Gartner: Oracle Lead In Distributed Databases Under Fire

Oracle still leads the overall database market but is seeing rivals hard at its heels, according to Dataquest, a unit of market researcher Gartner.

Last year, Oracle saw its market share in revenue grow to 33.8 percent of the overall worldwide database market from 31.4 percent in 1999. Second-place IBM grew from 29.9 percent to 30.1 percent, while Microsoft grew from 13.1 percent to 14.9 percent.

But Oracle also saw its lead in the key distributed database market--in Unix and Windows--under intense pressure. The overall database market grew to $8.8 billion, a 10 percent increase year-over-year, according to new Dataquest numbers.

In the Windows NT segment, Microsoft grew 45 percent for the year, passing Oracle to the No. 1 slot with a 38 percent market share, compared to 37.3 percent for Oracle. IBM stayed in third place, but grew its share a whopping 63 percent, to an 18.5 percent market share. Overall, the Windows database market grew 34 percent.

The Unix market grew 17 percent last year, with Oracle continuing to lead with a 66.2 percent share. IBM passed Informix to take second spot with 14.4 percent share. Informix was third with 6.7 percent share. IBM is likely to see continued growth in that market this year after its planned $1 billion acquisition of Informix, announced late last month.

"IBM's growth rate on Unix, not even counting Informix, was very solid, and Microsoft's growth rate on NT was very solid. These two vendors are nipping at Oracle's heels in a big way," says Betsy Burton, a Gartner vice president and research area director.

IBM has been promoting DB2 aggressively and has had some success recruiting ISVs who had based their businesses on Oracle's database. Since Oracle entered the application fray, competing with its own ISVs, some of those software companies--such as PeopleSoft and Siebel Systems--now prefer to push DB2.

"DB2 has become much more of a competitor, and IBM's investment has been significant," says Rick Bergquist, chief technology officer for PeopleSoft, Pleasanton, Calif. "We're database-neutral or agnostic in that we support DB2 and Oracle, but we say DB2 on Unix is great and the good news is it doesn't give Larry more money to market against us." Larry is Larry Ellison, chairman of Oracle.

These ISVs are able to be more open now in their criticism of Oracle because previously there really wasn't a choice in databases. "That is not the case now," says another PeopleSoft source.

Oracle disputes the notion that its bread-and-butter business is under fire. "We extended our lead in the worldwide database market and grew ten times faster than IBM," says Bob Shimp, senior director of Oracle 9i database marketing.

He concedes that Microsoft has made gains on Windows NT, but attributes that growth to the product cycle. Microsoft shipped SQL Server 2000 last September and "bet everything on it."

He maintains it's Oracle's turn to reap the benefits of product upgrades with its planned 9i launch June 14. In addition, "developers are flocking from [Microsoft] Visual Basic to Java and we think given our rollout we'll start to see an increase to our marketshare."

He also maintains IBM paid a lot--$1 billion--for what will may be a few points of marketshare with Informix. "Informix actually declined 35 percent last year," he notes.

Still, Gartner analysts see reinvigorated competition in a market once seen as a lock for Oracle.

"What I'm seeing now is clients are so frustrated with Oracle's pricing and negotiation issues that, in many cases, [they] are considering alternatives. In 2001, I expect the growth rates of Microsoft and IBM to continue strong because of that," says Gartner's Burton.