IBM overtakes Oracle in total database sales

Lisa Baertlein

PALO ALTO: International Business Machines Corp. took the No. 1 spot last

year in terms of total new database software sales from long-time leader Oracle

Corp., according to a new report from Dataquest, a unit of technology research

firm Gartner Inc.

Oracle remains king of the relational database software segment that accounts

for 80 percent of the overall $8.84 billion database market, but slipped because

of competition from IBM and Microsoft, Dataquest said.

Elsewhere, Oracle lost ground on Microsoft's Windows server platform -- where

it was overtaken by the software behemoth -- and retained its lead on the Unix

platform.

"It's not a technology issue with Oracle ... Oracle has a credibility

problem with respect to its sales and business practices and its prices,"

said Dataquest analyst Betsy Burton, who noted that database buyers were

cost-conscious in 2001.

Dataquest said IBM's total database revenue grew to $3.06 billion from $2.94

billion in 2000. Sales from Informix, which Big Blue bought last year,

contributed $264.4 million and the computer giant's DB2 database software

products gained momentum. IBM now has about a dozen database products, which run

on everything from Windows and Unix operating systems to older mainframes.

Oracle, which previously had been on the top of the heap, slid to No. 2 as

its new database sales dipped to $2.83 billion from $2.97 billion a year

earlier.

Microsoft landed at No. 3 with sales of $1.44 billion. Burton said IBM's

Informix acquisition gave it the edge over Oracle in 2001. "They bought

market share," Burton said. "It would have taken us five years to

build the business without Informix," IBM spokeswoman Lori Bosio said.

Numbers dispute



Oracle's leadership in the relational database market weakened as its
overall share fell to 39.8 percent in 2001 from 42.5 percent in 2000.

IBM's share of the market increased to 34.1 percent in 2001 from 32.6 percent

the year earlier. Microsoft's share was 14.4 percent, up from 11.6 percent.

Oracle Chief Financial Officer Jeff Henley -- who for many months has maintained

the firm is not losing market share in the sector that provides nearly

three-quarters of company software sales -- questioned Dataquest's methodology.

Henley told Reuters that IBM and Microsoft do not provide auditable database

revenues and said the companies' reported numbers include sales of other

products.

"I'm not sure what their numbers are. There's no way to check

them," Henley said. Dataquest analyst Burton said her firm gathers its

information from a variety of sources, including public filings and client

interviews. "They're not the vendors' numbers, they're Gartner's

numbers," Burton said.

Oracle customers lately have been choosing its moderately priced

"standard edition" database over its more expensive, high-end

database. The company also saw its revenues hurt when big-spending dot-coms and

telecoms fell on hard times.

"You can't take a one-year snapshot and say Oracle is losing

share," said Henley, who noted that database sales to existing customers --

who make up well over 75 percent of Oracle's database revenues -- have remained

on track.

Oracle last summer cut prices on its databases after customers complained its

so-called "power-unit" pricing, based on the number of processors a

customer uses, was expensive and confusing. This year, the company has been

embroiled in a pricing flap with existing users over their use of data warehouse

software.

Elsewhere, the state of California is seriously considering scrapping a $95

million software deal with the company after state auditors said taxpayers would

pay $41 million too much for software few employees needed or wanted.

Oracle's stock, which last week fell to its lowest levels since 1999, is down

39 percent so far this year. Microsoft shares are 25 percent lower and IBM's

stock, which hit a four-year low on Monday, is off 32 percent.

Under the covers



Microsoft grabbed the No. 1 position on the Windows platform with 39.9
percent market share as Oracle, which held that spot last year, dropped to

second place with 34 percent share. Oracle continued to lead on Unix, but its

share fell to 63.3 percent from 66.2 percent in 2001.

Dataquest said the overall database software market grew to $8.84 billion

from $8.73 billion in 2000. While Burton doesn't see 2002's overall database

market growth being much to write home about, she expects the "jockeying

underneath the covers" to continue.

"I don't think this market is going to be boring over the next year at

all. I think there's going to be a lot of shifting," she said.