When Sybase chief executive officer Mitchell Kertzman took to the stage at IT Forum in New York last month to unveil Adaptive Server, his company’s response to Oracle8 (CI No 3,248), there was little evidence in his laid-back demeanor of the more fraught morning he had spent closeted with some of Wall Street’s more ferocious technology stock analysts. For the past two and a half years, since Kertzman’s database and application development tools company stumbled, the analysts have been waiting – they believe, patiently – for Kertzman to deliver on a three stage promise. First, he had to save the company. In early 1995, it plunged into huge losses and saw sales flatten after a technology glitch with the Sybase SQL Server 10.0 database system meant the product performed badly on multiprocessor servers – a shortcoming ruthlessly exploited by Oracle’s marketing machine. That survival phase was a success – Sybase is now again making money – albeit at modest levels. Kertzman’s second job was to rebuild the product line – make the tools more of a match for Microsoft’s offerings, and erase any scalability issues while making the Sybase database (once again) a worthy challenger to Oracle and Informix.
Execution mode
The message Kertzman gave to analysts last month is that Sybase is between half and two-thirds of the way through his recovery program and that, following a summer of new product launches, of which Adaptive Server was the climax, the company is now in execution mode. We’ve done the stabilization, we’ve produced the products and technology. Now we have to execute, says Kertzman. The need to execute well is painfully apparent from Sybase’s last set of results. Its second quarter figures showed server license revenues dropping 9.3%, and tools revenues falling 25.8%. Sybase was still able to boast a $4.4m profit thanks to vigorous cost-cutting, the brunt of which fell on sales and marketing (down from $137.2m to $116.7m) and R&D (down from $46.1m to $33.7m). Kertzman denies, however, that his cost cutting has hit R&D as severely as the quarterly figures – and his competitors – suggest. Most of the cuts come from businesses we discontinued in 1996, so our R&D spend [on the remaining products] is about level, he says. Judging by the generally warm reception from users and analysts to the new products, the R&D reductions have certainly not had an ill effect to date. The new Powertools suite, which included PowerBuilder, PowerDesigner and PowerJ, was greeted with genuine enthusiasm when shown off to the user group in Nashville at the beginning of September, according to Hurwitz Group analyst Michael Barnes. But he also believes that while Sybase has answered its scalability critics, the issue of ‘manageability’ has not been adequately addressed. I don’t think you can have one without the other. You can make bigger applications, but if you [don’t have the tools to] manage them what’s the point? he asks.
By Graeme Burton
Sybase also needs to articulate its tools ‘vision’ more clearly to potential users, says Barnes, rather than be seen as simply following the lead of Microsoft. Winning in the tools arena alone will not ensure Sybase’s survival. To thrive, Adaptive Server must be a success. The company claims that the way it supports multimedia data has several advantages over Oracle’s freshly-minted Oracle8 and Informix’s Universal Server object/relational databases. Most notable is Sybase’s contention that support for different, multimedia data types should be through a number of separate data stores rather than one monolithic database. Adaptive Server also supports Java which Informix does not. But none of that will be available until the product ships in the first half of 1998, when Sybase will also deliver long-promised support for ‘row-level locking.’ The ability for database updates to lock data at the row rather than page level should improve performance. Observers, however, are divided about the product’s overall potential. In a report released to coincide with the launch, the Hurwitz Group praised Adaptive Server for its versatility. [Sybase is] one of the first vendors to effectively manage a complex, mixed workload environment, it concluded. But Dan Kusnetzky, an analyst with IDC, is more critical, saying he is highly concerned at the number of layers of middleware software that Sybase’s approach uses to achieve some of the object/relational effects. Predictably, Oracle is scathing.
Stay clear
Marketing manager Nick Gregory describes it as a rag-bag architecture completely reliant on partners and leaning on middleware technology to prop up a poor database. The upshot is that while some financial analysts are now optimistic about Sybase’s prospects, most are still reserving judgement until Kertzman gets to phase three. Lehman Brothers, for example, gives Sybase stock a æneutral’ rating, which means stay clear, and most of Wall Street remains underwhelmed by the company. Sybase’s shares were stuck resolutely in the $20 area last month despite the launch. This is, perhaps. not bad news and in line with Kertzman’s strategy of damping down expectations as much as possible until the company is in a position to deliver and then come out with its marketing and public relations guns blazing. Sybase’s existing customers seem content with the latest releases – reference sites MBNA Bank, ARM Financial Group and Lockheed Martin, among others, praise the product for its speed and ability to handle complex queries. The challenge now is to convince some new ones to start buying.
This article originally appeared in Computer Business Review.
