IBM fights Oracle with database software update

By Caroline Humer

NEW YORK: International Business Machines Corp., taking aim at rival database giant Oracle Corp., has unveiled a new version of its DB2 database software that it says will make it easier for companies to manage large amounts of information.

IBM has been trying to beef up its software offerings in recent years as software products often sell at higher margins than its hardware products, which are increasingly approaching commodity status. Offering software along with IBM computers enables Big Blue to sell customers entire systems.

IBM Senior Vice President Steven Mills, who is in charge of the Armonk, New York, company's $13 billion software business, said IBM is not content with the gains it has made against Oracle in the market for large, complex database systems.

Oracle and IBM have been at loggerheads over databases for years, since IBM decided in the 1990s that Oracle's market was one it wanted to own.

"We are driving to increase our share and become much bigger than we are today," Mills told in an interview. Market share gains helped push IBM software revenues up 11 percent in the second-quarter while total IBM revenues fell about 6 percent.

The new version of the software incorporates what IBM calls its self-healing technology, which it has also incorporated into other products like large corporate computers. Managing massive databases of critical information is complex and expensive, and there are not that many database administrators out there, said Carl Olofson, an analyst and program director for research group IDC, based in Framingham, Massachusetts.

"What's become really important for database software companies that want to be competitive is to provide more features and software that enable the database not to develop the kinds of problems you need an (administrator) to solve, or to eventually fix them itself," Olofson said.

"Oracle has had an edge in this area to some extent. This is important from a competitive position because of that," he said. According to IDC, Oracle has the most share of the database market. Another market research firm, Dataquest, a unit of Gartner Inc., earlier this year said IBM took the No. 1 spot in terms of total new database sales for 2001.

Janet Perna, general manager of IBM's data management solutions, said the software will cut costs for customers by alerting their database administrators to potential problems in the database system and suggesting ways to fix them.

It also improves performance, Perna said. The last time DB2 was updated was last summer. A beta-version of the software is being tested by customers now and the software will be generally available in the fourth quarter, IBM said.

© Reuters