Oracle gets defensive

IBM may now be king of the database market, but don’t tell that to Oracle Corp.

On Wednesday Oracle came out swinging in bitter protest of findings released by Gartner Inc., which indicate the former leader has slid down to the number two position in the market.

As if that is not enough to leave a bad taste in the firm’s mouth, it is also trying to salvage a US$126 million contract with several government departments in California.

Stamford, Conn., based-Gartner reported that for 2001, IBM and Informix Corp. – a database software firm purchased by Big Blue – reaped 34.6 per cent of worldwide new license revenue from the database management system (DBMS) market, overtaking Oracle at 32.0 per cent for the lead. In 2000, Oracle led with 34.1 per cent while IBM-Informix held 33.7 per cent.

In a prepared statement, Jeff Henley, Oracle’s chief financial officer, said Gartner’s numbers were being challenged.

“Oracle leads the modern relational database market…However, the continued focus on the overall database management system market, which includes databases on legacy systems, instead of the modern relational market will continue to fuel misperceptions about Oracle’s position,” he said.

In the relational database management system (RDBMS) market, which excludes mainframes, Oracle did continue its lead with 39.8 per cent of new license revenues while IBM-Informix took 34.1 per cent in 2000, Gartner found. The RDBMS market made up approximately 80 per cent of the total database market.

Despite Oracle’s protest, Gartner stands by its findings and explained why Oracle was miffed about the latest results complied for all of 2001.

“One of the items that Oracle is really debating is…the total database software market. What that actually includes is relational databases, desktop databases, mainframes and pre-relational databases. They are debating the value of that segment,” said Colleen Graham, a San Jose, Calif.-based industry analyst at Gartner.

Paradoxically, it was Oracle that had claimed until this year that it was the overall database leader. Now, because it only continues to lead in the relational database market, it says that those numbers should determine who the leader really is, she said.

Graham added that IBM’s acquisition of Informix helped propel Big Blue into the number one spot.

“IBM basically bought three points of market share and that is what pushed them over the top and into the number one spot. That database vendor was on the (selling) market for quite a while in 2000 and Oracle could have bought them. IBM got the top spot because they were aggressive and got the purchase,” she said.

IBM said its rise into the number one spot was based on the growth in DB2 and in the relational database space to the progress of Unix and Windows. There was no mincing of words from IBM, which is certain that its gains came at the expense of Oracle.

“Oracle is going to make a lot of positioning statements to try to de-emphasize the fact that they’re not number one anymore, (and) I guess any sore loser would say the same,” said Bob Picciano, director of database technology at IBM Canada in Toronto.

Another sticky point for Oracle is the market perception that its database, while considered technologically robust, is also perceived as more expensive than those of its competitors. In fact, the price point may be the deciding factor in California’s decision to nix its reported US$126 million contract.

Under the deal, the California Department of Information Technology and the Department of General Service agreed to buy database software from Oracle. While it was initially believed opting for Oracle would lower the database cost, Elaine Howle, California’s state auditor, criticized the deal saying it would cost the state more than a standard database license.

-With files from IDG News Service.