Comments on The 451 Group’s Database Report & Red Hat’s 4Q revenue

I want to thank Matt Aslett & The 451 Group for being brave enough to publish this report on the impact of open source databases on the DB market. An excerpt:

“One of the key findings is that open source software has had a superficial impact on the enterprise database market in that adoption has been widespread but shallow. While open source databases have been widely deployed for Web-tier applications, there has been minimal adoption in the enterprise application tier, and adoption for enterprise applications is at this time limited to certain specific application workloads.”

Matt “the OSS glass is overflowing, go get another glass, oh man, it’s overflowing, get a bucket, oh man, get a hot tub” Asay believes the report to be a “glass half empty” assessment. (Matt, I’m teasing; the world needs more optimists like you).

When data refutes “obvious truths about OSS”, we often hear one of three responses.

1. The data is flawed.
2. You’re measuring revenue, and OSS companies will always make less than proprietary vendors because of the nature of the business model.
3. Just you wait; the OSS market is still young.

Let me address #2 & #3 using recent revenue results from two vendors we all know. Red Hat released revenue results today. They grew fourth quarter revenue by 27%. Not bad at all. Two days ago Oracle reported a 21% increase in quarterly revenue. The only difference being that Red Hat grew from a $111.4 million base, while Oracle grew from a $4.42 billion base. Younger businesses, addressing younger markets (i.e. the OSS market), should be growing substantially higher than their older counterparts, addressing older markets. Shouldn’t they?

I don’t want to sound like Red Hat’s growth is not impressive. It is. I only want to provide some perspective…a $100M business *SHOULD* grow much, much, much faster than a $4.4B business.

 

Open Community and Closed Source Vendors

InfoWorld blogger Sean McCown at Database Underground wrote about a key difference between SQL Server & Oracle:

“The answer is simple… information. MS has built such a strong community and its members are committed to helping each other. There are so many forums out there you just don’t have time to go to them all. And one of the most amazing things I’ve found is that the MSDN forums are actually sharked by MS’s own PSS and dev teams. You just can’t get any better than that. You’ve got both the guys on the support team, and the guys who actually write the code helping you with your problem. You’ve got MVPs out there writing new and exciting books like crazy. They’re really giving up all the secrets on how SQL works, and what you can do with it.

Oracle is still living in the old days where everything is a good ole boys club. This is the world of linux and unix where they started, and it’s a dinosaur, man. You just can’t afford to do business like that anymore. You have to open up your community and start programs to encourage your best people to help and teach.”

Sean’s description of the community around SQL Server and the level of Microsoft employee interaction in the community should sound similar to the community around MySQL. It’s not exactly the same, but similar. I’d like to believe that MSDN became what it is today because Microsoft learned about the importance of community from OSS vendors. However, when something is a good idea, it’s not uncommon for several people/companies to have the same “good idea”.

Stating that Community matters today is as insightful as saying air matters to humans. Yet, it appears the folks at Oracle could learn a thing or two about Community from Microsoft. And they could both learn a thing or two from OSS vendors.

 

Oracle Blows Out the Quarter

I’ve been tracking the “Demise of the traditional software market” for some time now. One more data point from Oracle today.

Second quarter total revenues were up 28% to $5.3 billion, while quarterly net income was up 35% to $1.3 billion.

“In Q1 we reported new software license revenues up 35%, the strongest growth of any quarter in ten years,” said Oracle President and CFO, Safra Catz.

Yes, 35% growth on a few billion dollar base (give or take a few hundred million)…not shabby. Now, before you think, “that’s just acquisition related revenue growth”, keep in mind that new license growth for database and middleware software grew by 28%. The applications business, which would be impacted by Oracle’s acquisitions, grew by 63%.

Oracle didn’t mention anything about Unbreakable Linux during the earnings release conference call. What’s more, no analysts asked about Unbreakable Linux or competition from OSS. The analysts were too busy congratulating Oracle on the quarter.