The Database Report – July 2012
Reporting on Database Industry News from April through June 2012
Published: July 1, 2012
Craig S. Mullins reports on the database industry news from April to June 2012.
Here we are at the midway point of 2012 as the second quarter is now complete… and that must mean that it time to review what happened in the database systems market during the past quarter. We will examine the acquisitions, lawsuits, quarterly financial results, and product announcements that highlighted the second quarter of 2012. So let’s get going with this quarter’s edition of The Database Report, and examine all the news that’s fit to print in the world of data and database systems during the second quarter of 2012.
Oracle versus Google Legal Wrangling
Regular readers of The Database Report will recall that Oracle and Google are battling things out in court because Oracle accuses Google of infringing its patents and copyrights. The primary issue is whether Google used proprietary Oracle technology in its Android mobile operating system. The lawsuit began back in August 2011 and it finally ended this quarter (May 2012).
The trial began in April and in the early days of the trial the CEOs of both companies (Larry Ellison of Oracle and Larry Page of Google) took the stand. After several weeks of litigating the case was sent to the jury on April 30.
By May 7, the jury had returned with a partial verdict. It found that Google infringed on Oracle’s API copyrights, but could not reach consensus on whether Google was covered under the fair use protections in U.S. law. This was a setback to Oracle because it limited the penalty for the violation to statutory damages no higher than $150,000.
Then, the second phase of the trial started over patent violations. The jury ruled in Google’s favor. And finally, at the end of May, the judge in the case ruled that the APIs that were infringed were not subject to copyright in the first place.
Of course, even though it would appear to be over, it probably is not, as Oracle has indicated that it may appeal.
The Itanium Conundrum Continues
You may recall that in March of last year (2011) Oracle announced its intentions to stop developing applications for Intel Itanium microprocessors. This caused a rift with Hewlett- Packard, with HP hinting that Oracle was eliminating support for the chip in its software because of its newfound hardware business (which did not have any systems built on Itanium).
Well, here we are more than a year later and the dust has yet to completely settle. In the middle of May 2012 Oracle released a letter to their remaining Itanium customers. The letter reaffirms that Oracle will no longer develop new versions of its software for Itanium, but commits to supporting existing software on Itanium for 10 years (which is a huge amount of time in the world of software support).
The letter also takes a (perhaps deserved) shot at Hewlett-Packard, saying that many documents “have been disclosed through litigation that describes the true state of Itanium in Hewlett-Packard's own words.” There entire letter and the links to that document can be read here.
Frankly, I think that should put the matter to bed, but we’ll see...
Second Quarter Product Announcements
There were quite a few data-related product announcements made this quarter. Let’s begin by taking a look at IBM’s product activity.
In early April, IBM released DB2 10 for Linux, UNIX, and Windows. Version 10 has been available on z/OS systems for over a year, so this brings the distributed version of DB2 up to the same release level as the mainframe.
DB2 10 for Linux, UNIX and Windows, formerly code-named “Galileo,” offers many new features and improvements. One of the more highly touted features is Adaptive Compression which can help to reduce storage requirements for high volume databases. Although DB2 9.7 provided table and index compression, Adaptive Compression brings compression to the page level. Tests have shown that storage requirements can be reduced by 7 to 8 times using Adaptive Compression.
Another useful new feature is temporal data support. If you are familiar with the temporal features of DB2 for z/OS, the temporal support in DB2 for Linux, UNIX, and Windows works exactly the same way. It offers business time, system time, bi-temporal, and time travel query, enabling data to be stored and accessed as of any point in time.
Additional features include improved security with Row and Column Access Controls, improved availability (HADR), optimization improvements including a new zig zag join, and many other additional optimizations and improvements.
IBM also made headlines this quarter with its PureSystems initiative. The company was aggressively promoting PureSystems at its IBM Impact 2012 conference in late April at the Venetian Conference Center in Las Vegas.
