Despite the relative maturity of the relational database management system (RDBMS) software market, organizations find that ongoing attention and investment continue to be a necessity because the RDBMS is fundamental to success in data-intensive initiatives such as corporate performance management (CPM), business intelligence (BI) and data warehousing. This document complements "Market Share: Relational Database Management System Software by Operating System, Worldwide, 2007" and analyzes the global RDBMS software market share and key forces affecting the market through 2007. This report is recommended for technology providers, end users and investment firms seeking to better understand the current landscape and opportunities for RDBMSs.

• Total software revenue for the RDBMS software market in 2007 saw strong worldwide growth of 13.3%, with total software revenue growing from $15.1 billion in 2006 to $17.1 billion in 2007.
• In terms of share of the market, Windows Server surpassed Unix as an RDBMS platform for the first time.
• Linux, as an RDBMS platform, continued to dominate the market in terms of growth, with 61% growth over 2006.
• Linux, as an RDBMS platform, surpassed $2.7 billion and over 20% share of the market as it continues to gain user acceptance as an RDBMS platform supporting mission-critical applications.
• Each of the three major vendors by market share continues to dominate its particular platform(s); Oracle on Unix and Linux, Microsoft on Windows, and IBM on z/OS.
• The open-source RDBMS vendors, EnterpriseDB, Ingres and MySQL, showed the strongest growth of all vendors, although on some of the smallest revenue bases.
• The majority of vendors saw positive revenue growth in 2007, as many of the smaller vendors differentiated themselves from the top three by focusing on niche markets, such as specialized database management systems (DBMSs) for data warehousing and for mobile computing applications.

• While price considerations still lead as a key factor driving product selections, organizations are looking for cost savings in a tight economic environment. In these organizations, add-on functionality, such as BI and data integration capabilities embedded in or available with the RDBMS, are being taken into consideration as part of the product selection process. In this context, it's important that vendors possessing add-on functionalities highlight these capabilities to appeal to the broadest audience.
• As increasing numbers of small and midsize businesses (SMBs) purchase RDBMSs, the indirect channel to the market is becoming more strategic. Vendors must increase and strengthen relationships with value-added resellers (VARs) and other channel partners that cater to the SMB market.

In 2007, the RDBMS market grew 13.3%, which is above the average growth rate of 11.7% for the entire enterprise software market. This growth rate reveals the ongoing investment that organizations are making in RDBMSs and in the information management space as a whole.

Despite the relative maturity of the RDBMS software market, organizations find that ongoing attention and investment continues to be a necessity because the RDBMS is fundamental to success in data-intensive initiatives such as CPM, BI and data warehousing. While it is not seen as an area of dramatic growth and change, RDBMS technology continues to expand in capability and remains a significant area of investment for end-user clients and vendors. Growth of the RDBMS market reflects the needs of organizations in their information-intensive initiatives, as increasing numbers of organizations recognize that the efficient and strategic use of information can be a competitive differentiator. As organizations enhance the strategy, security and quality of their information management processes, the information can be used more effectively, which in turn allows organizations to more-accurately target new opportunities, identify strategic areas for investment, define new processes and refine existing processes to improve performance.

The RDBMS is seeing increased demand in supporting regulatory compliance initiatives by providing organizations a way to better control and manage data. Cross-industry compliance requirements (such as the U.S. Sarbanes-Oxley Act and Safe Harbor) or industry-specific requirements (such as anti-money-laundering legislation and Basel II in financial services and the Health Insurance Portability and Accountability Act in U.S. healthcare insurance) provide strong drivers for many projects that may require creating and using a better single view of business data. New RDBMS purchases are increasingly being included in such projects.

Additionally, as data warehouse environments move from decision support usage to mission-critical business usage in many verticals, investments in data warehousing are increasing, leading to increased RDBMS software sales. Further driving demand are organizations increasing their investments in business continuity planning, leading to demand for highly scalable RDBMS and replication technologies.

While the core RDBMS is not undergoing dramatic change, many RDBMS vendors have created value-add options, sometimes offered at additional cost, which are expanding the scope of the RDBMS stack to include functionality such as reporting, analytics and data integration tools. Not only does such functionality add competitive differentiation to the RDBMS, but it can also add to the overall growth of the RDBMS market and the revenue stream of vendors participating in this activity.

