MICROSOFT'S NEW SQL SERVER 7: IT'S GOOD, BUT NOT THAT GOOD

Microsoft Corp. has been uncharacteristically modest about the prospects for its products since the Justice Dept. charged it with violating antitrust laws last April. Seems it doesn't want to look too overpowering. But all of that went out the window on Nov. 16. At Comdex, the annual computer industry conference in Las Vegas, President Steven Ballmer was effusive as he introduced a major upgrade to the company's SQL Server database in a two-hour launch event at the Bellagio Hotel. "This product is so good we can't even do justice to it today," he said, adding later: "With the help of hardware makers like Hewlett-Packard and Compaq, we know that PCs will run the most powerful databases in the world."

Ballmer's excitement is justified. SQL Server 7 is a major event for his company. But don't expect this product to take the database world by storm.

Analysts say the upgrade finally makes Microsoft a respectable player in a market dominated by Oracle Corp. and IBM. But it won't leapfrog the competition. Meanwhile, Oracle is jumping ahead by delivering new technologies tuned to the Internet. "Microsoft is merely focused on the conventional needs of the market today. Oracle is focused on the needs of the market going forward," says Carl Olofson, database analyst for International Data Corp.

Oracle will soon deliver Oracle 8i, a version of its database that lets computer users view data through a special browser written in the Java programming language -- a boon to corporate information technology managers seeking compatibility among all of their computers.

Oracle Chairman Larry Ellison is downright dismissive of SQL Server 7. "When it comes to performance, we're the record holder. Microsoft doesn't even play," he scoffs. Ellison apparently is so confident that he's issuing a challenge: Oracle will pay $1 million to anyone who can get a decision support application built with SQL Server 7 to run within 200 times as fast as the same application on an Oracle database.

Microsoft isn't accustomed to being mocked. It usually dominates markets -- even if it takes many years to establish its presence as the leader. But the company's tribulations with SQL Server 7 demonstrate just how difficult it is to create sophisticated software packages capable of handling the most demanding tasks that corporations ask of their computers -- such as supporting high-volume Web sites, banking transactions, and huge data warehouses. In this environment, being very good doesn't necessarily make you the best.

Microsoft got its start in the database market a decade ago through an alliance with Sybase Inc. But it wasn't until four years ago -- when that partnership broke up -- that it got serious about designing a full-featured corporate database. It hired some bright engineers from IBM, Informix Inc., and Digital Equipment Corp.

A first effort, SQL Sever 6.5, was capable enough to secure Microsoft a 7.4% share of the database market last year, according to Dataquest Inc. -- compared with 39.3% for Oracle and 26.8% for IBM. But SQL Server 7 is seen inside the company as the strategic equivalent of its Windows 3.0 operating system upgrade in 1990, the product that made Windows a household word. "We think this is a breakthrough release for us," says Jim Ewel, director of SQL Server marketing. "It needs to be."

That's because Microsoft's ultimate goal is to supply the whole range of "platform" software that large corporations need to run their businesses. With SQL Server 7 and the upcoming upgrade of its Windows NT network operating system, called Windows 2000, it hopes to be able to match the capabilities of Unix operating systems supplied by companies like Sun Microsystems Inc. and IBM -- and the databases that run on them.

The new database is clearly a great leap forward. For starters, it's much easier to use than both its Microsoft predecessor and competitive offerings from IBM and Oracle, according to analysts. SQL Server 7 is designed to be simple to install and maintain. And a so-called "tuning wizard" observes database operations after a customer has installed it, making automatic adjustments to optimize performance.

Because of these ease-of-use features, the Colorado Community College system, with just one database administrator, is able to manage sophisticated databases containing information about class scheduling and payroll for 13 campuses scattered around the state.

At the same time, SQL Server 7 was designed to take on large computing jobs. Early signs are that it's up to the task in many cases. At Pennzoil, Britt Mayo, director of information technology, wanted to find out early if SQL Server 7 would be robust enough to handle the combined computing needs of Pennzoil and Quaker State, which Pennzoil just acquired, so he installed a test version over the Labor Day weekend. "It's doing great. We had hoped for an 80% increase in performance, and it exceeded that comfortably," he says.

Microsoft claims that its new database is capable of handling even the largest computing tasks. In June, the company unveiled Terraserver, a database containing photographs of earth from space that's accessible from the World Wide Web. The database contains 1.3 terabytes of data and has withstood more than a billion "hits" from people downloading photos. Terraserver crashed on the first day, but Microsoft claims it has been operating virtually without pause since then.

Dependability is a crucial attribute for corporate customers, and several major hardware manufacturers -- including Hewlett-Packard Co. -- have put the stamp of approval on SQL Server 7 by offering guarantees to customers that their databases will be available 99.9% of the time.

Those guarantees may make it easier for customers to accept the risk of switching over from tried-and-true Unix-based computers. Microsoft already has a pricing advantage over Unix. Computers running SQL Server hold the top 10 positions in an industry test that considers both price and performance. The software king is charging $1,399 for a standard five-user license of SQL Server 7 -- the same price it charged for the previous version. And, as a promotion, it's offering SQL Server 7 for $99 per user for 99 days.

Despite all these attractions, however, Microsoft still can't match Oracle and IBM for raw processing muscle. Six of the top 10 results on an industry-standard test for performance belong to Oracle -- compared with zero for Microsoft. And while Microsoft does extremely well in price/performance comparisons, analysts say when all factors are considered, it costs about the same to operate an Oracle database on Windows NT as it does to run a Microsoft database. "When you add in maintenance, it can be more expensive on Micrsoft than Oracle," says Carolyn DiCenzo, a database analyst for Dataquest.

Oracle isn't taking all this lying down, either. Next comes Oracle 8i, which is expected to be rolled out early next year. And some customers are already champing at the bit. Pharmaceutical company Pfizer Inc., for instance, is preparing a test version of the database to manage documents at its research facility in Groton, Conn.

Oracle 8i allows customers to store E-mail, memos, reports, and Web pages in a single database and uses simple keyword searches to gather information from any of them. Oracle has also embraced a new technology, called XML, that is expected by many to become the standard way of organizing information on Web sites. XML is a no-show in Microsoft's database -- though the company supports it in other products.

In the end, the database battle may settle into a perpetual draw -- with Microsoft ruling the mass market for smaller databases and Oracle and IBM dominating the high end. But if Internet technologies really take off in corporations, it could be Oracle's Ellison --not Microsoft's Ballmer -- who gets perpetual bragging rights in the database realm.

By Steve Hamm in San Mateo, Calif.