The Database Report - July 2010
Reporting on Database Industry News from April through June 2010
Published: July 1, 2010
It is hard to believe that we are half way through yet another year. But when I glance at the calendar it says July, so obviously we are at the half way point of 2010. And that means that it is time, once again, to review the news, views and rumors within the DBMS industry over the course of the past quarter.
The past three months have been quite interesting, so let’s dig right in and examine the goings on in the world of data and database systems in this quarter’s edition of The Database Report!
SAP To Acquire SybaseThe biggest news of the quarter is yet another mega acquisition in the database space. Last quarter saw the closure of Oracle’s acquisition of Sun. This quarter we see SAP gobble up Sybase.
Announced in mid May 2010, SAP’s all-cash offer of $65 per share values Sybase at approximately $5.8 billion. The offer is generous, coming in at a 44% premium over Sybase's three-month average stock price (according to SAP). And the Sybase board of directors voted unanimously to approve the deal.
So why would SAP pull the trigger on a deal of this size? Well, there are a number of reasons. A lot of the coverage of this deal has focused on the mobile technology Sybase brings to the table. Sybase has billed itself as the "unwired enterprise" company for a number of years now.
Well, this is a part of the reason for SAP’s grab for Sybase. There is the potential for growth as SAP marries it business applications to Sybase’s mobility capabilities. SAP has been promoting its future as being on mobile devices. SAP’s ERP users also use iPhones and Blackberries and Droids. Delivering access to business applications over smart phones and other unwired devices is a logical next step for SAP.
It will be interesting to see how SAP comes to market as it combines its in-memory database core with Sybase’s database technology, particularly its column stores that drive business analytics for many large customers.
Another aspect of this deal worth watching over time is what happens to Sybase’s core relational DBMS functionality. Although Sybase ASE has lagged against the major players (Oracle, IBM, and Microsoft), it still has a significant market share –
particularly in the financial services market. And that is a market that I’m sure SAP covets.
Of course, there are some who think that SAP is buying Sybase so that it can bypass Oracle altogether by offering both the application and the DBMS. But I don’t think that is the primary reason for this acquisition. Yes, SAP will be happy to sell its customers applications and the database software to run them. But SAP will have to continue to support multiple DBMS types for its applications, just like Oracle does. So having the Sybase database engine to sell along with SAP R/3 is nice, but it probably is not a significant part of the acquisition or go-to-market strategy.
The previous paragraph notwithstanding, SAP will likely try to convert users of its MaxDB DBMS to Sybase ASE. Although MaxDB started out as an open source project, its source code is no longer available under the GNU General Public License. The future of MaxDB has been less than clear with SAP stating that “Further commercial support concepts to cover mission critical use requirements outside of SAP scenarios are currently subject to discussion.” Whatever that means.
The bottom line regarding the Sybase DBMS: SAP is probably not interested in using the Sybase database engine to ramp up a full-scale assault on Oracle, IBM, and Microsoft.
Another interesting topic to note is that SAP previously promised that it would not make any more big acquisitions after it bought Business Objects back in 2007. By any accounting methodology, acquiring Sybase is a “big” acquisition. And astute observers do not think it will be the last one. Even though SAP has indicated that it does not think it needs to own middleware software, it would make a lot of sense for them to add a middleware enablement offering (perhaps Tibco?).
Then, in late May, SAP announced that its Sheffield Acquisition subsidiary had commenced its tender offer for all outstanding Sybase shares or $65 in cash per share. The tender offer is scheduled to expire at 9 p.m. EDT, July 1, 2010. So this one should be closed by the time you read next quarter’s edition of The Database Report.
Meanwhile, again in late May, IBM made plans to take advantage of the confusion that arises during an acquisition (any acquisition). IBM announced a partnership with ANTs Software to help migrate Sybase customers to DB2.
ANTs markets its in-memory, relational database system, the ANTs Database Server. But it also offers compatibility with existing mainstream relational systems, including Sybase.
The offering is called the DB2 SQL Skin for Sybase Adaptive Server Enterprise. It is built upon ANTs Compatibility Server, but it is being sold and supported by IBM. For those of you who are DB2 “people,” it is interesting to note that Don Haderle, the retired IBM Fellow who is sometimes called “The Father of DB2,” is a founding member of the ANTs technical advisory board.
If I were SAP, I would pay some attention to IBM to make sure that they do not steal away its financial market customers from them before they know what happened.
