The Four Hundred

Despite a precipitous drop in DB2/400 sales last year, IBM managed to hold onto its lead in the market for database management systems, primarily because of a strong mainframe business and a 20 percent drop in database revenue from its closest competitor, Oracle, market researcher Gartner said last week in its annual database report. While IBM's database revenue declined by almost a percent, it gained almost 3 percentage points of worldwide market share as the market contracted by nearly 7 percent.

In terms of IBM's relational database management system (RDBMS) business, Gartner's data--which is based on careful estimates and is subject to revision, but is nevertheless the best accounting of Big Blue's revenues outside of Armonk, New York--show that revenue from new sales of RDBMS software on the mainframe pretty much offset the weakness that afflicted the midrange iSeries line last year, and that RDMBS sales on Windows and Unix declined negligibly.

Sales of DB2 on the iSeries accounted for $325 million in revenue in 2002, according to Colleen Graham, the Gartner analyst who authored the report with Kevin Strange. That number represents a decline of roughly $103 million, or 24 percent, compared to 2001, when new DB2/400 sales brought in $428 million. On the other hand, RDBMS sales on IBM's S/390 and zSeries mainframes grew by about 13 percent--roughly $92 million--to about $800 million, according to Graham.

On the Unix, Windows, and, now, Linux side of Big Blue's RDBMS business, revenues from new DB2 sales amounted to $1.26 billion in 2002, a decrease of $6.9 million, or 0.5 percent, from 2001, Gartner says. Overall, new sales of IBM's RDBMS software worldwide brought the company $2.4 billion last year, a decline of $18.5 million, or 0.8 percent, from 2001, Gartner says. According to Gartner's figures, IBM's overall database management business--including non-relational databases such as the kind used to manage flat files--actually grew slightly, by about 0.6 percent, in 2002. Interestingly, the figures show that sales of non-relational database management systems actually grew by $383 million, or 5.9 percent, last year. Could flat files be the next big thing?

While IBM took the overall database management system lead away from Oracle in 2001, it wasn't until last year that IBM--buoyed by its acquisition of Informix midway through 2001--took Oracle's crown in the race for relational database supremacy, by far the biggest chunk of the database market, and a section of the market that Oracle has done very well for itself by specializing in.

Gartner's data shows that, in 2001, Oracle brought in $2.83 billion in revenue from new RDBMS sales, which gave it 39.7 percent of the market. The same year, IBM had $2.4 billion in RDBMS revenues, or 33.9 percent of the market; this figure includes the Informix product. In 2002, IBM's RDMBS figure remained at $2.4 billion, while Oracle's number fell by more than 20 percent, to $2.25 billion. Based on those figures, IBM had 36.2 percent of the RDBMS market, while Oracle had 33.9 percent of the market, according to Gartner's data.

Without IBM's acquisition of Informix in 2001, Oracle would have remained king of the RDBMS market. Without counting the $160.4 million that the Informix products brought IBM last year, Big Blue would have had 33.8 percent of the market--a tenth of a percentage point behind the Redwood Shores, California, company's share. And this is a conservative estimate, considering that IBM has been very aggressive in migrating its Informix customers to its own DB2 product. This shows in Gartner's data, as new sales of Informix products declined by about 32 percent last year.

Although its lead dropped significantly in 2002, Oracle still dominates the market for RDBMS software on distributed platforms--that's Windows, Unix, and Linux operating systems. These platforms together account for 79 percent of the total $6.6 billion RDBMS market, Gartner's data shows. Oracle's market share on these operating systems dropped from about 49 percent in 2001 to 42.5 percent last year. Oracle remains very strong on Unix operating systems, where it held a 58.7 percent market share in 2002, a four percent slide from the previous year. IBM, the only other major vendor of Unix-based RDBMS software, dropped 7 percent of the Unix-based RDBMS market, to a 26.7 percent share.

Gartner's Graham says she is currently working on breaking out the Linux-based RDBMS numbers and will submit a report in the coming weeks or months.

Microsoft continued to make impressive headway as the newcomer in the RDBMS market. According to Gartner's data, the Redmond, Washington, software giant had $1.19 billion in revenue from new RDBMS sales around the world last year, an increase of $171 million, or nearly 17 percent. At the same time, Microsoft boosted its overall market share in 2002 by almost 4 percent, and it remains the number-three vendor of RDBMS software, with 18 percent of the market.

In the market for Windows-based RDBMS software, Microsoft continued to wrest control away from Oracle last year. In the Windows segment, Microsoft's share of the market increased by nearly 6 percent, to 45.1 percent. Oracle's revenues from Windows-based RDBMS software declined by 19.3 percent--on track with its overall 20.5 percent drop--giving it 26.6 percent of the market in 2002, compared with a 33.5 percent share in 2001. IBM, on the other hand, grew its Windows-based RDBMS software revenue by 8.4 percent, to $574.5 million, last year, giving it 21.8 percent of that market.