An excellent way to begin the discussion on this thread would be a review of market share by company in each product segment. I know someone reading this has this current information so please post it!
Here is an interesting article from Briefing.com:
Briefing.com - The Platform Shift: Databases
16-Jan-01 03:42 ET
[BRIEFING.COM - Robert V. Green] Three weeks ago, we remarked that the earnings reports of Microsoft and Oracle indicated that the platform had shifted from operating systems to databases. Here are some more thoughts on this topic.
The Day The Market Shift Occurred
On December 18, 2000, we pointed out a market event that highlighted the platform shift. Ironically, on the same day, Microsoft warned and Oracle beat estimates (or met, depending on whose estimates you use.) Oracle's numbers were impressive. Microsoft's were anemic.
We drew the larger conclusion: that the platform power had shifted from operating systems to databases. Platform shifts happen very rarely, and are usually unstoppable for many years. Investors who ignore signs of a platform shift in technology usually wake up one day to find their stocks lagging the overall market.
The Morgan Stanley CIO Survey
Two days after our observation above, Morgan Stanley Dean Witter published their CIO Survey.
Published for the benefits of their technology investor clients, the survey reaches 150 Chief Information Officers across America's biggest companies. The survey indicates some clear trends about the direction of enterprise level capital spending for computer equipment.
The results, in our opinion, clearly support the idea that the platform has shifted.
Databases Are Number One
The number one focus of CIOs across the country is databases.
In a graph showing the growth of component spending on IT (information technology) segments, the database segment was at the top of the list. Spending on database software is expected to grow at 9.5% in the average enterprise IT budget, the highest growth segment listed.
In addition, the database segment showed the lowest percentage of CIOs who planned for lower database spending in 2001 than in 2000. Only 4% of all respondents indicated that database spending would decline.
The Death Of The Desktop
But another trend is clear in the MSDW CIO Survey: the desktop doesn't drive things anymore. Investment in "productivity software" (read Windows Applications) is at the absolute bottom of the list.
Spending on desktop PCs is slowing. A full 11% of all respondents expected to spend less next year, the fourth highest decline, after consulting services, mainframe software, and storage hardware.
Budgets for desktop productivity software showed an average of just 2.9% increase next year, ahead of only mainframe software (1.5%) and consulting services (-0.2%).
Let's face it: Who needs another version of Excel? Or Word? The current versions work extremely well. The features being added now often don't get used.
Have we really come to the "buggy whip" phase of the information world? Looks like it, when it comes to desktop applications.
And if the applications don't need to be upgraded, why get a new desktop PC? A new monitor may make workers happy now, but getting the higher speed system isn't important like it used to be.
Desktops used to drive IT spending. That era is over.
The Future of The Database
On the other hand, the database is far from reaching its full value delivery.
With an "information distribution system" being built globally, the management and presentation of information becomes increasingly important.
Financial transactions, customer records, business control systems, automated data monitoring, factor floor automation, and more; the list is endless for applications which create data, and the need to manage it.
Why The Internet Is Driving the Platform Shift
To use the internet, you do not need a PC.
Most people think of the internet as a browser-based application, but that is a narrow view.
Napster, for example, does not use a browser at all. The application is so simple, it really doesn't even require a PC. It could easily be built into a specialized music storage "appliance" and be sold, if the legal issues are ever resolved.
TiVo is an internet application, as it updates its internatl database nightly by dialing into a local ISP point and requested data over the internet. No PC in sight.
Cell phones already access and display data, delivered over the IP protocol. They will soon deliver data over the internet, as they become point-of-purchase tools.
Credit card verification systems which currently use a modem will soon be internet based.
Each of these applications requires a database. None require a PC.
The Database Companies
There are really only four prominent database companies:
Oracle (ORCL)
Microsoft SQL Server (MSFT)
Sybase (SYBS)
Informix (IFMX)
Sybase and Informix are both niche players and are just one-tenth the size of Oracle. The future landscape is probably a battle between Oracle and SQL Server.
A fundamental problem with Microsoft, which is now going to come back to hurt them, is that they have always designed everything to leverage the sales of Windows. SQL Server and Active Server Page functionality both have explicit design features to leverage Internet Explorer, which itself is leveraged for Windows.
Oracle on the other hand is operating system agnostic. Oracle 8 can be controlled completely by a java interface which requires no operating system intervention at all. While some people attributed this feature at introduction to Larry Ellison's obvious dislike of Microsoft, the independent design is going to be a key element of Oracle's success in the database era.
A complete analysis of Oracle's competitive edge is beyond the scope of today's Brief. For now, today's point is that the shift we pointed out three weeks ago is very real. Databases have become the platform for information technology, not PC operating systems.
Larry's Revenge
Oracle is likely to start growing faster than Microsoft grows. Oracle's market cap ($180 billion) is now two-thirds of Microsoft's ($285 billion). It may not be long before Larry Ellison surpasses Bill Gates as the richest person in the world.
The media will probably start talking about the "platform shift" when Larry becomes richer than Bill. Certainly, Larry will start talking about it when they interview him about his passing Bill.
But you, the Briefing.com reader, heard about it here first.
Comments can be emailed to the author, Robert V. Green, at rvgreen@briefing.com.
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