InformationWeek

January 12, 1998

Database Sales Slow

Sybase reveals lower-than-expected financials; IBM an d Microsoft gain ground

Mitchell Kertzman caption ybase has provided further evidence that the client-server database market is slowing. The software developer revealed on Jan. 2 that revenue and earnings for its most recent quarter will fall short of analysts' expectations. Informix Software and Oracle have already posted lackluster quarters. But while these traditional market leaders struggle, Microsoft and IBM say their database businesses are thriving.

Sybase, in Emeryville, Calif., attributed its shortfall to weak database sales in North America. Mitchell Kertzman, Sybase's chairman and CEO, acknowledges an "execution pr oblem" was partly to blame, but also says year 2000 projects and general confusion over too many technology choices are causing companies to delay database purchases. "It's clearly not a robust market at the moment," Kertzman says.

Recovery Plan
Sybase executives met with their sales force in Orlando, Fla., last week to lay out a recovery plan. It includes hiring additional salespeople, eliminating some of the overlap in Sybase's sales-quota system, forming a unit to focus on new accounts, and increasing the number of channel partners.

The recovery scheme also includes improvements to the technology: Later this quarter, Sybase will release to independent software vendors a version of its Adaptive Server database that will include row-level locking, a feature required for some packaged applications. Row-level locking manages contention when multiple users try to access the same database records at the same time.

Oracle, which saw its stock plunge in December when the vendor revealed it s own disappointing results, is redoubling efforts to sell Oracle8, a six-month-old version of its database that got off to a slow start. Revenue from database licenses grew just 3% in Oracle's most recent quarter.

Over the next few months, Oracle plans to introduce new management options for Oracle8, push the database for data-warehouse applications, and partner with computer makers to deliver Oracle8 on clustered systems.

One expert says Oracle8 sales should pick up in the first half of 1998. "I think people are going to buy into it," says Rich Niemiec, a principal with Tusc, a technology consulting company in Lombard, Ill., and executive VP with the International Oracle Users Group, Americas.

Oracle8 will get pulled along by sales of Oracle's enterprise applications, he adds. Tusc is ramping up for Oracle8 deployments at more than twice the rate of last year.

Kevin Strange, an analyst at Gartner Group Inc., says Informix, Oracle, and Sybase, the leading providers of Unix client-server da tabases, feel pressure from Microsoft, which is making strong inroads with departmental applications, and from IBM at the high end of the market.

In fact, the number of SQL Server licenses issued by Microsoft increased 125% in the quarter ended Sept. 30, compared with the same period a year ago, says Jim Ewel, group product manager for Microsoft's SQL Server database, which runs on Windows NT. This month, Microsoft will release a second beta version of SQL Server 7.0 and a test version of an online analytical processing server that works with the database upgrade. Both products are due this year.

Similarly, IBM's client-server database business grew by more than 30% in 1997, twice the industry average, says Janet Perna, general manager of data management with IBM Software Solutions. "I'm not seeing any sluggishness," she says.

IBM is about to begin a marketing push of business intelligence systems, which will further spur database sales, Perna adds. Near-term product plans include parallel versio ns of IBM's DB2 Universal Database for Windows NT and Sun Microsystems' Solaris operating systems, and an upgraded version of IBM's Intelligent Miner data mining software.

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