And, here's another, from March 1999 (Featuring Ellison the Outrageous, and a terrific view of ORCL's strengths.):
Software. Data mining
20-Mar-99
The worlds two largest software firms are coming to blows over databases. Which will win
depends on the future of Internet computing
Software
ORACLE'S boss, Larry Ellison, likes to describe competing with Microsoft in apocalyptic
terms: “It's Microsoft against mankind, and mankind isn't winning.” He also thinks that Bill
Gates's firm should be broken up for repeated antitrust violations. For its part, Microsoft
sneers at the bombastic Mr Ellison as a failed visionary whose attempts to supplant the PC
with a low-cost browser-based “network computer” went nowhere with consumers.
Yet the funny thing is that, until now, neither firm has really competed head-on against the
other, even in databases. Microsoft's database, SQL Server 6.5, was a lightweight compared
with Oracle's, suitable only for departmental use and smaller businesses. What is more,
Oracle benefited from the success of Microsoft's Windows NT operating system for business
users, selling many more databases than it would have had it been confined to the
slower-growing Unix system. In 1997, nearly 30% of Oracle's database sales came from its
share of the NT market.
Yet Microsoft has long been eyeing the $9.5 billion-a-year relational database market. In
January it pounced, with SQL Server 7. According to Doug Leland, the Microsoft manager
responsible for marketing the new database, SQL 7 “is a stake in the ground that puts us
squarely into the enterprise class.” He adds ominously: “Our friends in Redwood Shores are
going to feel the pressure.”
It is easy to see why the database market has begun to matter to Microsoft. Databases are
the all-important platform for “enterprise resource planning” ( ERP ) applications, pioneered
by Germany's SAP , which have revolutionised the business processes of large companies
over the past few years. There is a new emphasis on mining data to get a detailed
understanding of what is really going on inside a firm.
Microsoft needs SQL 7 to help spearhead its next release of NT , christened Windows 2000,
which it claims will be able to run even the most powerful server computers that currently
rely on different types of Unix. Microsoft has worked closely with consulting firms and big
ERP suppliers, such as SAP and PeopleSoft (though not, oddly enough, with Oracle), to
create a platform that they can recommend even to their biggest clients.
SQL 7 is indeed a “good enough” database, according to Betsy Burton, a consultant at
Gartmore. It will support online-transaction processing by about 500 concurrent users. That
number will grow when Windows 2000 is launched towards the end of this year and Intel's
powerful new Xeon processors also become available.
But, as always with Microsoft, the database's success will depend less on its own qualities
than on the company's sheer market power. SQL 7 will be bundled with other Microsoft
products, such as BackOffice, attracting price-conscious companies. A further $600m has
been earmarked to sweeten contracts with inducements. Microsoft has nearly $20 billion in
cash, waiting to be siphoned into grabbing extra market share when needed. It will also use
the clout it gets from the NT operating system to win the backing of hardware firms. Perhaps
most crucially, Microsoft will have strong support from the dominant ERP supplier, SAP ,
because of the German firm's own rivalry with Oracle in the business-applications market.
Delphic
Against such an onslaught, many firms would panic. And for Sybase and Informix, relative
minnows of the database industry, the prospects indeed look cloudy. But Oracle is not
without advantages of its own. SQL 7 has fewer features than Oracle 8, the latest release of
Oracle's database, and it cannot match its performance. In particular, Oracle 8 will support
a couple of thousand, as opposed to a few hundred, concurrent users. With Unix now the
preferred platform for “mission critical” applications, SQL 7's restriction to running only on
NT guarantees Oracle a lock on the high end of the market.
Oracle also has a large installed base. It dominates the Unix market and provides over 40%
of the databases that run on NT (see ). Oracle also claims that 87% of Fortune 500
companies have an Oracle database; and that today a majority of ERP applications run on
Oracle. Because database customers do not like to chop and change, it is almost
inconceivable that Oracle users will suddenly switch to SQL 7, however tempting the price.
But what gives Oracle most confidence is the conviction that computing is moving its way.
Although Mr Ellison was wrong about the network computer, he is probably right to say that
“the Internet changes everything”. Oracle is betting on a type of Internet computing in which
applications are centrally managed, backed up and administered. Users will gain access to
information and applications using a browser that can run on a personal computer or an even
simpler device. Oracle may charge more than Microsoft, but it says that the extra costs of
running SQL 7 on NT more than offset any saving.
To ram home the message, Oracle has this month released Oracle 8i, which is designed to
be not just a database, but a complete platform for Internet computing. Oracle believes that
the rigours of doing business on the Internet are creating a demand for ever more
sophisticated database technology, and that 8i will be a natural choice for electronic
commerce.
Firms now need not only to give their employees access to a database, but also to extend
parts of their database to customers through corporate “extranets” or the public Internet.
With customers doing their own ordering and billing through the Internet, databases must be
able to handle vast numbers of concurrent users and provide information fast. Oracle claims
that the ten most-visited consumer websites, including Yahoo! and America Online, are
powered by its databases, as are the ten biggest business websites (with one
exception—www.ibm.com).
Oracle 8i should tighten the company's grip on the exploding e-commerce database market,
where IBM is its main competitor. But it has another purpose too. By incorporating software
that allows traditional files to be stored and managed by the database, Oracle 8i also
removes the need for a big, all-purpose operating system, such as Windows 2000. To
emphasise this, Oracle has joined Sun Microsystems to create an Intel-based server, called
the “Oracle 8i appliance”, with an Oracle database and its own simple operating system.
Ready to use out of the box, this, Oracle says, is a cheaper and less complex alternative to a
database that runs on NT , because it minimises the cost and complication of the operating
system.
Several large computer makers, including Compaq, Hewlett-Packard and Dell, have already
said they will sell their own versions of the appliance. With much of their distribution aimed at
small and medium-sized firms, the machine will take the fight to Microsoft. As Merv Adrian,
an analyst with Giga Information Group, puts it, “Microsoft is playing the commodity card,
but Oracle has gone one better.”
Who—apart from customers—will win this database war? The answer depends to some
extent on Windows 2000. Until it is established, SQL 7 will be a capable, cheap database in
search of an operating system. More decisive, however, will be the speed with which the
Internet approach to computing that Oracle preaches takes off. For now, Oracle not only
remains in pole position, but has the more compelling vision. That said, few firms can play
catch-up to more devastating effect than Microsoft.
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