Oracle’s woes continue. Today, Gartner Dataquest confirmed what many
has displaced Oracle
the leader of the database market.
According to Gartner Dataquest’s annual survey of the database software
industry, IBM’s total market share for 2001 increased to 34.6 percent, up
from 33.7 percent a year earlier. The increase can mostly be traced to IBM’s
acquisition of Informix, which accounted for $264.4 million of IBM’s $3
billion of license revenue. IBM purchased Informix for $1 billion in April
IBM edged out longtime incumbent Oracle, whose market share dropped from
34.1 percent to 32 percent. Without the Informix acquisition, the $2.8
billion of license revenue for Oracle would come in just $30 million ahead
of IBM’s total. Microsoft ranked No. 3 with a 16.3 percent market share, up
18 percent from a year earlier.
Overall, Gartner Dataquest reported the database software sales remained
mostly soft, inching up 1.4 percent, to $8.8 billion, from 2000.
“IBM showed some good strong growth without the Informix acquisition,” said
Betsy Burton, Gartner’s vice president and research area director. “The
surprise is the fact that Oracle is losing market share across the board. I
think this for the first time shows what everyone suspected and Oracle has
The news of Oracle relinquishing its position at the top of the database market comes as the Redwood Shores, Calif-based company defends itself in a brewing political scandal in California, where the state attorney general has begun a criminal investigation into the handling of a $95 million software contract Oracle has with the state. Gov. Gray Davis is reportedly in talks with Oracle to wriggle out of the deal. Oracle put out a statement this afternoon reaffirming its willingness to cancel the contract, but defending the deal as a money-saver for the state.
On top of the California debacle, Wall Street worries Oracle will report weak financial results in its upcoming quarter. Lehman Brothers recently downgraded the companys stock, sending it to its lowest level in three years.
Meanwhile, Oracle tried to counter the impending bad news with some spin of its own. Yesterday, in anticipation of the Gartner Dataquest
report, Oracle released its own study that showed it held a strong lead in
the database market – if the measurement is done by operational use, not
revenue. An Oracle spokesperson said the survey was undertaken to “clear up
But the perceptions of slipping in Oracle’s core database business, which
accounts for 70 percent of its software sales, will not be helped by the
Gartner Dataquest report. Melissa Eisenstat, an analyst with investment bank
CIBC World Markets, this morning downgraded Oracle’s stock on the news from
a buy to a hold, saying Oracle’s sales quotas “appear to be unattainable.”
“We believe the outlook for the company will worsen before it improves, ”
Even the Gartner Dataquest figures for relational database management systems (RDMS), which Oracle has
dominated thanks to its Unix RDMS sub-segment, gave Oracle reason for
concern. The research firm found Oracle retained its lead in the relational
database market, with $2.8 billion in new license sales, but that lead is
slipping. Oracle had 39.8 percent of the market, down almost 5 percent from
42.5 percent a year earlier. IBM made up ground, raising its market share
from 32.6 percent to 34.1 percent. Microsoft came in a distant third at 14.4
Already, Oracle has said it expects tough challenges in the near term.
In a call with investors in March, CFO Jeff Henley said, “As far as we can
tell, tech spending for enterprise hardware and software remains very soft
and doesn’t yet appear to be improving.”
Eisenstat said Oracle’s position is hurt by some of its pricing methods,
which customers have objected to, as well as the strides made by IBM and
Microsoft. “Now there’s a credible alternative to Oracle,” she said.