Other Acquisition Related News for the QuarterI’m sure it will come as no surprise that Oracle was in the news again this quarter with several acquisitions. First up, in April Oracle announced its intent to buy Phase Forward, which develops and sells SaaS (software as a service) offering for drug manufacturers. The deal, which was initially expected to close in the middle of 2010, is sized at approximately $685 million. Under the terms of proposed agreement, Oracle will pay Phase Forward shareholders $17.00 per share for each share of Phase Forward common stock outstanding.
Oracle plans to merge Phase Forward into its Health Sciences global business unit. This acquisition should complement Oracle’s 2009 purchases of Relsys (maker of drug-safety software) and the intellectual-property assets of Conformia (technology for managing pharmaceutical design and development). The key to this acquisition seems to be Phase Forward’s market leading front-end electronic data capture solution known as InForm.
In late May, though, the U.S. Department of Justice asked for more information on the pending acquisition of Phase Forward. The government is concerned that the acquisition of Phase Forward by Oracle could hurt competition in the healthcare software market.
So this one is not quite a done deal, yet. We’ll watch it and report on the progress in future editions of The Database Report.
But Oracle was not done with its acquisitive ways. In mid May, the company announced that it would be buying Secerno, a database firewall provider. Whereas most of its recent acquisitions have been application related (with the exception, of course, of Sun Microsystems), this acquisition is back in Oracle’s database wheelhouse. Financial terms of the deal were not disclosed.
Secerno products are compliance focused and include database activity monitoring, data protection, and data auditing solutions. Secerno software is heterogeneous in that it operates on not just Oracle, but other databases, too (including Microsoft SQL Server and Sybase ASE).
“The Secerno acquisition is in direct response to increasing customer challenges around mitigating database security risk,” said Andrew Mendelsohn, senior vice president, Oracle Database Server Technologies. “Secerno’s database firewall product acts as a first line of defense against external threats and unauthorized internal access with a protective perimeter around Oracle and non-Oracle databases. Together, Oracle’s complete set of database security solutions and Secerno’s technology will provide customers with the ability to safeguard their critical business information.”
Gobbling up Phase Forward and Secerno would be a lot to swallow for most companies, but Oracle was not done yet. Late in May Oracle announced a couple of technology acquisitions.
Oracle acquired the intellectual property assets of Market2Lead, a provider of demand generation and marketing automation software. Market2Lead's technology helps companies improve demand generation to increase sales and marketing effectiveness. Oracle plans to integrate Market2Lead's technology into Oracle CRM applications. The financial details of the transaction were not disclosed.
Oracle also announced its intent to acquire technology for prepaid telecommunications billing from eServGlobal, an Australian firm. eServGlobal's Universal Service Platform (USP) applications includes a proven and scalable pre-paid charging application, a network-services platform and a messaging gateway. The transaction is subject to customary closing conditions and approvals. Financial terms for the deal were not disclosed, but it is expected to close in the second half of 2010. EServGlobal will continue to operate as a separate company, focusing on mobile payments and value-added services.
Even though Oracle was the most active player in the acquisitions world, there were other interesting acquisitions in the database world. In early May, IBM announced the acquisition of Cast Iron Systems, a privately held company based in Mountain View, CA. Cast Iron Systems is a provider of cloud integration software, appliances and services. Financial terms of the deal were not disclosed.
With the addition of Cast Iron Systems to its portfolio, IBM will be able to offer clients a complete platform to integrate cloud applications from providers including Salesforce.com, Amazon, NetSuite and ADP with on-premises applications, such as SAP and JD Edwards. Using Cast Iron Systems’ pre-built templates and services expertise, expensive custom coding can be eliminated, allowing cloud integrations to be completed more rapidly.
“Through IBM, we can bring Cast Iron Systems’ capabilities as the world’s leading provider of cloud integration software and services to a global customer set,” said Ken Comée, president and chief executive officer, Cast Iron Systems.
Consistent with IBM's software strategy, IBM will continue to support and enhance Cast Iron Systems’ technologies and clients while allowing them to take advantage of the broader IBM portfolio. Cast Iron will be integrated into IBM's WebSphere business and IBM plans to integrate Cast Iron Systems’ approximately 75 employees into IBM.
Also in May, Teradata acquired Xkoto, a privately held Canadian developer of database load balancing software, headquartered in Toronto, Ontario. Financial terms of the deal were not disclosed.
The gem Teradata gets from Xkoto is its patent pending Gridscale technology. This load balancing technology balances all database servers in a cluster using an active/active arrangement; that is, they are available and active all the time.
