A friend pointed me to this interesting post by Allan Packer of Sun entitled Are Proprietary Databases Doomed? Overall, I think it’s a well done analysis of the DBMS market and well worth reading.
First, a nit. When I was a lad, “proprietary” didn’t mean “closed source“, it meant proprietary (i.e., vendor controlled) interface. For example, Ingres originally spoke a query language called Quel. SQL then emerged as the standard and any DBMS that spoke a language other than ANSI standard SQL was deemed proprietary. While I know that some people in the open source community view the opposite of “open source” as “proprietary,” I think that’s a misnomer. I think the correct antonym is closed source.
First, I think Allan makes an excellent point about stagnation:
By the turn of the millenium, relational databases had already pretty much met the essential requirements of end users, and proprietary database companies were either pointing their vaccuum cleaners toward other interesting money piles, or losing the plot entirely and sailing off the edge of the world. Today, database releases continue to tout new features, but they’re frosting on the cake rather than essentials. No-one issues a tender for a database unless they have unusual requirements. No-one loses their job because they chose the wrong database. And it’s been that way for years.
As a general rule I am shocked by the lack of innovation returned by the R&D budgets of most technology companies. As I mentioned yesterday, despite billions of R&D investment, Google has yet to come up with another big business. And what does Microsoft get for the billions they spend each year on R&D? An incompatible version of Office with irritating “ribbons” that takes four years to make.
Silicon Valley startups create new categories with $10s of millions in venture capital. It seems that once they become “real companies” they forget how to innovate at all, let alone on a shoestring.
Specifically in the DBMS market, I think the lack of innovation — enabled by the oligopolistic structure of the market — creates a soft underbelly for focused, innovative companies to carve our niches. (And remember “niches” of $10B market can be pretty big.)
Allan goes on to do some interesting pricing analysis, and then poses the question:
Why, then, is proprietary database software becoming more expensive while everything else reduces in price? End users normally expect to benefit from the cost savings resulting from improvements in technology. I am writing this blog, for example, on an affordable computer that would easily outperform expensive commercial systems from just 10 years ago.
It seems difficult to resist the conclusion that proprietary database companies have managed to redirect a good chunk of these savings away from end users and into their own coffers. Successful as this strategy has been, though, it could ultimately backfire. The more expensive proprietary databases become, the more attractive lower cost alternatives appear.
I think the short answer to his question is (1) the market is an oligopoly and (2) there is a lot of inertia when it comes to database management systems. So change will happen, but it will happen slowly. And, ironically, the force that drives the market change will be overpricing on the leaders’ part. Were RDBMSs not so expensive, there would be less impetus to move to open source.
Now, the RDBMS vendors probably argue they should “milk” the market until the real threat emerges and then “wave a wand” to reduce price, but that is a risky strategy because they could very easily wave the wand too late, which is what I think they are doing.
The only point I think Alan misses in his analysis is that some powerful vendors like SAP and EMC don’t like the fact that their applications run on top of lower-level DBMS technologies from competitors. For example, SAP has been trying to get itself off Oracle for about a decade, and I’m told they fund developers to work on MySQL towards that end. I know that EMC/Documentum is not comfortable that the vendors who provide the DBMSs they run on are all now challenging them in content management (e.g., Oracle/Stellent, IBM/FileNet, Microsoft SharePoint).
He then speculates on what he thinks will happen going forward:
My vote for the Strategy Most Likely To Succeed is a tie between Revenue Pull-Through and Reduce Prices. Oracle is arguably becoming the most successful proponent of the pull-through strategy. Oracle wants to supply you with a full software stack, including an OS, virtualization software, a broad range of middleware, a database, and end user applications. The largest component of Oracle’s revenue currently still comes from database licenses, but the company is working hard to reduce that dependency. Until that happens, reducing prices across the board will be challenging for Oracle. If Oracle succeeds with a pull-through strategy, it doesn’t mean that OSDBs will fail, of course. It simply means that Oracle is less likely to sustain major damage from their success.
He concludes:
Are proprietary databases doomed, then? Not at all. Even if proprietary database companies pull no surprises, they won’t fade away anytime soon … Make no mistake, though, open source databases are coming. For established companies it’s more likely to be an evolution than a revolution.
I believe there are two major trends in the DBMS market today: (1) open-source chipping away at the closed-source oligopoly, and (2) special-purpose DBMSs innovating and carving out niches in the soft underbelly. I actually think point 1 provides powerful “air cover” for vendors pursuing strategy 2, because point 1 is a direct attack on the existing business.
