Fancy Footwork with Market-Share Numbers

Getting a handle on the database price war is tricky business, with bundling initiatives clouding the market-share picture.

The database price war is heating up, with Oracle launching worldwide initiatives aimed at getting its wares into the hands of SMBs in the Middle East, Africa and the European Union, for example. The database kingpin is launching bundling initiatives with Sun Microsystems and bolstering its channel by offering partner discounts.

Its all part of the grand plan to take a swipe at Microsofts position at the top of the SMB RDBMS market—a plan that has included pricing its entry-level 10g database at the same level as Microsofts SQL Server.

To get a handle on the price war, you need a firm idea of where Microsoft is in terms of market share. Thats not so easy to determine, given the murkiness behind the market-share numbers.

That was highlighted by the most recent OLAP Report from Nigel Pendse, released last week. The report pointed out a few things that have been obvious for some time. First, the market is consolidating like gangbusters, with the Top 10 vendors in the BI industry now controlling a whopping 95 percent of the market. On top of the pile is—who else?—Microsoft, which managed to consolidate its No. 1 position in spite of a falling growth rate.

Is that any surprise? Microsoft bundles its OLAP server, Analysis Services, with its database, SQL Server. The bundle also contains the DTS ETL tool and, most recently, it picked up the Reporting Services module.

Grateful companies have been thrilled with Reporting Services, a "free" business-intelligence tool that can and is replacing costly—try six-figure—third-party tools such as those from Crystal Reports.

But while this module is indeed offered free to current SQL Server 2000 customers who run it on the same server as their database, running the product on another server means you have to purchase an additional SQL Server 2000 license. Also, customers have to license at least one Visual Studio tool for each report author.

In other words, its not free at all, since sites end up buying extra licenses to deploy the additional modules, Pendse pointed out to me in a recent e-mail conversation. "Most serious Analysis Services sites run it on a different box to SQL Server, so they need licenses for both servers," he said. Pendses point is that Microsofts bundling makes it impossible to determine whats OLAP-derived revenue and whats RDBMS-derived revenue.

Oracle traditionally kept OLAP revenues separate from RDBMS revenues, but now it is jumping on the bundling bandwagon, offering the OLAP server as an option with its 9i and 10g databases instead of selling it separately. Thats not very important, though, since Oracles OLAP revenues are pretty puny compared with its database revenues. Likewise, IBM and CAs OLAP revenues are insignificant, Pendse noted.

On the other hand, Microsofts revenues from OLAP are substantial, and those figures are artificially pumping up Microsofts RDBMS share. Word to the wise: Take Microsofts RDBMS market-share numbers with a grain of salt.

When Gartner last checked the worldwide RDBMS market, IBM had edged out Oracle, but Microsoft was moving up fast, experiencing a 17 percent growth from 2001 to 2002. Gartner attributed the growth to SQL Servers low pricing and its appeal to cash-strapped enterprises, as well as to improved scalability.

Is Microsoft really gobbling up RDBMS market share at such a rate? After you read the latest OLAP report, youre likely to doubt it. But even if that 17 percent growth rate isnt fully attributable to RDBMS revenue and is instead derived from OLAP gains, dont discount Microsofts strength and gaining of momentum.

Nobody in the OLAP space is discounting it—indeed, many point to acquisitions in that space, such as Business Objects takeover of Crystal Decisions, as a direct result of Microsofts entrance in the space.

And as far as Microsofts growing RDBMS presence is concerned, Oracle sure as heck isnt shrugging it off.

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