So what is PureSystems? IBM describes it as “a new category of expert integrated systems” and “a major step forward in a new, simpler era of computing.” OK, but what is it? At a high level you can think of PureSystems as pre-configured hardware with pre-installed software. Basically, you buy it, plug it in, and it works. There is a bit more to it which we’ll get to in a moment, but the “bit more” simplifies things.
Steve Mills, Senior VP and Group Executive of Software Systems at IBM, explains it this way: “Organizations are spending more and more on the human side of IT… on things like administration and configuration. Seventy cents of every dollar spent on IT is being spent on labor. While the cost of hardware declined, the cost of managing it has climbed. PureSystems is about reducing that 70%.” And that is a noble goal, indeed.
The PureSystems initiative began 4 years ago and IBM is rolling it out big time starting in April 2012 and continuing this week at the IBM Impact event. PureSystems is the end result of $2 billion in research, development and acquisitions.
Pure Systems is deployed with “Scale-In” System Design. PureSystems integrates the server, storage, and networking into a highly automated, simple-to-manage machine. With Pure Application Systems the software is added (WebSphere, DB2, and embedded monitoring and management software based on Tivoli). According to Beth Smith, VP of WebSphere at IBM, there are 4 power cords and 4 network cords. Plug them in and go, that’s it!
PureSystems also delivers what IBM calls Patterns of Expertise. That means that IBM embeds technology and industry expertise through software that allows the systems to automatically handle basic, time-consuming tasks such as configuration, upgrades, and application requirements. So the base system has no applications, but the patterns enable the applications.
In late April at the Impact conference IBM announced a new Virtual Pattern Kit to enable clients and business partners to convert technology expertise into reusable, downloadable packages of their own. This complements the patterns that are already being created by both IBM and more than 125 other ISVs. Once designed, these patterns are embedded directly into the PureSystems machines to automate a wide range of manual and administrative IT tasks.
IBM also touts out-of-the-box, cloud-ready integration. All PureSystems family members are built for the cloud, enabling corporations to quickly create private, self-service cloud offerings that can scale up and down automatically.
Organizations looking to reduce the cost of management and administration of their Linux, UNIX, and Windows environments would do well to investigate what IBM PureSystems can do for them.
But IBM was not alone in unleashing new products on the market in the second quarter. Oracle was quite active, too.
In early May, Oracle announced new Oracle Business Accelerators for Oracle Business Intelligence Applications for both the Oracle E-Business Suite and Oracle’s JD Edwards EnterpriseOne. The Oracle Business Accelerators provide tools, templates and wizards to speed up development time and improve return on investment (ROI).
“Oracle Business Accelerators help reduce implementation discovery, setup and testing project phases,” said Mark Keever, group vice president, Oracle Accelerate for Midsize Companies. “These capabilities provide executives with the intelligent decision-making tools that are the foundation of every growing, successful business.”
In late April, Oracle also unveiled new versions of its JD Edwards applications: JD Edwards World A9.3, JD Edwards EnterpriseOne 9.1, and JD Edwards EnterpriseOne One View Reporting. Oracle claims that these new versions offer significant updates to usability and business processes thereby increasing productivity and ROI.
Part of Oracle’s JD Edwards EnterpriseOne 9.1, an integrated applications suite of comprehensive enterprise resource planning software, JD Edwards EnterpriseOne One View Reporting is a real time reporting solution designed specifically for end users that enables improved productivity and enhanced real-time decision making by providing users with a simplified and clear view of the essential data necessary to effectively execute business processes.
“Oracle’s JD Edwards EnterpriseOne is used by organizations of all sizes, across a broad range of industries, to support growth, innovation and success,” said Lyle Ekdahl, group vice president general manager, Oracle’s JD Edwards. “This important new release builds on our longstanding commitment to delivering an integrated, standards-based portfolio of innovative applications that can help streamline processes, reduce costs and drive business value.”