But in an odd move, at the same time it announced the Xkoto acquisition, Teradata also withdrew Gridscale from sale. Existing customers will be supported, but no new licenses are being sold. I’m guessing that Teradata is planning to incorporate the workload balancing capabilities into its DBMS. And, at present, Xkoto’s Gridscale only worked on DB2 for LUW and Microsoft SQL Server. So we should keep an eye out for a future announcement from Teradata regarding database workload balancing…
By the NumbersAs we do each quarter, let’s take a look at the market performance of the Big Three DBMS vendors: Oracle, IBM, and Microsoft.
Oracle reported earnings per share of 23 cents, with new software licenses up 13% and new licenses for its applications software business up 21%. Revenue grew 17% to $6.4 billion, and net income was $1.2 billion for its fiscal third quarter, which ended February 28. That compares with $1.3 billion, or 26 cents per share, for the same quarter last year. Its performance just barely bested analyst’s expectations.
Perhaps most interesting is that this was the first reporting period that included results from Sun Microsystems. “The Sun integration is going even better than we expected,” said Oracle President Safra Catz. “We believe that Sun will make a significant contribution to our fourth quarter earnings per share as well as meet the profitability goals we set for next year.”
“Exadata is the fastest growing product in Oracle’s history,” said Oracle President,
Charles Phillips. “Introduced a little over a year ago, the Exadata pipeline is now approaching $400 million with Q4 bookings forecast at nearly $100 million. This strengthens both sales growth and profitability in our Sun server and storage businesses.”
And to cap things off, we get a snarky quote from Oracle CEO Larry Ellison, who said “Every quarter we grab huge chunks of market share from SAP. SAP’s most recent quarter was the best quarter of their year, only down 15%, while Oracle’s application sales were up 21%. But SAP is well ahead of us in the number of CEOs for this year, announcing their third and fourth, while we only had one.”
That is all well and good, but what about Oracle’s core database business? It continues to grow year over year, with third quarter 2010 software revenue for database and middleware coming in at $1.241 billion. That is an 11% growth over the $1.120 billion the company earned from database and middleware software in its fiscal third quarter of 2009.
So Oracle continues to acquire… and continues to perform well.
Over at IBM things are going well, too. In mid April, the company increased its outlook for the full year and reported stronger than expected results for the fiscal first quarter of 2010. IBM announced first quarter diluted earnings of $1.97 per share compared with diluted earnings of $1.70 per share in the first quarter of 2009, an increase of 16%.
First-quarter net income was $2.6 billion compared with $2.3 billion in the first quarter of 2009, an increase of 13%. Total revenues for the first quarter of 2010 of $22.9 billion increased 5% (flat, adjusting for currency) from the first quarter of 2009.
Overall revenue growth was consistent across geographic segments; services revenue rose 4% and systems and technology revenue rose 5%.
“In the first quarter, we drove significantly improved revenue growth rates from the fourth quarter across our businesses and geographies. We had strong results in strategic investment areas including growth markets, business analytics and Smarter Planet solutions,” said Samuel J. Palmisano, IBM chairman, president and chief executive officer.
From a database perspective, the Information Management software group grew 11% for the quarter.
IBM also declared a regular quarterly cash dividend of 65 cents per common share, payable June 10, 2010 to stockholders of record on May 10, 2010. This represents an increase of 18% over the prior quarterly dividend of 55 cents per common share. This is good news for investors; IBM has increased its quarterly dividend over 330% since 2003, and it is the 15th year in a row that IBM has increased its quarterly cash dividend.
And up in Redmond, Microsoft was celebrating a successful quarter, too. The company announced record third quarter revenue of $14.50 billion for the quarter ended Mar. 31, 2010, a 6% increase from the same period of the prior year. Operating income, net income and diluted earnings per share for the quarter were $5.17 billion, $4.01 billion and $0.45 per share, which represented increases of 17%, 35% and 36%, respectively, when compared with the prior year period.
The results include the deferral of $305 million of revenue relating to the Microsoft Office 2010 Technology Guarantee program. Adjusting for the revenue deferral, third quarter revenue totaled $14.81 billion, an increase of 8% over the prior year period.
“Windows 7 continues to be a growth engine, but we also saw strong growth in other areas like Bing search, Xbox LIVE and our emerging cloud services,” said Peter Klein, chief financial officer at Microsoft. “Our record third-quarter revenue along with continued rigor on cost management resulted in exceptional EPS growth.”
Windows revenue was up 28%, compared with the same quarter a year earlier, driven by strong demand for Windows 7. More than 10% of all PCs worldwide are running Windows 7 today, making Windows 7 by far the fastest-selling operating system in history.
