Over the last few years, Asia-Pacific has witnessed a steady rise in database revenue. Oracle has been the perennial leader in this market but its long-standing dominance took a huge dent in 2002 when Microsoft and IBM advanced at its expense.
Despite the backdrop of a global economic crunch and reduced IT spending, the database segment managed to garner nearly US$60 million in new revenue to reach US$673.7 million, according to statistics from Gartner Dataquest Asia-Pacific.
Gartner said in the relational database market, Oracle managed to grow by a mere two percent, while Microsoft and IBM recorded 26 percent and 15 percent growth rates, respectively.
Overall, Oracle recorded a 35.4 percent market share against Microsoft's 29.3 percent and 25 percent for Big Blue.
Gartner analyst Colleen Graham attributed Oracle's underperformance to a "perfect storm".
"Oracle's dot-com customer set had all but vanished, and enterprises, which had overestimated data processing demands, were working at excess capacity from prior years," Graham said.
Market perception of Oracle being expensive--especially during an economic downturn--also proved detrimental.
"All this combined created an exceptionally challenging environment for Oracle," she told ZDNet Australia.
The software maker was also embroiled in a legal scandal which lasted more than two months.
Last July, the state of California rescinded a six-year contract after it was misled into believing that Oracle software would save taxpayers US$100 million.
Instead, an audit report revealed the deal would actually cost US$136 million in total--an additional US$41 million over the original agreement.
But the cancellation meant little to Oracle's business prospects in Asia-Pacific.
"There was no direct impact on Oracle's business anywhere," Graham said but warned: "The real effect of events such as these is to reinforce the market perception of Oracle as being "difficult" to deal with. This does not mean that customers will stop doing business with them, but it is another factor that enterprises will take into account when making their purchasing decisions."
Oracle's Peter Thomas skirted the low growth issue. Instead, he stressed that "according to Gartner, Oracle has maintained overall database market leadership and continues to lead Asia-Pacific in the growing modern database market."
Thomas, Oracle Asia-Pacific senior director for technology marketing, said the company had a 93 percent win rate in the 9000-plus database deals it competed in across the region.
"Our customer base grew with the adoption of Oracle9i Database and Oracle9i Real Application Clusters to include users like China Telecom and Cairns City Council in Australia," Thomas added.
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Ignoring Microsoft but taking a swipe at IBM, he said: "Gartner's findings also reinforce the point that a majority of IBM's database business is on the mainframe and AS/400."
Indeed, his view was supported by the research house. Gartner's Graham said IBM saw growth due to its strong offering on the mainframe as enterprises continued to hang onto that hardware.
IBM agreed the enterprise segment will always be key but the company sees huge potential in small- to medium-sized businesses.
"In the growing SMB space, we compete mostly with Microsoft," said Jim Koerner, vice president for Data Management Solutions at IBM Asia-Pacific, suggesting that Oracle didn't address this crowd.
Much ado about pricing
One reason behind Microsoft's double-digit growth in databases is its response to the price-sensitive yet burgeoning SMB market.
"Microsoft fared well as SQL Server, with its lower price point, appealed to cash-strapped enterprises," Graham said.
But Microsoft argued that price isn't its only weapon.
"Yes, our list price alone is significantly less than Oracle," said Terry Clancy, Microsoft Australia's database product manager. "But our value to customers is also built around features, training and the development platform we provide for SQL Server."
"SQL Server 7.0 was a landmark release since the previous version was based on Sybase code. With SQL Server 2000, we introduced business intelligence and data mining capabilities.
"People think SQL Server is merely a relational database but it's so much more than that," Clancy said. "So why would you pay for all that functionality [elsewhere] when our standard version already offers all that?"
Microsoft is also working towards tightening its communities through various programmes. SQL Server user groups, for instance, meet in every capital city in Australia each month. "Having good features in products [alone] aren't enough. Some people need help and we have to lead them...you need to make them aware of these tools," Clancy said.
IBM's Koerner questioned SQL Server's ability to scale, saying: "We have our reservations about that. We don't believe that by including OLAP server, data mining and data warehouse functionalities within the database, they can match our scalability performance. They can't match our robust "palm-top to mainframe" scalability. We're also not aware of SQL Server 2000's reputation or history in the enterprise segment so we believe they are mostly at the departmental level."
Muddled marketing?
In late 2001, Oracle embarked on its Unbreakable campaign--a marketing idea excoriated by IT professionals.
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Unbreakable went for IBM's scalp but typical of Big Blue, it didn't retort. At Microsoft, executives were "pleasantly surprised".
Microsoft's Clancy said advertisements--which pitted IBM DB2 against Oracle9i--gave the Redmond, Wash.-based software giant more credibility in the database market and proved that Oracle was in denial.
"Oracle targeted IBM because in marketing, you never do a direct comparison with your closest rival," he said.
Clancy described SQL Server as Microsoft's trojan horse. "We broke into new accounts despite the economic crunch because our prices met our customers' needs." What will Oracle's secret weapon be?
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they're been in trouble for some time now. just look at what's happening in U.S.A and europe. biz is bad and they're bad for the business