In early April, Oracle announced the availability of Oracle Endeca Information Discovery, an enterprise information discovery solution for the exploration and analysis of structured, semi-structured and unstructured data from diverse sources, including data warehouses, transaction systems, blogs, social media, sensor data and Big Data within the enterprise and beyond the firewall. The product is built on Oracle Endeca Server (formerly Endeca MDEX), acquired by Oracle in October 2011.
Oracle Endeca Information Discovery complements the trusted analysis of known data sources delivered by Oracle Business Intelligence Foundation, by enabling fast exploration of new or unanticipated questions. Endeca Information Discovery can leverage the metrics and models of Oracle BI Foundation and existing data warehouses together with other unstructured and structured data sources.
“Exploding volumes of data, untapped value in unstructured data, and an increasingly unpredictable and dynamic business environment ensure that data discovery will be an essential capability alongside classic business intelligence and data warehousing,” said Gaurav Rewari, vice president of EPM and BI product development, Oracle. “Oracle Endeca Information Discovery is the enterprise category leader that provides immediate and significant added value to our customers.”
Oracle was busy unleashing new and updated products this quarter. In April, the company also unveiled the MySQL 5.6 Development Milestone Release (DMR). The new MySQL 5.6 DMR delivers:
"Working with the user community, Oracle continues to lead MySQL innovation, delivering new and anticipated features and enhancements,” said Tomas Ulin, Oracle’s MySQL vice president of Engineering. “With this new MySQL 5.6 development milestone release, Oracle has further improved the performance, manageability and availability of the MySQL Database, making it an even better choice for Web, cloud-based and embedded applications.”
What Are the Analysts Saying?
Both Oracle and IBM were proudly trumpeting the latest accolades being heaped on them by the analyst community during the second quarter.
First up, Oracle touted the Gartner 2011 Worldwide RDBMS Market Share report that indicated a 48.8% market share for Oracle based on total software revenue. According to Gartner, Oracle grew at 18%, exceeding both the industry average (16.3%) and the growth rates of its closest competitors. Evidently Oracle’s RDBMS is more than the next four competitors in the report combined.
But IBM had its own Gartner report to wave around. Based on Gartner's definition of middleware, IBM was named the overall market share leader in middleware software. The rankings are based on total worldwide revenue for 2011 and mark the eleventh consecutive year of leadership for IBM.
According to the report, IBM was the leading software vendor with 32.1% market share, extending its lead to nearly double that of its closest competitor. According to Gartner, IBM grew 12.4% in 2011, faster than the overall market. The worldwide application infrastructure and middleware software market grew 9.9% to $19.4 billion, according to Gartner.
Besides its overall lead, according to the Gartner report, IBM holds the number one market share position in key sub-markets growing faster than the overall IT market.
Let’s turn our attention to the quarterly financial announcements of the major data and database organizations: Oracle, Microsoft, IBM, and SAP.
Oracle’s Fiscal Third Quarter
In later March Oracle announced third quarter 2012 financial results that exceeded Wall Street’s expectations. The healthy third quarter has (at least temporarily) stanched some of the scuttlebutt that Oracle has over-extended itself and might have trouble rebounding, given the disappointing Q2 results.
For Q3, which ended on leap day, Oracle's sales rose by 3% to $9.04 billion driven by higher than expected sales of new software licenses. Wall Street analysts had pegged Oracle’s earnings to be $9.024 billion, so the company beat expectations by $160 million. New software licenses rose 7% to $2.37 billion and software license updates and product support revenues were up 8% to $4.05 billion. Overall software revenues were up 8% to $6.43 billion.
Overall database and middleware revenues of $4.492 billion were up 10% as compared to the same quarter last year. And overall application revenues of $1.933 billion were up 4% over the same quarter of the previous year.
So the software business is back on track and producing as expected at Oracle, but the hardware business is still a big question. Despite rapid expansion of bookings and sales of its engineered systems (that is, Exadata, Exalogic, and Exalytics) and a revamped Sparc T4 server line, hardware systems revenues fell 16% to $869 million for the quarter.
