IBM buys Informix database business for $US1 billion

IBM buys Informix database business for $US1 billion

IBM said Tuesday it will acquire Informix's database business, Informix Software, in a cash transaction valued at $US1 billion. The move is intended to strengthen IBM's distributed database business and dethrone chief rival Oracle as the industry leader.

"We are playing for first place," said IBM Data Management Software General Manager Janet Perna, in a conference call following the announcement.

IBM intends to merge Informix Software into its existing IBM Software data management division and integrate some Informix technology into future versions of its flagship DB2 Universal Database. IBM said it will continue maintaining Informix's products and not force existing customers to migrate to IBM's software, but it also said it will steer new customers toward DB2.

The Informix unit brings IBM an installed base of more than 100,000 customers including Verizon Communications; Deutsche Telekom; Sears, Roebuck and Co., and Sabre.

IBM is scrapping Informix's planned Arrowhead database server, an all-in-one database intended to combine features from an assortment of existing Informix products. The company said it will instead focus its development efforts on DB2.

Larry Ellison, Oracle's chairman and chief executive officer, dismissed the deal with characteristic flair.

"What can I say?" he said, when asked about the deal during an unrelated press event Tuesday morning. "We have a billion dollars in cash. We could have bought them too but we were never really interested."

Oracle 9i, a major upgrade to Oracle's flagship database, is due to ship May 15, Ellison said. Customers who move away from Informix are more likely to switch to Oracle than DB2, in part because Oracle 9i has improved clustering features that make it more scalable than DB2, he asserted.

Informix customer James Davis isn't in a hurry to switch anywhere. A vice president of new product development for wireless developer StatSignal Systems, Davis said he hopes IBM will follow through on its promise of continuing to support and develop Informix's products. Migrating to DB2 "was not part of our original plan. We have a lot expertise with Informix and we're very happy with its performance," he said.

StatSignal began using several Informix applications a year and a half ago, including the Informix Internet Foundation package. Davis said he's not worried about the acquisition yet. "I haven't read enough information to see what IBM's real plans are," he said. "It will be interesting to see what happens."

The IBM-Informix combination comes just one year after the two firms were swapping inflammatory rhetoric and lawsuits. In February 2000, IBM sued Informix for allegedly infringing on six patents relating to its database software, distributed processing software, and data compression technology. In March 2000, Informix hit back with a countersuit. The case was still unresolved as of March 23, 2001, when Informix filed its annual report with the US Securities and Exchange Commission.

The lawsuits had nothing to do with the current acquisition deal, according to Steve Mills, senior vice president of IBM Software. He noted that the cases are now moot.

The acquisition comes as Oracle shows signs of hitting a plateau. Oracle's database business grew 6 percent for its third fiscal quarter, ended Feb. 28, while IBM's database revenue grew 36 percent year-over-year for the quarter ended March 31.

Gartner Group Dataquest's 1999 survey of the worldwide database market had Oracle just barely edging IBM, with 31 percent of the market to Big Blue's 30 percent. But analyst Betsy Burton, who covers the database market for Gartner, said the deal is really about the Unix subset of the database market -- where Oracle drastically outpaces its rivals, holding a 60 percent market share to Informix's 12 percent and IBM's 10 percent.

"In my mind, what IBM has done here is buy market share in the Unix DBMS (database management system) market," Burton said. "We believe that what IBM is going to do is aggressively go out and migrate those Unix users to DB2, which will give their Unix product line a shot in the arm. ... In my mind, this is much less about Informix the company and much more about IBM competing against Oracle on the Unix platform."(James Niccolai of the IDG News Service San Francisco bureau contributed to this article).Photograph: Oracle chairman and CEO Larry Ellison

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