billion on revenue of $24.4 billion, which translates to earnings of $1.99 per share. Analyst consensus was $1.94 per share.
It seems that the analysts who had warned about IBM’s services division having trouble closing fourth quarter deals were true. Services account for more than half of IBM’s revenue. Services revenue came in at $12 billion, which is down 5 percent from the $12.6 billion posted by the division last year. IBM’s software division posted flat revenues but would have reported a 3 percent increase if not for currency changes. The hardware business showed positive gains due to IBM’s mainframe product line (5 percent improvement) and its manufacturing of computer chips (48 percent improvement).
Overall, IBM’s quarterly profit margins were boosted by its sell off of its personal computer business along with cost cutting measures. Yearly revenue for IBM’s fiscal 2005 was $91.1 billion with profits of $7.93 billion – or $4.87 per share.
IBM Divvies Up the Services Division
In late February, possibly in reaction to the fourth quarter results from its services division, IBM divided the group into three units. The units are: Enterprise Business Services, led by Ginni Rometty; Integrated Operations, led by Bob Moffatt; and IT Services, led by Mike Daniels. All three of the business unit heads will report directly to IBM CEO Sam Palmisano.
The move makes some sense because IBM’s Global Services division was huge, being responsible for $47 billion of IBM’s $91 billion in revenue. Now each unit can concentrate on running a smaller, more easily controllable business. However, it might be confusing for customers to understand.
Hey, Buddy, Want a Free DB2?
In late January IBM released a free edition of DB2 dubbed DB2 Express-C. The offering is being marketed as a no-charge database server for use in application development and deployment. DB2 Express-C is supported for both Windows and Linux operating systems. It does come with a few restrictions over the full-blown DB2 offering, as follows: it is available on hardware with no more than 2 processors and with a maximum addressable memory of 4GB. But there is no database size limit. Additionally, some high-end features are not offered on DB2 Express-C, including database partitioning, connection concentrator, the DB2 geodetic extender, Query Patroller, and the Net Search Extender.
As far as technical support goes, users can get community support for DB2 Express-C on IBM’s developerWorks web site, or they can pay for support from IBM.
So although DB2 Express-C is not targeted for applications requiring very large databases with high availability and speed. It is possible even with these limitations for many, many important application for small to medium sized businesses to be developed and run using DB2 Express-C. And if you hit any of the limitations you can always upgrade from DB2 Express-C to any of the DB2 Universal Database editions which support larger servers or server clusters.
This is not really huge news because Microsoft (SQL Server 2005 Express) and Oracle (Database XE) already provide no-charge DBMS offerings. But if you do a little bit of investigation you’ll notice that all of the other offerings are pretty severely crippled when compared to the IBM offering. Basically, of the freebies, only with IBM’s DB2 Express-C is it possible actually to deploy applications using it.
And it is now possible to get “free” database software from all of the big guys as well as from the open source players.
On The Open Source Front
Well, even though the big open source DBMS news this quarter was Oracle’s acquisition of Sleepycat, that was not the only news. MySQL made the news several times this quarter.
First off, MySQL launched itself into the acquisition game. In late February, MySQL announced that it had acquired Netfrastructure, a privately held maker of tools and server software for Web-based application building. In so doing, MySQL picked up Jim Starkey, a well-respected database architect and former founder of Interbase Software. Starkey was Netfrastructure’s founder and president and will take on the role of senior software architect at MySQL.
Interbase Software was acquired by Borland and Borland released the Interbase code to the open-source community. That code is the basis for the Firebird open source DBMS; and Starkey was a contributor to that code.
The addition of Starkey should be a boon for MySQL, as Interbase was somewhat of a DBMS visionary. Interbase was the first DBMS to adopt some features which are now ubiquitous in database management systems. For example, Interbase pioneered the use of BLOBs and triggers. MySQL can use some of the forward thinking abilities of an architect like Starkey. One thing Starkey could start working on is a transactional engine to replace the InnoDB engine that MySQL relies and which is now owned by Oracle.
Even though it would seem that this acquisition was done to acquire human capital (MySQL also placed several other Netfrastructure employees in key positions), it also gains some nice software in the deal. The Netfrastructure products combine a Firebird-like database and an application server. It is a good bet that MySQL will work to integrate this software into its own products. And it would seem that Starkey will no longer be contributing to the Firebird project given his new role at MySQL.
In other MySQL news, the company won a five year contract with the US government’s General Services Administration. The contract enables government customers to be able to purchase and deploy MySQL through Carahsoft Technology Corp. The GSA schedule is effective December 20, 2005 through November 19, 2009 and it should boost MySQL’s presence in government projects.
Of course, MySQL was not the only open source company in the news this quarter. Ingres also made some headlines when it hired Tom Berquist as its new CFO. Berquist, a former managing director at Citigroup, rounds out Ingres’ impressive executive team, which includes several former Oracle executives.
