I just read Gartner’s estimate of the open source database market, where Gartner writes:

“We also believe this growth will continue during the next five years at more than 40%, passing $1 billion in revenue by 2013.”

Two things surprised me about this forecast.

First, I can’t think of many companies that can grow at a minimum annual growth rate of 40% over 5 years after their revenue has crossed a certain point.  The “certain point” is largely tied to the market size, but $75M-$100M is a good range for a “certain point”. It’s much easier to grow 40% from $10M to $14M than it is from $100M to $140M in a year.  For instance, let’s look at the poster child of commercial open source, Red Hat.

$Mil 2008 2007 2006 2005 2004 2003 2002 2001
Red Hat Revenue 523 401 278 196 125 90 80 81
YTY Growth 31% 44% 42% 58% 38% 14% -2%

If you start with Red Hat’s revenue since it got close to $100M in 2001, the annual growth rate is only 30% over the 7 years.  Some readers may ask, 30% vs. 40%, what’s the big difference.  Well, over a 7 year period, had Red Hat’s revenue grown at just 10% more than it did, Red Hat’s 2008 revenue could have been nearly $900M, versus the actual $523M.  To be fair, if you look at Red Hat’s past five years, they have achieved a 43% annual growth rate.  So, I can’t discredit the 40% annual growth rate estimate from Gartner.  However, I would not base a forecast on being “like Red Hat”, because few companies are in the position that Red Hat is. Based on my forecasting experience, even a 30% annual growth rate estimate for the open source database market is on the aggressive side (since the market is already past “a certain point”).

Second, if direct spending on subscriptions or services surrounding the open source database market industry is to pass $1B, which vendors will account for this figure?  Well, clearly we’d start with MySQL.  I used the 2005-2007 estimates for MySQL’s revenue found on Matt Aslet’s excellent post regarding MySQL revenue.  For 2008 I used a 50% growth rate, which is in line with the 55% growth in billings (not revenue) of the “MySQL/Infrastructure” reporting category that Sun provides. I tried three different estimates; using a 40% annual growth rate that Gartner suggests, tempering growth down by 5% each year from 50% to 25% and using a flat 30% growth each year.

Table 1 $Mil 2005 2006 2007 2008 2009 2010 2011 2012 2013
MySQL Est. 1 34 50 53 80 111 156 218 305 428
YTY Growth 47% 6% 50% 40% 40% 40% 40% 40%
MySQL Est. 2 34 50 53 80 115 161 218 283 354
YTY Growth 47% 6% 50% 45% 40% 35% 30% 25%
MySQL Est. 3 34 50 53 69 90 116 151 197 256
YTY Growth 47% 6% 30% 30% 30% 30% 30% 30%

Seeing these results, I find it difficult to believe that the open source database market will hit $1B by 2013.  While EnterpriseDB and Ingres aren’t going anywhere soon, I don’t see them combing to drive nearly $600M+ in 2013 revenue.

Based on my rudimentary analysis, I’d put the 2013 open source database market market at $600M; not chump change by any means.  But not $1B either.