- According to DB-Engines, a site that ranks the popularity of databases, MySQL and SQL Server are about to pass Oracle as the most popular databases.
- The decline in Oracle’s database will cause a decrease in purchases of add-on applications and negatively impact the company’s overall profitability.
Introduction: The Logic for a Changing of the Guard
The database market is changing, with lower price and open source database options nipping at Oracle’s heels. You will learn about the reasons for these changes in the database market.
Oracle’s dominance in databases has been so great for so long that it is taken as a given. However, according to DB-Engines, something interesting is about to happen in the next year, and this is shown in the graphic below:
Understanding the DB-Engines Ranking
DB-Engines ranking is a site that uses a method that combines a series of factors to result in a rank of how widely a particular database is used. So what factors do they use? Well, I have listed the description of their method below:
“Number of mentions of the system on websites, measured as number of results in search engines queries. At the moment, we use Google, Bing and Yandex for this measurement. In order to count only relevant results, we are searching for <system name> together with the term database, e.g. “Oracle” and “database”.
General interest in the system. For this measurement, we use the frequency of searches in Google Trends.
Frequency of technical discussions about the system. We use the number of related questions and the number of interested users on the well-known IT-related Q&A sites Stack Overflow and DBA Stack Exchange.
Number of job offers in which the system is mentioned. We use the number of offers on the leading job search engines Indeed and Simply Hired.
Number of profiles in professional networks in which the system is mentioned. We use the internationally most popular professional networks LinkedIn and Upwork.
Relevance in social networks. We count the number of Twitter tweets, in which the system is mentioned.” – DB-Engines
This seems like a reasonable way to perform a ranking.
Oracle’s Negative Database Growth Rate
To begin, let us review the usage/popularity list from DB-Engines. This is for June.
Oracle’s DB-Engines Ranking
The June column shows the growth since the past month (as this snapshot was taken July). The month to month change moves around quite a bit. So the next column, July 2016, shows the change since the same month last year and is a more reliable guide to what is happening long term.
- As one can see, Oracle has lost 66% of its popularity since July of 2016.
- We can look at the base popularity; it is 1,374 units. If Oracle continues at even 1/2 this rate of decline for the next year, in July 2018, Oracle will sit at 906 units.
- If nothing else were to happen, both MySQL (also owned by Oracle) and SQL Server would pass by Oracle. However, SQL Server is growing at 33% per year.
- This means that in a year, its 1226 base would be 1630. This would far exceed Oracle.
If we conservatively take Oracle’s decline from 2016 and 2017 and cut it in half, while keeping the other three databases at their number from the previous year, then the 2018 database rankings would look like this:
2018 Projected Database Rankings
- Microsoft SQL Server: 1630 Units
- MySQL: 1160 Units
- Oracle: 906 Units
- PostgreSQL: 583 Units
Interestingly, Seeking Alpha has noticed this as well. In their article, The Death of the Commercial Database, they stated the following:
“We see the $29.6b commercial database market contracting 20-30% by 2021, and do not believe Oracle (NYSE: ORCL) can transition its revenue streams (from legacy commercial database to cloud-based subscription offerings) fast enough to offset the decline of this market, which represents a major legacy core of its revenue.
The commercial database market – 80% of which is an oligopoly of Oracle, IBM (NYSE:IBM), and Microsoft (NASDAQ:MSFT) – has remained one of the most stable and sticky in all of tech for over two decades. However, we think the velocity and magnitude of its decline is likely to surprise many investors.
Faster growth in use cases such as social media, IoT, and unstructured/semi-structured data that are ill-suited to the SQL standard upon which the database oligopoly is based;
Revenue from database software represented ~36% of Oracle’s total FY16 revenue and ~55% of its operating profit.”
Understanding Oracle’s Profits
This statement is quite interesting because it means that of all of Oracle’s acquisitions, none were as profitable as its database business.
