Perspectives on IBM's Sale of the U2 Database Technologies

In early September, IBM announced it would sell its U2 database technologies to Rocket Software. The announcement immediately divided the U2 community into two groups: those who were in a state of panic, and those who hadn't heard the news. It wasn't the first time the technology was being sold, but it was the first time they were being sold to a much smaller company.

The two databases in the U2 brand are UniVerse and UniData, and they show up in many vertical-industry applications, especially schedule-oriented software, like registration, dispatch, transportation, manufacturing, and call centers. There are horizontal applications in business intelligence, ERP, Finance, HR, e-commerce and other areas. According to IBM statistics, 75 of the top-100 insurance companies and 80 percent of U.S. auto dealers use UniVerse, and 40 percent of higher-education institutions and 55 out of the top-100 leasing businesses worldwide run UniData.

The differences between the two databases are nuanced, but both were designed to operate without DBAs. In addition to supporting SQL for integration with third-party tools, both databases feature fast native query languages that can be operated by business people without support from analysts. Both products provide interfaces for .Net, Java, and COM development.

Given the similarities, it's no surprise that UniVerse and UniData started out as competitors before merging in 1998. Through the development of Datastage -- later marketed under the Accential Software name -- they became attractive to Informix and were bought. When IBM acquired Informix, U2 came with the deal.

Shortly after news of IBM's sale of U2 broke, the community shifted from panic mode to research mode on the question, "who is Rocket and why is this deal happening?" As more details became available, four answers seemed to emerge.

The IBM Answer

With Oracle and IBM in a constant struggle for database bragging rights, giving up any database seats would seem to be problematic. IBM delayed making a formal announcement on the deal, but once it was completed on September 30, a spokesperson issued the following statement:

"IBM has been very focused on developing higher-value analytics capabilities. The U2 offerings, which are primarily targeted at embedded, vertical applications, didn't really fit with that go-to-market strategy."

Is it a good deal for IBM? In a sense, it has already won twice, making money on U2 since 2001 and finding a new home for it where it can continue to grow. Since U2 customers were often customers for IBM's other offerings, keeping the databases well supported is a priority.

The U2 databases were always an odd-duck fit for IBM's overall strategy. While the databases were a welcome addition to revenue and database statistics, the U2 model favors non-SQL development. U2 continued to post positive sales under IBM, but it did so with little help from IBM's marketing policies. Those policies required U2, Informix, and other products to be identified as DB2 "pillar" offerings instead of promoting separate branding.

For IBM, this is an opportunity to realign its DB2-centric view to allow other IBM databases more opportunity to shine under their own names.

"IBM needs to let the world know better that they have multiple databases and it is not all just DB2," says Stuart Litel, President of the International Informix User Group (IIUG.org). "They could clearly avoid confusion among current and potential customers as well as IBM employees." The Rocket Software Answer

Rocket Software is a longtime OEM software partner to IBM and to other vendors including Microsoft, RSA, EMC, and HP. Andy Youniss, the president of the company, and his team have a history of buying and making the most of existing technologies, acquiring products including CorVu, Arkivio, Servergraph, and Seagull Software. Rocket itself is not better known in part because it retains the branding of the assets it acquires. This is the opposite of the IBM database strategy of submerging database identity into DB2. If Rocket can make it clear that it is a white knight and not a looter, it could retain U2's existing market and stand a chance of continuing the growth story. Rocket has taken the first steps by sending Youniss to two U2 University events to speak, and it has also posted a dedicated Web site about the acquisition.

The U2 Business Answer

U2 advocates are hopeful that Rocket will give U2 front-and-center attention it has lacked during the last two ownership changes -- even though Informix pushed Datastage heavily, it positioned U2 as an embedded database, not as a product in its own right.

"With IBM, DB2 was always going to be the lead database brand and U2 needed to fit around that," comments George Land, chairman of APT Solutions, a U2 reseller. "With Rocket, U2 is the lead database brand."

On the downside -- and it is a significant downside -- U2 is losing the IBM name, which helped sales even though IBM did not aggressively market the brand. If Rocket can't use this change of venue to build brand recognition, then the deal is simply trading one benefit (the IBM name) for another (the freedom to do real marketing).

"While the U2 Users, developers, and resellers have lost those three magical letters, I-B-M, I'd bet they'll get a lot more innovation from Rocket Software," says Mike Ruane, owner of Revelation Software, which is both a competitor and a partner of U2 (an interview with Ruane can be found here ).

The worst case for U2 is that the net result will be continued growth at a modest pace. The best case answer is a real expansion of market presence.

The U2 Community Answer

This is a good deal for U2's global community of users so long as the products continue to be developed and supported. Susie Siegesmund, formerly IBM's Director of U2 Data Servers and Tools and the highest-ranking IBMer to move to Rocket Software, says the sale will allow the new owner to invest for growth. In the short term, the products will continue on their current release schedules.

"We expect very minor changes to currently published schedules, mostly due to the transition of all our development systems to a new network," Siegesmund comments. "In the future, customers can expect more investment in development, resulting in more frequent releases."

As for formerly IBM-sponsored Certification, DeveloperWorks, U2 University and Data Champions programs, Siegesmund says those, too, will continue. "We're in the process of figuring out how to fit each of these Programs into Rocket's infrastructure," she says. "But U2 University in both the UK and Australia will still offer free certification testing."

Charles Barouch is President of the international U2 User Group, Manager of Data Integration for The New York Botanical Garden, and CTO of the training and consulting firm Key Ally, Inc. He has been writing, teaching, and working in the business database community for more than 25 years.