Within the last three months the leading merchant database companies – Oracle Corp, Sybase Inc, and Informix Corp – have all managed to royally screw themselves up. Plucky little Informix led the way, with accounting practices that were, well, shall we say a tad aggressive, dating back at least three years before it all came horribly to light early 1996. This led to the demise of one CEO, the trashing of its share price (which has gone from $24 to $4 since last March, with it now slumped comatose at just over $5), the total loss of credibility in its absurdly techie object- relational strategy, and the clawing off its books of half a billion dollars of spook business and profits ($278m reduction in revenues back to 1994, $236m reduction of reported ‘earnings’).
By Gary Flood
While Informix shivers in one corner, big bad Larry Ellison’s Oracle walks right into the doodoo, setting a trading record on Nasdaq in terms of dumped stock on December 11th (31% of all stock traded on the exchange that day was ORCL), with the price itself diving 29%, and quite fittingly Ellison losing on paper $2bn of his personal fortune that week. The ostensible reason: a very, very poor second quarter, with all the blame being placed on Asia, this season’s convenient monster under the bed, even though the company only makes about 15% of all its sales in that region. The real reason: Ellison confusing everyone with his pet NC project, while Oracle salesmen discovered to their growing terror that being the most aggressive group of visitors since the 101st Airborne in 1944 Normandy has left all their customer sites with product up the kazoo from here until about 2010. No-one is buying Oracle8 because they have enough Oracle7 to last until the next Soccer World Cup in Asia (2002). And now we have Sybase, which lost 20% of its share price Thursday after it had to reveal that between $60m to $65m of its business in 1997 is non-kosher, that it will have to restate earnings for the previous three quarters and report yet another loss for the year as a whole.
Hordes of class action lawyers
At the very least, as we stand aside lest we be trampled by the arriving hordes of class action lawyers, we have to note that the database industry has nothing to be proud of. It’s never been that much more gentlemanly in there than the WWF, which makes for a lot of fun covering it as a reporter, but one does wonder what it must be like being a customer trying to deal with these characters. Fundamentally, this is all down to Ellison, who decided that the way to win was to turn business into war when he set his sights on knocking both IBM and Cullinet off their perches. This set a trend right through the 1980s until now, where to work for a database company meant being as testosterone- filled as a steroid-abusing bodybuilder, eternally competing, competing, competing with the Other Guys. This resulted in a lot of excellent business, and a lot of real ROI for investors – anyone lucky enough to have put $10,000 in Oracle stock the day it went public in 1986 and kept it for a decade would have seen it grow 79-fold – but it could never last, and now it looks like the end is nigh. These companies only make sense existing in conflict with each other; but increasingly customers buy databases as engines for applications, not as vanilla technologies they want to work on themselves.
Not enough space
Bottom line: there is not enough space for three independent database companies in today’s market, and the sooner Computer Associates International Inc, Microsoft Corp, SAP AG, IBM or (why not?) Platinum Technology Inc spot this the better we shall all be. SAP should buy Oracle, consolidate the enterprise resource planning market at a stroke, and use all that database technology to improve its core product. Microsoft could relieve us of Sybase, reuniting the sundered Sybase-SQL server code streams, and thus making SQL Server a real enterprise play, or just as easily snap up Informix, giving it a sound footing in both corporate NT and corporate Unix, and allowing it to have some cool object-relational technology in the closet for when that stuff really takes off. Just as likely: IBM or CA or Platinum could legitimately buy up Informix or Sybase and run the customer bases for maintenance and profit for ten years, maybe even making proper money out of the former’s neglected OLAP tools or the latter’s middleware brochure. Fantasy? Far-fetched? OK, here’s the alternative: two battered billion dollar companies (Sybase and Informix) limping along for the next 12 months, hoping the Street will eventually forget their botched recent pasts, bleating for us all to give them another chance, then screwing up again; while a larger, multi-billion dollar concern (Oracle) has to turn itself into a consulting firm to serve its massive captive customer base, which sits there glutted with more software than it really needs. Who really thinks we will end 1998 with these three jokers still around in their current forms? Pity the US Government can’t save us all the bother and meld the Terrible Three into one Mediocre Megacompany. Anyone who believes that probably still needs a multi-year massively discounted free upgrade corporate soup-to-nuts database and tools licensing agreement – and hey, there are at least three 1-800 numbers I’d be happy to recommend.
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