Oracle Gains, But Looks Over Its Shoulder At MicrosoftOracle Gains, But Looks Over Its Shoulder At Microsoft

The worldwide relational-database software market grew a relatively robust 12% to $15.0 billion in 2004, according to preliminary figures released Monday by market researcher IDC. Oracle and Microsoft both gained market share while IBM, despite increased sales of its DB2 database, saw its share of the database market shrink last year.

Database software sales have grown slowly in recent years and some analysts view relational databases as mature technology. Much of last year's gain was attributed to companies increasing their database software purchases to reduce their backlog of database-management projects. But IDC says currency-exchange rates accounted for some of the growth. Vendors also face increasing pricing pressures on database software.

Oracle's database sales grew at a rate of 14.5% in 2004 to $6.2 billion, giving it a 41.3% share of the relational database market, according to IDC. In 2003 Oracle held a 40.3% market share. "We're very pleased with results that extended our lead over our nearest competitor," said Willie Hardie, Oracle's senior director of database product marketing.

That competitor, IBM, saw sales of its DB2 database grow at a rate of 8% to $4.6 billion in 2004, but its market share slid to 30.6% from 31.8% in 2003, according to the IDC figures. IBM officials couldn't be reached for comment by press time.

Microsoft's SQL Server was the fastest-growing database system, according to the report, increasing its sales by 22% to just over $2.0 billion in 2004 to capture 13.4% of the market. In 2003, Microsoft's market share was 12.3%.

"It's the third consecutive year that SQL Server has been the fastest-growing system," observed Tom Rizzo, director of SQL Server product management. "We think it will skyrocket once our 2005 product is out."

Microsoft competed in 2004 with the four-year-old SQL Server 2000 version of its database product. It's slated to bring out SQL Server 2005 this summer. Oracle was competing with Oracle 10g, which was released in January 2004.

Sybase Inc. and NCR Corp.'s Teradata, with market shares of 3.1% and 2.6%, respectively, rounded out the top five database vendors.

Oracle, IBM, and Microsoft are looking for new ways to compete in the market for small and midsize business and departmental systems, one of the fastest-growing areas of the database market, the report said. All three introduced lower entry-level prices in the 2003-2004 time frame. Last year, Oracle dropped its Standard Edition One price from $5,999 to $4,999, for example.

The report predicts that IBM, Microsoft, and Oracle will be engaged in "a battle royal" once Microsoft's SQL Server 2005 comes out. "The landscape could change considerably," the report says, but adds that "Microsoft's strong momentum should serve the company well."