Microsoft Corp. may have turned up the heat in the database management system battle with IBM Corp. and Oracle. But some analysts believe that the recent court decision declaring the software giant a monopoly may have put a damper on their zeal.
“The court decision calling Microsoft a monopoly means the company may have to tread softly even in its innovations” commented Adam Guy, senior analyst for Strategis Group.
Although the upside of the decision for Microsoft, says analysts, is that the court ruled out the breakup of the company, it calls for caution in its products and business strategies.
“The battle is by no means over,” said Ulric Weil, senior technology strategist for Friedman, Billings and Ramsey & Co. Inc. “Much of what Microsoft will do will depend on what the court will decide. It may go to the Supreme Court.”
Steve Ballmer, the company’s chief executive officer, said the court’s decision would frustrate the company’s well-known passion to innovate and extend its frontiers in the market.
With its SQL Server database code-named “Yukon,” the company thinks it is positioning itself for competitive advantage. In an email sent to the staff of the company, Ballmer described Yukon as “the key to our next-generation storage database, file system, e-mail and user interface work.”
Yukon is designed to store different kinds of data, including e-mails, word-processing files and digital photos. One of the company’s new customers is the largest U.S. wireless carrier Verizon Communications Inc.
“The competition has been going on for a long time,” said Weil. “And it will continue to be a competitive market.”
Oracle still dominates the market with 33.8 percent of the total market share. IBM holds second place with 30 percent and Microsoft has 14.9 percent in third position, according to a recent study by Gartner Dataquest. In revenue, Oracle raked in $2.97 billion in 2000, and IBM revenue totaled $2.65 billion. Microsoft acquired $1.31 billion. Part of Oracle’s anxiety comes from the closures of many startups that had adopted its solutions.
Microsoft increased its market share by 25 percent in 2000, while IBM rose by 11 percent and Oracle 19 percent. Feeling the heat from Microsoft and IBM, Oracle has responded by unveiling a new product called 9i and slashing its pricing plan.
The decision was inspired by what the company regards as its competitors’ efforts to cut their prices to ramp up more market share.
Not all analysts agree that price is the main reason Microsoft and IBM are muscling up more advantage in the market.
“Microsoft has always been known as the most user-friendly database,” Reuters quoted AMR Research analyst Peter Urban as saying.
Gartner believes that price is the main driver, attributing the gains by IBM and Microsoft to the companies’ decisions to drop their prices.
“We’re cheaper, we’re faster, we’re more reliable, we have more features,” boasted Larry Ellison, Oracle’s chief executive at the launch of its 9i product. Internally, the code name for 9i is “the last database,” he said, hoping that it will help confirm his company’s premier position in the market.
Oracle’s 9i’s differentiating features include scalability and what the company called clustering, which allows users to tie servers together in order to handle more transactions and data volume. Ellison described it as the Holy Grail of the database business.
IBM thinks the burden of proof lies with Oracle, while Microsoft thinks Ellison’s company is responding to the competitions’ business strategies and technical inventiveness. IBM acquired Informix Software’s database management system product line to secure a stronger position in the Unix relational market, according to Gartner Dataquest. That has not been the company’s forte, which has been the OS/390 and AS/400 platforms.
“The purchase is a double-edged sword for Informix DBMS customers,” said Gartner. “For the past three years, they have witnessed a slow and steady decline of Informix in terms of technology innovation and marketing focus. IBM’s strength and stability will be a welcome relief.”