Hardware systems support revenues were off 4% as well, at $604 million. Of course, Oracle executives remained optimistic on the hardware business line. During the company’s earnings call, Oracle President, Mark Hurd said “Going into Q4 we have a record pipeline for engineered systems, and we expect that we will materially surpass all past booking records, and that our bookings for the year will be roughly in line with our original forecast.” And hardware revenue for engineered systems rose 139% for the quarter, which helps to back up Hurd’s assertion.
Net income rose 18%, coming in at $2.5 billion.
Microsoft’s Fiscal Third Quarter
And things were rosy in Redmond this quarter, too, as Microsoft announced quarterly revenue of $17.41 billion for the quarter ended Mar. 31, 2012, a 6% increase from the prior year period. Operating income was $6.37 billion, up 12% from the same period a year ago.
Net income and diluted earnings per share for the quarter were $5.11 billion and $0.60 per share, compared with $5.23 billion and $0.61 per share, respectively, in the prior year period. Prior year net income and diluted earnings per share included a $461 million or $0.05 per share tax benefit primarily related to a tax settlement with the U.S. Internal Revenue Service.
“We’re driving toward exciting launches across the entire company, while delivering strong financial results,” said Steve Ballmer, chief executive officer at Microsoft. And during Microsoft’s earnings call, Bill Koefoed, General Manager of investor relations said: "We saw strong enterprise uptake for our server and Office products and continued business demand for PCs, leading to healthy top line growth. Along with our revenue growth, we were able to drive margin expansion with our strong focus on cost management."
The Server & Tools business posted $4.57 billion in third-quarter revenue, a 14% increase from the prior year period, driven by double-digit revenue growth in SQL Server and more than 20% growth in System Center revenue.
The Microsoft Business Division reported $5.81 billion in third-quarter revenue, a 9% increase from the prior year period. And Dynamics posted an 11% revenue increase from the prior year period, with Dynamics CRM revenue growing more than 30%.
Evidently it was a very good quarter for software sales!
IBM’s Fiscal First Quarter
The trend continued in Armonk, with IBM announcing first quarter 2012 earnings of $2.61 per share, compared with diluted earnings of $2.31 per share in the first quarter of 2011, an increase of 13%. Net income for the quarter was $3.1 billion compared with $2.9 billion in the first quarter of 2011, an increase of 7%. But total revenues for the first quarter of 2012 were flat at $24.7 billion compared to the first quarter of 2011.
"In the first quarter, we drove strong profit and earnings per share growth. We delivered another excellent software performance, expanded services margins, and continued the momentum in our growth initiatives," said Ginni Rometty, IBM president and chief executive officer. "Our investments in growth market countries continued to generate strong revenue growth across software, hardware and services while contributing to the company's ongoing margin expansion.
Revenues from the Software segment were $5.6 billion, an increase of 5% compared with the first quarter of 2011. Software pre-tax income increased 12% and pre-tax margin increased to 30.2%. Information Management software revenues increased 5%. Revenues from the company's business analytics operations across services, software and hardware segments increased 14%.
The hardware numbers were not as impressive. Revenues from the Systems and Technology segment totaled $3.7 billion for the quarter, down 7% from the first quarter of 2011. Systems and Technology pre-tax income decreased $236 million.
Based on the overall quarterly performance, though, IBM raised its 2012 full year operating earnings per share expectations to at least $15.00.
SAP’s Fiscal First Quarter
Finally, let’s take a look at SAP’s fiscal first quarter 2012 earnings, which also looked quite good. Software and software-related services revenue increased 12% to 2.6 billion Euros (or $3.43 billion). Operating profit was up 7% to 834 million Euros for the quarter.
The company reiterated its full year outlook and indicated that it expects a strong second quarter with software revenue growth in a range of 15% to 20% and service revenue growth in a range of 14% to 16%.
