Oracle/IBM battle beyond the database

Oracle expands middleware portfolio

August 22, 2005—No longer satisfied with its role as the corporate database leader, Oracle has been building out its middleware portfolio through R&D and acquisitions and is increasingly going head-to-head with IBM.

"For years, the database has been an extremely vigorous competition between DB2 and Oracle database," says Joshua Greenbaum, principal analyst at Enterprise Applications Consulting. "The heat has gotten more intense because middleware has been added to the mix."

Others, including SAP and Microsoft, also see opportunity as corporate data centers move to environments where data and systems are shared and reused in so-called service-oriented architectures. Middleware—such as application servers, business integration software, and data management systems based on open standards and Web services—provides the foundation for this new IT environment.

"Who controls the future of computing is really what this is all about," says Judith Hurwitz, president of Hurwitz & Associates. "All these vendors understand that this is a transitional time for the industry where platforms are evolving, and everybody wants to be the market leader and control things."

Acquisition frenzy

That is resulting in a flurry of acquisitions, particularly by Oracle and IBM, as the two industry heavyweights move to expand their capabilities. IBM acquired Ascential Software, a data integration software vendor, earlier this year. Earlier this month, IBM said it was acquiring DWL, maker of customer data-integration software, to build out its data management capabilities. Since 2001, Big Blue has made nine acquisitions in information management, says Janet Perna, a 31-year IBM veteran who was general manager of IBM's information management unit until her retirement August 15.

"Information and the integration of information is becoming much more important, because it is the way companies are going to be able to gain insight into their own operations, their customers and their competitors," she says.

Oracle sees the same thing. Its recent acquisitions include database firm Times10, as well as ProfitLogic and Retek, retail-focused information management software vendors. In July, it bought the assets of content integration software maker Context Media. Its Oblix buy earlier this year brought identity management into its information management systems, and last year, the acquisition of Collaxa added a business rules engine to Oracle's portfolio.

The integration factor

The key is to enable a company to take its data, systems, and resources and create a platform that allows them all to integrate, analysts say. As a result, customers can expect to see more acquisitions and internal product enhancements.

IBM, for example, will provide native XML support in the next release of DB2, code-named Viper, which is expected to go into beta release shortly. Earlier this month, IBM upgraded its WebSphere product line, releasing XD 6.0, adding enhanced manageability for grid deployments in which workloads are shifted in response to application demands. Oracle has long focused on grid as the key underpinning to its database and middleware environments.

But while IBM continues to nip at Oracle's heels in the database market, Oracle is coming on strong in the middleware arena, where Big Blue has a comfortable lead.

"Yes, Oracle has had an application server for at least five years, but they were kind of the Rodney Dangerfield of the business for the longest time. They could get no respect," says Peter O'Kelly, senior analyst at Burton Group. "But then they made a hard decision. They started over with this Orion open source code base. They have been tenacious about sticking with it and making investments in it, and they optimized it for Oracle Database 10g. Now it is irrefutably a top contender in the Java space."

In the last year or so, Oracle has been chipping away at its "also-ran" image in the middleware market, analysts say. The latest figures from IDC show Oracle's application-deployment software business growing at twice the rate of the market average.

IBM, meanwhile, still holds a solid position at the head of the pack in the market, which IDC defines as including application, Web, and integration servers; message-oriented and transaction-server middleware; and all associated adapters, connectors, and gateways.

BEA Systems holds the No. 2 position, with a 12 percent market share compared with IBM's 37 percent and Oracle's 7 percent. But BEA doesn't offer the "suite" of platform features now available from IBM and Oracle.

"The market is changing so that it's not so much about an individual slice of the product stack at this point," O'Kelly says. "It's more about customers saying, 'We want you to be our end-to-end supplier, not just somebody who is solving one part of the problem for us.'"

That means customers are looking for databases, application servers, message-oriented middleware, and even applications and tools that integrate well, and if they come from one supplier, so much the better, O'Kelly says.

The user view

Online retailer Overstock.com, for example, has used Oracle databases and Oracle financials for years and has been happy to see the company expanding its offerings.

Overstock.com used to write all its code itself. But with a growing number of vendors offering Web-based applications, it's looking to take advantage of packaged products so that it can focus on more strategic IT development, says Shawn Schwegman, senior vice president of technology at the Salt Lake City firm.

"We're finding that Oracle and IBM and other big guys are coming out with a ton of software architecture designed for the Web," he says.

Schwegman says he does "bake-offs" to compare technology, but has consistently been happy with the performance from Oracle. Overstock.com uses Oracle's Fusion middleware—which includes Oracle's application server, business intelligence system, portal, and identity management—and is in the process of rolling out Oracle's customer self-service software, he says.

"IBM may have one up on Oracle on the WebSphere, Web e-commerce side of the house, but I don't think that's going to be too long-lived," Schwegman says. "Oracle owns the database side, and that's such a core component to everyone's Website. If you own the database and have the ability like Oracle does to then start rolling out these value-added applications, then you're going to have a new kind of competitor."

Oracle is positioning itself as a software vendor that can provide the integrated infrastructure that a corporate buyer needs, from its database to its PeopleSoft enterprise applications—all supported on its flexible, grid-based infrastructure.

"Whereas IBM decided many years ago that they would not be in the application business," Hurwitz says. "They're taking their middleware so that it evolves and becomes wrappers for packaged software that is becoming componentized. Then it almost doesn't matter who the primary packaged application is because if you put the enterprise wrapper around it, then you sort of control the game."

Jennifer Mears is a senior editor for NetworkWorld.

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