Features - Enterprise Data Insights:

MS GROWS DBASE SALES AS IBM, ORACLE FALL

As reported by Siobhan Kennedy, Microsoft Corp was the only company to show significant growth in database software sales in 2002, even as the overall market declined, industry research firm Gartner Inc said recently.

The world's largest software maker saw sales of its database software -- used to store and manage corporate information -- soar by almost 17 percent despite massive cutbacks in corporate technology spending.

Rival Oracle Corp had a decline of 20 percent and International Business Machines Corp's (IBM) database revenues slipped 0.8 percent. The overall database market fell 7 percent.

Although Microsoft is still in third place overall, with 18.8 percent of the total market -- IBM is first with 37 percent and Oracle is second with 27 percent -- analysts say the software giant is the biggest force to be reckoned with because its products target small- and medium-sized businesses and are much cheaper than rival systems.

"Microsoft is considered the current darling of the industry because that's where the growth is," said John Jones, an analyst at SoundView.

"Long-term they are the player to be concerned about," he added.

Traditionally the big database race has been between Oracle and IBM, with both companies rushing to do down the other the second market research is published.

Oracle Struggling

IBM won a huge victory last year when it knocked Oracle off the top spot in terms of overall database sales.

And this year, the Armonk, New York hardware, software and services giant also surpassed Oracle in the relational database sector, which comprises 80 percent of the total $8.3 billion database market.

"I think what's happened is more a reflection of Oracle struggling in the market," said Gartner database analyst Colleen Graham, who said IBM's sales were basically flat to slightly up from a year ago.

"IBM was able to take the No. 1 spot by staying exactly where they were last year... because Oracle had such a difficult time," she said.

In addition, IBM has managed to gain overall market share because a big chunk of its database sales are tied to its proprietary mainframe computers, where Oracle does not compete.

IBM spokesman Ari Fishkind said IBM was seeing genuine growth. He said 1,500 Oracle customers had defected to IBM last year.

Robert Shimp, Oracle's vice president of database marketing, rejected the notion that the Silicon Valley company is losing out to rivals IBM and Microsoft. He said market share reports like those turned out by Gartner create confusion, in part because they are based on incomplete and unaudited information.

That said, Oracle easily retained its top spot in the Unix operating system market, with 62 percent market share, while IBM has just 26.7 percent.

But Redwood Shores, California-based Oracle lost ground in the Windows sector, where its market share fell to 26.6 percent from 33.5 percent last year. Microsoft holds the top spot with a 45 percent share and IBM comes in third with 21.8 percent.

Fishkind said IBM was aggressively targeting Microsoft and that the company would soon announce a product aimed specifically at small businesses.

Both Microsoft and IBM have been challenging Oracle at the low end of the market with low-price databases that have fewer features than Oracle's flagship product, called 9i. Oracle responded with a lower-priced "standard edition" version of its database, which did not include high-end features such as data mining and clustering.