Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
Two recent news items, however apparently disconnected, highlight an
interesting turnaround for the otherwise dowdy database market.
On the same day that Microsoft announced a newly enhanced SQL Server
database — with the clear intention of challenging Oracle and IBM in the
high-end of the market — Computer Associates announced it was spinning
off majority ownership of its Ingres open source database line to a
private-equity firm. And with those two announcement, the database market
became the official proxy for the next battle royale in the enterprise
software market.
Here is what’s happening with databases… Oracle is the market leader in
databases, and is angling to be the market leader in enterprise
applications, as well. Hence, the companies that sell databases — IBM
and Microsoft — want to outsell Oracle in the database market, while the
companies that sell enterprise software — such as SAP and Microsoft —
want to knock Oracle out of the applications market.
The problem is that Oracle is a little two well-ensconced in both markets
to be taken out by a frontal assault. That’s where the database-as-proxy
comes in.
The database proxy battle has two founding principles. The first is that
Oracle differs greatly from SAP and Microsoft’s high-end Axapta
enterprise software line — as well as most of the rest of the enterprise
software market — in its requirement that Oracle applications customers
use the Oracle database. The second is that a large number of SAP and
Microsoft applications customers — too many if you ask these vendors —
run on the Oracle database.
If Microsoft and SAP could get applications customers to eschew Oracle in
favor of SQL Server (the Microsoft alternative) or anything-but-Oracle
(the SAP alternative), the result would be pretty dramatic, as long as
the Oracle replacement database was less expensive and equally robust.
Such a shift would dramatically lower the total cost of ownership for
non-Oracle applications and isolate Oracle as the high-cost, low-choice
vendor. With Oracle’s applications locked into running on a significantly
more expensive database platform than the competition, SAP and others
could potentially blunt Oracle’s market dominance plans.
This makes the timing of Microsoft’s new SQL Server extremely propitious:
with Steve Ballmer claiming that SQL Server is ready for the high-end of
the market, database proxy number 1 is now in the field.
The Computer Associates announcement gives a hint of what proxy number 2
will look like: an open source database. While this doesn’t mean that
Ingres will be SAP’s Oracle killer, it sets the stage for what to watch
for, not only at SAP but at every other enterprise software vendor that
counts Oracle as a database of choice for its customers. The key fact is
that open source databases, combined with low-cost server hardware, can
give Oracle a run for its money in many, if not most, enterprise
applications implementations.
So where does all this leave IBM?
Sitting in the cat-bird’s seat, no matter how the battle turns out.
Remember, IBM Global Services makes more money in implementing and
servicing enterprise software than IBM Software makes in databases. So if
an open source or SQL Server database become the market leader in
enterprise software one day and blunts Oracle’s plans for dominance, IBM
will still be chortling all the way to the bank.
And if Oracle remains dominant, so what? Oracle is IBM Global Services’
largest ISV partner, and there still will be no particular threat to
IBM’s overall bottom line.
What’s important to bear in mind is that the cost and complexity of the
database side of enterprise applications is highly vulnerable to a
paradigm shift. It’s vulnerable because of the ”get-Oracle” mentality
in both the applications and database side of the market, and it’s
vulnerable because technological and market advances are commoditizing
much of Oracle’s traditional database advantage in favor of lower-cost
alternatives.
The database proxy war is only just heating up, and there certainly will
be more proxies to follow. Disconnecting applications customers from the
Oracle database is something a lot of vendors are very hot to see happen
in the next couple of years.
It will be interesting to see Oracle’s response. Applications may be
interesting to Oracle, but the database is literally its lifeblood. Don’t
expect Oracle to give up without waging a proxy war of its own.
