IBM Declares Database War

By Tony Baer and Susie Harwood

Make no mistake about it, IBM Corp's $1bn cash purchase of Informix Corp was strictly a play about market share and nothing else. In conference calls with press and analysts, IBM's Janet Perna, who heads IBM's Data Management Solutions group, repeatedly made references to the database "war" with Oracle Corp.

"We are making great strides," she said. "We are fighting to win, we are playing for first place here", citing numbers such as IBM's 36% growth in this market space, compared to Oracle's 6% last quarter. As if there were any doubts about whom this was aimed at, Perna dismissed Microsoft Corp as a "one-trick pony" in the market since SQL Server is limited to Windows platforms.

Prior to the deal, the database market was already consolidating down to three main players: IBM, Oracle, and Microsoft. Once-mighty Sybase Inc and Informix, along with CA-Ingres, the earliest also-ran, have effectively become peripheral players. In effect, the IBM/Informix deal changes few dynamics in the marketplace. Where there were previously three and two-quarters players, it's now down to three and a quarter.

Instead the deal looks like a cash-rich salvage operation. IBM, whose latest quarterlies have been healthy in contrast to most other tech players, could easily afford a billion dollars of pocket change to buy installed base. And the deal gives it a significant boost, with an extra 100,000 customers, which it claims doubles its installed base in the distributed database market. According to estimates by industry analyst Giga Group, Oracle had 64% of distributed database market last year, while IBM had 13% of the RDBMS market last year, and Informix 9%.

Based on these figures, this gives IBM a 22% market share, which though still a fair way behind Oracle, is pretty respectable considering how young its Unix business is. And if IBM's growth continues at the rate it has over the past couple of years, catching up with Oracle in the Unix market becomes a more realistic possibility.

In addition, for Informix customers that consider migrating to a more "mainstream" database that has the most current technology, the obvious path will be DB2, not Oracle. Given that Informix has lacked the market share and resources to keep up with the Joneses - its Arrowhead effort to converge relational, object, and analytic database technologies was years behind IBM's - the Informix installed base has been ripe for the taking for all three major players. And, given that database migrations are never trivial - if you replace the database, you may as well replace (or heavily retrain) the DBAs - IBM is going out of its way to pre-empt inroads from Oracle.

Terilyn Palanca, director of research for database management systems at Giga, said that while Oracle could change its strategy and suddenly turn the tables, she doesn't expect this will happen and that by 2005, IBM could well be neck-and-neck with Oracle.

But Oracle's chairman and CEO Larry Ellison, speaking at a conference yesterday, said that if a customer is going to leave Informix they are going to evaluate which database to go to. "9i is coming out in May. 9i has real application clusters ... we are fault tolerant. Why would anyone move to a system that's fault prone and not extensible," he added. " No one is going to move from Informix to DB2."

 

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