1998 Database Market

Most analysts expected the database market to shrink in 1998 because of Year 2000 (Y2K) issues. However, the booming economy, coupled with new markets for database technology, contributed to a 15.3 percent growth for worldwide database revenue of $7.1 billion, according to a recently released preliminary study from Dataquest of the 1998 database management system (DBMS) market. The study found that the relational database management system (RDBMS) market grew from holding 76 percent of the total market in 1997 to holding 83 percent of the total market in 1998. IBM, Oracle, and Microsoft held 72 percent of the total database market revenue.

The study showed that IBM was the worldwide market leader with 32.3 percent of the license revenue, overtaking Oracle, which narrowly led in 1997 and had 29.3 percent in 1998. IBM showed great strength from mainframe and legacy application license and maintenance revenues, whereas Oracle had a very strong year from Windows NT and UNIX license revenue. Although IBM and Oracle each found something pleasing in the results, Microsoft's overall market share remained flat at 10 percent.

The first surprise in the NT market numbers from Dataquest was that the overall growth of NT database revenue slowed from 155 percent growth in 1997 to 46 percent growth in 1998. The second surprise was that Microsoft's revenue share shrank from 37.8 percent in 1997 to 29.7 percent in 1998. Microsoft's late release of SQL Server 7.0 might have contributed to the postponement of major NT database purchases by many customers this past year, thereby contributing to these results.

Growth of DB2 Universal Database sales boosted IBM's strong performance on S/390 and AS/400 systems. IBM posted a significant market share increase in the UNIX version of DB2 Universal Database.

Dataquest's report suggested Oracle's drop from market leadership. Carl W. Olofson, DBMS research director at International Data Corporation (IDC), believes removing the mainframe and legacy database licenses from the study will show Oracle to be the market leader. According to the Dataquest report, Olofson explained, "Over 80 percent of IBM's DBMS revenue came from mainframe and AS/400 systems. On these systems, the software is leased. For this reason, IBM's total number, even including UNIX and NT, combines license and maintenance revenues. By contrast, the $2 billion in server revenue for Oracle includes license revenue only. Therefore, these two figures aren't comparable."

The discrepancy between the individual license revenue and combined license and maintenance revenue also helps explain the contradictions between the Dataquest report and a recently released IDC report. IDC's preliminary study of the DBMS and RDBMS for 1998 found that Oracle held 40.4 percent of the RDBMS market, IBM accounted for 19.8 percent, and Microsoft held 5.1 percent.

Oracle posted a very strong year in the NT and UNIX markets. According to Dataquest, Oracle owns 80.9 percent of the UNIX market and 46.1 percent of the NT market. IDC pegged Oracle's NT revenue share at 60 percent and its UNIX share at 46 percent.

NT and UNIX were the two growth segments in the database market. Dataquest found that UNIX revenue was $2.2 billion, NT revenue was $1.2 billion, and the entire object-oriented database market made up a scant $93 million. The market breakdown for NT database revenue was 46.1 percent for Oracle7, Oracle8, and Oracle Lite combined; 29.7 percent for SQL Server; 9.7 percent for DB2 Universal Database; and 14.6 percent for all others. Sybase and Informix had market reductions on NT in 1998 but were still fourth and fifth in the market, respectively.

Carolyn DiCenzo, database market analyst at Dataquest, predicts an annual growth rate of more than 7 percent for the next 5 years for the worldwide database market. The Dataquest study predicts several areas of database market growth resulting from industries that use the Internet, data-warehousing technology, business-intelligence technology, thin-client/server technology, and mobile devices connected to databases. E-commerce, Extensible Markup Language (XML) servers, and application outsourcing and software rental are potential areas of growth. Areas that represent potential problems for database vendors include fewer installations around the Y2K threshold, saturation in the large-company database sector, and lower revenue if product rental and outsourcing of database projects grow. If the numbers for the NT database market don't increase in the next few years, the database market on NT won't overtake the UNIX market in revenues until 2003.