Strategic alliances with independent software vendors (ISV) have proved to be a successful way for IBM to gain new customers for its DB2 database software. And IBM appears to be getting help on that front of the database war from an unlikely source: Oracle.
IBM executives said at a recent press briefing that the company's strategic alliances with ISVs such as SAP, J. D. Edwards, PeopleSoft, Baan and Siebel Systems have generated more than $US1 billion in revenue during the past year. And much of that, they claimed, came at the expense of rival Oracle.
PeopleSoft spokesperson Steve Swasey said the ISV "will encourage" customers to go to DB2 not only because it's a better database, but also because "Oracle will go out and spend the money to compete against us in the software business."
After reporting a paltry database revenue growth rate of 6 per cent for the third quarter, Oracle's fourth-quarter database revenue declined by 5 per cent. A March report by Salomon Smith Barney concluded that Oracle's decision to compete directly with ISVs is partly to blame for that downturn.
"IBM's Unix database business . . . has been growing at three to four times the industry average for the last two or three quarters, helped by Oracle's practice of competing with its ISVs," the Salomon Smith Barney report stated.
IBM has reported 15 consecutive quarters of revenue growth in its database business, said Janet Perna, general manager of IBM's Data Management Solutions. In fact, more than 42 per cent of DB2 sales last year were "influenced" by ISV partners, she said.
For example, DB2's penetration into the SAP and PeopleSoft user markets has doubled year over year, and 35 per cent of all new Siebel sales "went in with DB2" being recommended over Oracle9i, Perna said.
Mike Gilpin, an analyst at Giga Information Group was also critical of Oracle's application strategy. "Oracle has definitely alienated the other application vendors because not only have they chosen to compete with them, but their applications play has been very monolithic in nature," said Gilpin. "Oracle's 'my way or the highway' [approach] does not encourage a best-of-breed blend of applications."
Oracle faults IBM's best-of-breed approach for being costly and creating an integration nightmare for users, but Kelly said the strategy has led to 68 individual alliances with ISVs, many of which are pushing DB2 over Oracle. "Our role is to be the partner, not the predator," said Kelly.