Oracle: We’re still Number One…

While Oracle Corp. copes with a brewing scandal over a California state software contract and fierce
competition from its rivals, the database giant sought to get ahead of
upcoming research reports on the state of the database industry with one of
its own.

The FactPoint Group research ranked Oracle No. 1 as the primary database of
the Fortune 100, with a 51 percent market share, in a study commissioned by
Oracle. Rivals IBM and Microsoft came in second and third, capturing 19
percent and 8 percent respectively. (Fifteen percent of respondents reported
using a combination of database vendors.)

Los Altos, Calif.-based FactPoint interviewed over 400 IT managers at
Fortune 100 companies. The survey was based on operational use, not revenue.

An Oracle spokesperson said the survey was undertaken by Oracle to “clear up
misperceptions” about the company’s lead in the database industry. The
FactPoint Group’s survey comes before The Gartner Group and IDC release two
broader reports on the database market this week, which are expected to show
Oracle’s share of the market shrinking. (Oracle has already tussled recently
with Gartner over a recent report that criticized the company’s pricing

Reports of declining market share would add to the Redwood Shores,
Calif-based company’s slew of problems. The latest is a nascent scandal over
a $95 million software contract with the California government. A state
auditor uncovered that Oracle was the only bidder on the contract, and few
state agencies reported needing the software. Echoes of Enron were heard on
Thursday, when Gov. Gray Davis sent the California Highway Patrol to prevent
document shredding at the state’s Department of Technology. The Wall
Street Journal
today reported Davis is in talks with Oracle to void the

While the six-year contract is relatively small potatoes for Oracle, the
imbroglio comes at an awkward time for the company, which has been buffeted
by challenging economic conditions and internal turmoil. Last week,
Sebastian Gunningham departed his post as senior vice president for product
industries and Latin American sales. His exit was the latest of a string of
long-serving executives to depart the side of Oracle CEO Larry Ellison over
the last two years.

Wall Street has also worried that Oracle will show weak fourth-quarter
numbers when it reports earnings this month. Lehman Brothers recently
lowered its earnings estimates for the company, which it expects will be
hurt by persistently sluggish corporate tech spending. The financial worries
pushed Oracle’s shares down to near their lowest level in three years.

Database sales are at the core of Oracle’s business, accounting for 70
percent of its software revenues. But the company’s database revenues have
declined for four straight quarters, including a 30 percent slump in the
most recent period. And in March, Oracle CFO Jeff Henley said the fourth
quarter would continue to be challenging. “As far as we can tell, tech
spending for enterprise hardware and software remains very soft and doesn’t
yet appear to be improving,” he told investors on a conference call.

Last year, the Gartner Dataquest report on the database market, which used
revenue as a measuring stick, ranked Oracle No. 1 in the market, with a 33.8
percent share compared to IBMs 30.1 percent share and Microsoft’s 14.9
percent. Gartner Dataquest pegged the worldwide market for databases at $8.8

A lower share in the database market would worry some analysts. “Although
Oracle management has vociferously denied that it is losing share in the
database market, Microsoft and IBM are both undeniably playing more
aggressively in this area,” Morningstar analyst Christopher Beaulieu wrote
in a recent research note. “Any weakness in Oracle’s bread-and-butter
database business would be a big problem.”

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