Taking On the Database Giants

Can open-source upstarts compete with Oracle, IBM, and Microsoft? It's an uphill battle, but customers are starting to look at the alternatives

by Sarah Lacy

Rick Herman is awash in digital data. He's vice-president for business and legal affairs at Sony Online Entertainment, the division of Sony (SNE) that handles Internet gaming. It's his job to ensure that the company's databases manage that information properly and on budget. To do that, Herman has traditionally relied on one of the three main database vendors: Oracle (ORCL), IBM (IBM), or Microsoft (MSFT). But lately, he's doing a bit more shopping around.

It's not that the big three don't do a good job. There's a reason they have 85% of the $15 billion database market, notes Herman. But as you would expect in any market dominated by a few players, Herman is on the lookout for better prices and more flexibility to tailor database features for Sony's unique needs.

OPENING MINDS.

Herman's search has taken him in an unexpected direction. He's spending a lot of time evaluating databases built around the open-source software that's disseminated and developed freely over the Internet. Sony, like most big companies, has been conservative when it comes to open source.

But that has changed since Linux, the open-source operating system, started making big inroads with servers, the computers that run Web sites and corporate networks. Those gains have let companies see firsthand the benefits of open source, which include lower costs and more control over the code.

Switching to an open-source database can slash costs for one of the most expensive segments of the software budget by as much as 90%. "If you had told us four or five years ago we would be considering these types of products at the rate we are, I would have looked at you like you were insane," he says. "But open source isn't going away, and I'm pretty excited about it."

So now Herman and executives like him are the spoils in what's shaping up to be a heated round of database wars. On one side are the defending champions -- Oracle, IBM, and Microsoft -- against a ragtag bunch of coders and some more organized corporate ventures, all going to market in different ways, but all trying to take down the Big Three using the power of open source.

NEW PLAYERS.

This isn't the first time tech titans have defended the database turf. Oracle, now the world's No. 1 database vendor, was the clear winner in a round in the 1980s. It succeeded largely due to better marketing and execution. In the early 1990s, amid a shift in technology, a new raft of nimble competitors such as Sybase (SY) again tried to knock Oracle back on its heels -- and largely failed.

This time around, the dominant players still won't cede ground easily, especially Oracle. It's the longtime market leader with a 41% share of the biggest part of the market, relational databases, which Oracle pioneered in the late 1970s. Growth is slowing -- hence Oracle's $19 billion investment in applications -- but revenue from databases is still its lifeblood.

Open-source databases come in a wide variety of flavors. It's not like when Linux fought the server wars, and the choice was Linux against some patent-protected variety. Now it's proprietary software against the likes of Postgres, Ingres, or MySQL.

Of these, Sweden's MySQL has the most momentum. It has been at the open-source database game for a decade, but only in the last few years has that hard work started to pay off. Its free database has been downloaded 100 million times since it was released. A souped-up version, 5.0, was released last October and has been downloaded more than 4 million times.

ORACLE ON BOARD?

But staggering as those numbers may seem, very few translate to paying customers. Of every 1,000 downloads, one database is actually implemented, and only one customer ends up paying for service and support. MySQL's annual sales are just $40 million.