IBM Sets Its Sights on Oracle

The battle for supreme command of database platforms has begun.

The battle for supreme command of database platforms has begun. Executives at IBMs database team have identified the enemy, and its led by a tall, bearded gentleman with a penchant for yacht racing and making colorful public remarks.

By purchasing the database operation of Informix for $1 billion, IBM is looking to build its own database, DB2 Universal Database, into a more formidable competitor to Larry Ellisons Oracle with its 8i, and the soon-to-be-released 9i. Oracles offering overwhelmingly leads the market.

"We concluded that [IBM and Informix] share a common view and there was a way to come together and make a stronger, more competitive organization, and decided wed be better off to combine the businesses and take business away from our respective No. 1 competitor — Oracle," said Steve Mills, senior vice president at IBM and group executive of the IBM Software Group.

"We are still making great strides in winning the war with Oracle," said Janet Perna, general manager of IBMs data management business. "Well add over 2,000 people to our business, and . . . the team with the most talent in the industry will win."

Oracle owns 61 percent of the distributed Unix database market, according to Gartner Dataquest. Informix and IBM trail with 12 percent and 10 percent, respectively.

IBM executives claimed the tide is changing, however, citing a 36 percent increase in its data management business in the first quarter of 2001, compared with Oracles 6 percent increase in the same quarter.

After the acquisition, IBMs total database customer list, including for its mainframe databases, will grow to 500,000 customers. Perna and other executives have touted the costs of selecting IBMs DB2 Universal Database as a strategic advantage in winning the "war."

As for cost comparisons, Oracle Chairman and CEO Ellison, whos been battle-tested in the past by the likes of Microsoft and Siebel Systems, said bring it on. "We always beat [IBM] by having a much better product," Ellison said. "People arent buying databases because theyre cheaper, because the real cost you have is not associated with the database, but the labor involved with running the applications."

IBM leaves behind Informixs database applications group, which will become Ascential Software. Ascential will use the $1 billion to build the new business. It also signed a joint marketing relationship with IBM. Most of Informixs 2,500 database employees will remain with IBM.

Perna said IBM will support Informix and future versions of the database for years to come, slowly migrating its functionality into DB2.

As for Oracle, Bob Shimp, senior director of database marketing, said it plans to take as much advantage of the acquisition as IBM, by offering heavy discounts for migrations from Informix to Oracle 8i. He says Oracle is fighting a different war. "Were focused on the war on complexity. Were not focused on competitors."