According to SeekingAlpha, Oracle’s 2016 profits break down the following ways:
- Database Software: $1,445 Million
- On-Premises Applications: $1,022 Million
- Database Infrastructure: $250 Million
- Hardware Support: $125 Million
- Cloud Revenues: $83 Million
The Counter Argument to Oracle’s Database Decline Versus SQL Server
Oracle’s databases have many proponents, and it was interesting to find a counter-argument to the Seeking Alpha article, which I have pasted below:
“Articles like this were written 20 years ago. In 1997, the Oracle database was going to decline because it did not fit modern use cases and new document data types (HTML, XML) like the new extensible databases such as Illustra and Polyhedra. Oracle was not “object oriented”, so OODBMS like Poet, Versant, and Object Store would soon rule the day. With 64-bit computing mainstream, in-memory databases like TimesTen, ANTS, and SolidDB were on the “right side of Moore’s law.” In data warehousing, Red Brick and IQ were a lot faster due to advanced indexing. Most of all, Oracle was going to be replaced by cheap or free open source databases, especially MySQL. Here we are in 2017, and of the vendors just mentioned, only TimesTen and MySQL still survive” – as part of Oracle Corporation.
The issue with this analysis is that just because Oracle’s database decline was predicted due to new technologies in 1997, and did not occur, does not mean that this new prediction will not occur. HTML and XML were greatly overblown in the late 1990s, and they never affected databases they were projected to have had. The same applies to object-oriented databases. It is also true that open source databases did not replace Oracle, although MySQL has undoubtedly reduced Oracle’s proprietary database growth.
But the problem with arguing this is that the popularity of Oracle’s proprietary databases is declining. And Oracle is nowhere near as popular in the NoSQL database market as it is in the SQL database market.
If Oracle’s control over databases declines, it causes two issues.
- Overall Profitability: One is the direct profitability issue, as Oracle receives so much of its profits (although less of its revenue) from databases. Oracle’s 12c is (depending on a number of variables) a million dollar database per server and has high yearly maintenance costs (it is very complex and can do quite a lot). Losing sales on such a high-profit item is going to cost profits. This is pointed out by the Seeking Alpha article.
- Account Control Issues: But a second issue is that Oracle uses its database (through account exposure and account control) to leverage customers to purchase its applications. Oracle has an enormous number of acquired applications that are less impressive comparatively than when they were purchased. This is the normal state when one software vendor acquires another software vendor. But with a lower ability to control accounts, this means the on-premises applications will (I predict) decline as well.
There is a massive amount of discussion as to whether Oracle is moving to the cloud fast enough, but Oracle appears to have a bigger issue at hand: it’s swiftly eroding market share in its core profitable product.
On the other side of the issue is Microsoft’s fortunes, as they appear poised to surpass Oracle in database popularity. This actually won’t matter all that much for Microsoft.
SQL Server sells for a much smaller amount of money than Oracle does with its database, at roughly $14,000 for an enterprise version. Estimates are that SQL Server and all other databases by Microsoft (principally Access) drive roughly 5% of revenues for Microsoft.
The Problem: A Lack of Fact-Checking of Oracle
There are two fundamental problems around Oracle. The first is the exaggeration of Oracle, which means that companies that purchased from Oracle end up getting far less than they were promised. The second is that the Oracle consulting companies simply repeat whatever Oracle says. This means that on virtually all accounts there is no independent entity that can contradict statements by Oracle.
Being Part of the Solution: What to Do About Oracle
We can provide feedback from multiple Oracle accounts that provide realistic information around a variety of Oracle products — and this reduces the dependence on biased entities like Oracle and all of the large Oracle consulting firms that parrot what Oracle says. We offer fact-checking services that are entirely research-based and that can stop inaccurate information dead in its tracks. Oracle and the consulting firms rely on providing information without any fact-checking entity to contradict the information they provide. This is how companies end up paying for items which are exorbitantly priced, exorbitantly expensive to implement and exorbitantly expensive to maintain.
If you need independent advice and fact-checking that is outside of the Oracle and Oracle consulting system, reach out to us with the form below or with the messenger to the bottom right of the page.
Financial Bias Disclosure
Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.
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