“We see strong momentum for our flagship in-memory platform SAP HANA, our cloud and mobile solutions, and our core applications and analytics products,” said Bill McDermott and Jim Hagemann Snabe, Co-CEOs, SAP. “Customers are embracing our high speed of innovation and the ability to orchestrate solutions across our entire portfolio. SAP continues to help companies run like never before – helping to solve fundamental business challenges with unmatched industry expertise. We’re confident that we’ll deliver on our business outlook for Q2 and the full year.”
I wonder if they said it in unison?
Second Quarter Acquisitions
There were numerous acquisitions in the data space during the second quarter of 2012, with SAP, Oracle, and IBM making interesting purchases.
SAP Sticks Its Head in the Cloud and Grabs Ariba
In late May 2012, SAP announced plans to acquire Ariba, Inc., a cloud-based business commerce network. Ariba combines cloud-based applications with the world's largest Web-based trading community to help companies discover and collaborate with a global network of partners. Over 730,000 companies around the world use the Ariba Network to simplify inter-enterprise commerce.
SAP will be paying $45 per share for Ariba, which values the company at about $4.3 billion. This is almost 7 times Ariba’s expected 2013 revenue. The deal is expected to close by the end of the third quarter of 2012.
SAP plans to use the Ariba network to build a comprehensive, one-stop business networking option that “enables companies to achieve a closed-loop from source-to-pay, regardless of whether they deploy in the cloud, on-premise or through a combination of both.”
Oracle Keeps on Buying
Also in late May 2012, Oracle announced an agreement to acquire Vitrue, a cloud-based social marketing and engagement platform that enables marketers to centrally create, publish, moderate, manage, measure and report on their social marketing campaigns and activities on social media platforms such as Facebook, Twitter, and YouTube.
Given the ubiquity of social media, the combination of Vitrue with Oracle’s sales, service, commerce, social data management and analytics capabilities can enable Oracle to build an advanced and comprehensive social relationship platform.
Vitrue’s social media marketing applications help customers amplify their social community engagement by giving marketers the ability to develop campaigns from global to local, across multiple social networks and devices, and publish content that engages fans and drives leads.
“The world’s greatest brands have been built by creating meaningful relationships between organizations and their customers," said Reggie Bradford, founder and chief executive officer, Vitrue. “As a part of Oracle, we can help our customers ensure that consistent high-touch social engagement is delivered across marketing, sales and service interactions.”
Although the terms of this deal were not disclosed, speculation is that Oracle outlaid in the neighborhood of $300 million for Vitrue.
In early June 2012, Oracle announced that it has entered into an agreement to acquire Collective Intellect, a private company founded in 2005 and headquartered in Boulder, Colo. The company is a provider of cloud-based social intelligence solutions that enable organizations to monitor, understand, and respond to consumers' conversations on social media platforms such as Facebook and Twitter. The deal is expected to close in the second half of the year.
Collective Intellect's semantic analytics engine processes tens of millions of conversations daily, transforming social conversations into actionable intelligence. Collective Intellect's solution eliminates irrelevant and duplicate data, captures a clean signal, determines consumers' intentions and interests, and automatically identifies emerging trends and hot topics to help organizations drive better decisions with meaningful consumer data.
“Gaining intelligence from consumer conversations across social media, and knowing customers’ intentions and interests helps organizations create better products and deliver better service,” said Thomas Kurian, executive vice president, Oracle Development. “Collective Intellect’s leading cloud-based applications for social media monitoring, combined with Oracle’s social relationship platform offers a complete social experience to our customers.”
So it is clear that Oracle has embarked on a quest to bolster its social media capabilities. And by acquiring Collective Intellect and Vitrue, it has taken a large leap toward doing so.
Additionally, in late March 2012, Oracle announced that it has agreed to acquire ClearTrial, a provider of cloud-based Clinical Trial Operations and analytics products that improves the speed and accuracy of planning, sourcing, and tracking of clinical projects and financial performance. The transaction has closed.
ClearTrial’s activity-based costing solutions use embedded intelligence based on deep industry expertise to help life sciences companies manage the rising costs and increasing complexities of bringing new therapies to market.
