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February 14, 2000

Databases Get Boost From Internet And E-Commerce
Technology has become a vital component in E-business strategies

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ot long ago, the database market was considered mature--even saturated--and database systems were in danger of becoming commodity products. But the Internet and E-commerce are changing that. "Databases are coming back because people are beginning to understand they are a critical component of any E-business strategy," says Andrew Roskill, an analyst with Warburg Dillon Read.

The result has been steady growth in sales of database software, which reached $7.1 billion in 1998--a 15% gain over 1997, according to Dataquest. Although market statistics for 1999 are still being compiled, Dataquest senior analyst Norma Schroder says the database market last year "did at least as well as 1998." Dataquest projects the market will grow to $10 billion by 2003.

The market revival has affected vendors across the board. Even Sybase Inc. and Informix Corp., which were struggling to survive just a few years ago, are reporting healthy sales and earnings.

Oracle
Oracle needs little help. The industry's second-largest software company has been turning in the kind of financial performances that make Wall Street giddy. For fiscal 1999, ended May 31, Oracle reported sales of $8.83 billion--a 24% gain from the previous year--and net income of $1.29 billion.

More than six months into fiscal 2000, the Oracle juggernaut shows few signs of slowing. In December, the company reported earnings of $621.2 million on revenue of $4.31 billion for the six months ended Nov. 30, gains of 32.4% and 13.2%, respectively, from the first six months of fiscal 1999.

According to Dataquest, Oracle was No. 2 in market share for worldwide database sales by revenue in 1998, with a 29% share compared with IBM's 32%. But those numbers cover all computer platforms, including MVS mainframes and AS/400 systems--areas in which IBM dominates. In 1998, Oracle led all competitors with a 46% share of the Windows NT database market, compared with Microsoft's 30%--and an astounding 61% in the Unix market, followed by Informix's 13%.

CEO Larry Ellison has predicted Oracle's software license revenue growth this fiscal year--including database, enterprise resource planning, and customer-relationship management software--will exceed fiscal 1999's 16%. Sales of database software alone reached $651 million in the second quarter, a 17% increase from a year ago.

To maintain its momentum, Oracle last month began shipping Oracle8i Release 2, the latest version of the flagship database with new analytical capabilities, improved Java support, and an enhanced management console. Analysts say the updated Oracle8i, combined with Oracle's push into new markets such as application service providers and online startups, should accelerate database sales growth this year.

Microsoft
At the end of 1998, Microsoft held a 30% share of the Windows NT database market--second behind Oracle--and 10% of the overall database market, third behind Oracle and IBM.

But those numbers are pre-SQL Server 7.0, the latest release of the Microsoft database, which hit the market at the end of 1998. While previous versions of SQL Server were limited to departmental and workgroup applications, SQL Server 7.0 can meet the database needs of large companies.

Microsoft doesn't break out sales figures for SQL Server, but indications are that the database had a very good 1999. Sales grew 54% in Microsoft's fourth quarter, ended Dec. 31, from the same period a year ago, according to SQL Server product manager Barry Goffe. "SQL Server is one of the fastest-growing businesses at Microsoft," he says.

Goffe says nearly half of all copies of SQL Server 7.0 sold are for running enterprise applications, while the balance are used for data warehousing and business-intelligence applications. A small but rapidly growing percentage of SQL Server 7.0 sales are for E-commerce applications, Goffe says.

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