From a database perspective at Microsoft, we have to look at its Server and Tools division. Server and Tools product revenue increased $50 million or 2%, driven primarily by growth in Windows Server and Enterprise CAL Suites revenue. Enterprise Services revenue grew $34 million or 5%, primarily due to growth in Premier product support services, offset in part by decreased consulting services.
So it would seem that all three of the big DBMS providers are doing very well these days… at least financially.
New Software Announcements in the Second QuarterMicrosoft released the next SQL Server release to manufacturing late in April 2010. The release, called SQL Server 2008 R2, sounds like a minor release, but actually has quite a few interesting new features.
Microsoft’s primary theme for this release is self-service business intelligence (BI). The biggest news on this front is the PowerPivot plug-ins for SharePoint 2010 and Excel 2010. These plug-ins use column-level compression, which can enable BI analysts to process millions of rows in the same amount of time it would take to process thousands of rows ordinarily. And the PowerPivot for Excel plug-in can be used against most any database source, not just SQL Server. SQL Server 2008 R2 is required to feed PowerPivot workbooks shared via SharePoint 2010. You can download the PowerPivot plug-ins at http://www.powerpivot.com/.
Another useful BI-related feature of SQL Server 2008 R2 is Report Parts, which is part of Report Builder 3.0. Using Report Parts, you can publish sections of your report to a centralized library; once there, other users can use and include them in their own reports.
Master Data Services is another new SQL Server 2008 R2 feature that is worth discussing. It provides a data model and a database that can be used as the authoritative source for your master data (e.g., products, customers, employees, etc.). Master Data Services offers versioning and the ability to undo unwanted master data changes. Bottom line, SQL Server 2008 R2 offers some built-in support for managing your critical master data assets.
There are also administration improvements including:
In other product news this quarter, Oracle released Tuxedo Application Runtime for CICS, an application API-based emulator for running IBM's mainframe CICS transaction server. It promises to help customers take existing business applications running on the mainframe and migrate them to an open system environment. The software will simplify the migration process, but it will not completely automate it.
Next up, we have IBM, who partnered with Verizon to deliver Managed Data Vault, a cloud backup service. Don DeMarco, IBM vice president of Business Continuity and Resiliency Services, said: “Managed Data Vault offers a broad array of enterprise data protection, not just for files, but for very large data stores and transactional database content. Today, enterprises have different ways to address specific scenarios. Managed Data Vault is a single, secure solution to help clients retrieve a file, restore a device, or recover from a serious outage emergency. Working with Verizon, we are addressing the needs of enterprise users with large data footprints, whether it's 15, 50, 150 terabytes or even more.”
Oracle is Redefining “Free”Oracle is an open source juggernaut these days, but it does not seem to understand the concept of the word “free.” Well, open source proponents may debate that, too, but their definition of free absolutely does not equate with Oracle’s new definition, which is $9000.
What am I talking about? Well, Oracle’s Open Document Format (ODF) plug-in for Microsoft Office (which enables users to read, edit, and save to ODF) is supposedly a free download. The ODF project was founded by Sun, which was acquired by Oracle earlier in 2010.
If you go to Oracle’s website and try to download it, you will see that the terms have changed. The price is now $90 per user – and there is a minimum of 100 users.
Actually, there are two editions: a standard edition, meant for single users or very small companies, which costs $49.95, and an enterprise edition, which requires a minimum of 100 users, adds features such as a Microsoft SharePoint connector and costs $90 per user and do not forget the 100 user minimum.
Interesting? No, actually, not the best marketing move I’ve seen. If Oracle wants to increase the adoption rate of its Open Document Format, then it shouldn’t be trying to charge folks to use it.
In other Oracle / Sun news, James Gosling, one of the founding fathers of Java, quit Oracle. He has indicated that he will continue to be involved with Java, but is not sure exactly in what capacity yet. He has not yet signed on with another company.
SummaryThus ends another edition of The Database Report. The data and database system market sector continues being a hot bed of acquisition activity. And the big DBMS vendors continue to do well financially as they release new software versions. What else can we expect for the remainder of 2010? Well, all I know for sure is that it should be interesting. If you want to track what happens, be sure to check in with The Database Report on a quarterly basis… see you in Q3!
Recent articles by Craig S. Mullins
Craig S. Mullins - Craig S. Mullins is a data management strategist and principal consultant for Mullins Consulting, Inc. He has three decades of experience in the field of database management, including working with DB2 for z/OS since Version 1. Craig is also an IBM Information Champion and is the author of two books: DB2 Developer’s Guide and Database Administration:The Complete Guide to Practices and Procedures. You can contact Craig via his website.