“Biopharmaceutical, medical device and diagnostic companies, as well as contract research organizations, are facing increasing pressure to deliver clinical development projects on time and within budget,” said Neil de Crescenzo, senior vice president and general manager, Oracle Health Sciences. “Adding ClearTrial to the Oracle Health Sciences Cloud will help our customers streamline the clinical development process and help them bring therapies to market with greater predictability and at lower costs.”
IBM Was Busy, Too
In mid April, IBM announced a definitive agreement to acquire Varicent Software Incorporated, a leading provider of analytics software for compensation and sales performance management. Varicent was a privately held company, with headquarters in Toronto. Financial terms were not disclosed.
Varicent software automates and analyzes the collection and reporting of sales data across finance, sales, human resources and IT departments to gain efficiencies, uncover trends and improve sales performance. The acquisition accelerates IBM's Smarter Analytics capabilities across line of business operations in all industries, and will be combined with IBM's existing software offerings that are delivered to clients through on-premise or cloud computing models.
"The acquisition of Varicent advances IBM's efforts to drive analytics capabilities into the hands of front line employees to transform business operations and ultimately improve the bottom line," said Les Rechan, general manager, business analytics, IBM. "For the thousands of sales organizations still relying on silos of data, spreadsheets and e-mail to manage sales, there is an enormous opportunity to apply analytics to this vital area of business and uncover new, untapped growth opportunities."
In late April, IBM announced that it was acquiring Vivisimo, a provider of federated discovery and navigation software that helps organizations access and analyze big data across the enterprise. Vivisimo was a privately held company based in Pittsburgh. Financial terms were not disclosed.
Vivisimo software enables the capture and delivery of quality information across a broad range of data sources, no matter what format it is, or where it resides. The software automates the discovery of data and helps employees navigate it with a single view across the enterprise, providing valuable insights that drive better decision-making for solving all operational challenges.
"Navigating big data to uncover the right information is a key challenge for all industries," said Arvind Krishna, general manager, Information Management, IBM Software Group. "The winners in the era of big data will be those who unlock their information assets to drive innovation, make real-time decisions, and gain actionable insights to be more competitive."
And finally, in early May, IBM announced its intent to acquire Tealeaf Technology, Inc., a provider of customer experience analytics software that helps organizations to gain intelligence and react more swiftly to consumer trends in today's digitally transformed marketplace. Tealeaf has over 450 customers worldwide including 30 of the Fortune 100 companies. Financial details were not disclosed.
“Marketers must continuously deliver a better customer experience on both the Web and mobile devices to meet the expectations of today's empowered consumers," said Craig Hayman, General Manager of Industry Solutions at IBM. "With these new capabilities from Tealeaf, we can not only provide chief marketing officers and other marketing leaders the qualitative insights into how customers actually experience their brands, but show them how to react in real time across marketing, sales and service.
All three of IBM’s acquisitions this quarter bolster the IBM big data and analytics initiatives.
IBM Silences Siri
And we will end this quarter’s edition of The Database Report with an interesting data-related tidbit that was reported by Wired magazine. Evidently IBM has forbidden the use of Siri at IBM work locations. The company has not gone so far as to forbid the use of iPhones but the phone’s voice-activated digital assistant is not welcome on IBM’s networks.
Why would IBM do that? It’s all about the data. According to the Wired article, “Siri ships everything you say to her to a big data center in Maiden, North Carolina.” IBM’s concern is that those spoken queries, which may be stored by Apple, may contain information that IBM does not want to be public.
It is all right there in Apple’s iPhone Software License Agreement, which states (in part): “When you use Siri or Dictation, the things you say will be recorded and sent to Apple in order to convert what you say into text.”
So be careful about what you tell Siri. She won’t keep your secrets!
And so we end all the database news that’s fit to print for yet another quarter. But remember, the year is only half over, so be sure to visit TDAN.com again next quarter to keep up to date on what is happening in the world of databases by reading The Database Report.
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.