Announced in February, Berquist did not move into his new role at Ingres until the beginning of March. His background with Citigroup included following medium to large software companies including Microsoft and Oracle, two companies that Ingres must battle for customers in the DBMS market.
Berquist is not unfamiliar with the open source market either. Prior to working at Citigroup, Berquist was managing director of Software Equity Research at Goldman Sachs where he covered Red Hat, among other technology companies.
And Up in Redmond
Given that SQL Server 2005 is still new there was not a whole lot of news on the Microsoft front this past quarter. If you are still running SQL Server 7.0 though, you might want to start thinking about upgrading. Effective December 31, 2005, support for all versions of Microsoft SQL Server 7.0 will transition from Mainstream Support to Extended Support.
Extended Support for SQL Server 7.0 will continue for at least five years, through December 2010. During Extended Support, Microsoft will continue to provide security hot fixes and paid support. Extended Support will be provided through Premier Support contracts and Essential Support contracts, per-incident telephone support, and Web support. Design change requests will not be available for SQL Server 7.0 during the Extended Support phase.
If you are still relying on SQL Server 7.0 in a production system it is really time to move up to SQL Server 2000 or SQL Server 2005.
SQL Server 2005 SP1
In mid-March Microsoft released the first Community Technology Preview of Service Pack 1 for SQL Server 2005. But what does this mean in English for those of us who do not speak techie? SP1 is the first service pack for SQL Server 2005. A service pack is a packaged group of fixes and enhancements. If you run Windows XP you are familiar with the terminology.
SQL Server 2005 SP1 will include some interesting new functionality for SQL Server users. Most important is the new data mirroring technology that Microsoft cut from SQL Server 2005 at the last minute due to quality concerns. Support for data mirroring will improve SQL Server’s disaster recovery continuity planning.
SP1 will also include SQL Server Management Studio Express. This is a graphical front-end for the Express version of Microsoft SQL Server – that is, Microsoft’s free DBMS offering that competes with DB2 Express-C and Oracle XE. The new tool should make it easier to manage and use SQL Server 2005 Express.
No More SQL Server Betas?
Also in mid-March Microsoft Watch reported that Microsoft was re-thinking its current process of releasing beta software. Instead of large beta releases Microsoft is favoring the creation more frequent test builds for some of its software. The hope is that this new technique will speed up the development process.
Paul Flessner, the vice president in charge of Microsoft’s server applications, indicated his desire to forgo beta releases in favor of the new process.
Microsoft’s Quarterly Earnings
In late January Microsoft announced revenue of $11.84 billion for the quarter ended December 31, 2005. This represents a 9 percent increase over the same period of the prior year, marking the highest quarterly revenue in the company’s history. Net income for the quarter was $3.65 billion, which grew 5 percent from $3.46 billion for the same quarter of the previous year.
The revenue was well-earned as it comes from a very important quarter for Microsoft. The quarter marked the launches of Xbox 360, SQL Server 2005, Visual Studio 2005 and Microsoft Dynamics CRM 3.0. Server and Tools revenue grew 14 percent over the prior year and the growth of SQL Server was particularly strong with over 20 percent year over year revenue growth.
Raising the Antsy on Database
Even though we usually cover the bigger players in the DBMS space, every once in a while a piece of news from one of the smaller players is worth highlighting. An announcement from ANTs Software falls into that category this quarter. ANTs develops and markets what it calls a “universally compatible, high-performance SQL database management system.”
In early March, ANTs announced that Don Haderle, recently retired IBM fellow and leader of the technical team that created DB2, had joined ANTs’ newly created Technical Advisory Board. This is a major coup for ANTs given Haderle’s reputation in the DBMS community. Haderle worked at IBM from 1968 through 2005 and before his retirement was responsible for securing more than 50 patents and disclosures relating to database management. In addition to being an IBM Fellow he was appointed an ACM Fellow in 2000 in recognition of his impact on database technology.
So what is the big deal about ANTs database technology that would interest someone with Haderle’s background? Haderle says that “ANTs has developed a groundbreaking product with broad implications for any business seeking to reduce the cost and complexity of their database infrastructure. I look forward to working with their first-class technical and management teams to help establish ANTs as a major force in the industry.”
Key aspects of ANTs’ DBMS includes wait-free, or non-blocking technology database that can deliver better transaction throughput. Additionally, ANTs has technology that enables its DBMS to mimic other databases, such as DB2 and Oracle. This is important because one of the big barriers to entry for DBMS products is compatibility and availability of applications. If ANTs can mimic the interface of other DBMS products well enough for application code to run unchanged it might be worth keeping an eye on them. Especially with Don Haderle in their corner.
Summary
And thus ends the first quarter of 2006… we saw a lot of activity, acquisitions, and new technology. It promises to be a great new year for database technology, so make sure you check in with TDAN.com next quarter to read The Database Report and keep up-to-date on the DBMS market.