Oracle dominates the RDBMS software market in terms of share (see Figure 1), leading the nearest competitor by nearly 28 share points.

In terms of growth, among the top three vendors, Microsoft saw the fastest growth of 16.5%, followed by Oracle with 14.9% growth and IBM with 10% growth (see Table 1). IBM continues to struggle somewhat in maintaining market-level growth because of its reliance on the z/OS and System i platforms, which are growing substantially slower than the overall market. IBM, we estimate, has more than 50% of its RDBMS business coming from these slower-growing platforms. If we look at the RDBMS market just from the Linux, Windows and Unix perspective, IBM shows faster than market growth, but it becomes a distant third in market share behind Microsoft on that select set of platforms.

Looking at all RDBMS platforms, it is apparent the market is highly concentrated among the top three vendors (see Table 2).

However, despite the market continuing to consolidate among the top three vendors, Gartner expects vendors outside of the top three to survive, and in some cases, even thrive. Many of these smaller vendors continue to differentiate themselves by focusing on niche markets, such as specialized RDBMSs for data warehousing or for mobile computing applications. Specialization is even occurring in areas such as development and licensing models. The open-source RDBMS vendors, which had the strongest growth of all vendors, albeit on smaller bases, are key examples of the innovation and activity occurring outside of the top three.

While most RDBMS vendors support multiple operating system platforms, the tendency, particularly among the top three vendors, is a certain degree of platform "affinity" because the largest RDBMS vendors continue to dominate their particular platform(s): Oracle on Unix and Linux, Microsoft on Windows, and IBM on z/OS. This entrenchment by the vendors is significant because it somewhat ties vendors' overall growth prospects to the success of "their" operating system as a mission-critical RDBMS platform. Figure 2 illustrates RDBMS software revenue and growth rates by operating system in 2006 and 2007.

With growth of 16% in 2007, Windows Server surpassed Unix to become the largest RDBMS platform worldwide. Windows Server, now accounting for 35% of the total RDBMS software market, surpassed $6 billion. Of the top vendors in the Windows Server RDBMS space, Oracle showed the strongest growth, with 21%, although it trails Microsoft in terms of share, holding 29% of the market compared with Microsoft's 51%. IBM and Sybase also trail in terms of share, with 10% and 4%, respectively.

Unix platform revenue declined 6.2% from $5.3 billion in 2006 to just under $5 billion in 2007. Oracle maintained its dominant market share position on the platform despite a 5.2% decline in growth. Of the top five vendors, IBM, in the No. 2 market share position, showed the strongest growth of more than 10%, while Teradata (in the No. 3 market share position) saw a significant decline of nearly 46% on the Unix platform as it continues to aggressively migrate existing customers and sell to new customers on a Linux RDBMS platform. However, while the Unix RDBMS market is expected to continue to decline slowly as organizations move to other lower-cost options, the complexity and cost of migrating existing applications running on Unix RDBMSs, particularly highly customized ones, may limit the extent and speed of the decline.

The RDBMS on Linux market saw exceptionally strong growth of 62% on a $2.3 billion 2006 base, bringing the market to $3.7 billion in 2007. Much of this growth has been fueled by organizations pursuing cost reductions in IT, as older Unix hardware is being replaced with Linux servers. Oracle holds the dominant share of the Linux RDBMS market, with 79%. Teradata surpassed IBM as the No. 2 vendor in this space, moving from just over 1% of the market in 2006 to nearly 10% of the market in 2007. As mentioned previously, Teradata has been highly proactive in migrating existing customers off the Unix RDBMS platform and onto Linux. IBM holds nearly 8% of the market. Together, the top three vendors hold nearly 97% of the market.

The RDBMS on z/OS segment saw growth of 8.7% in 2007, bringing the market to just over $1.5 billion. Dominated by IBM, this platform continues to see ongoing investment by organizations. Asia/Pacific, in particular, is seeing significant growth in the RDBMS on z/OS segment primarily because of investments in System z by banks and telecommunications companies in countries such as Australia and South Korea.

In this section, we highlight the specifics of coverage in the market share study for 2007.

This report is limited to an analysis of the RDBMS. To see the overall database management system software market share, including the prerelational segment, see "Market Share: Database Management Systems Software, Worldwide, 2007."

For more details on segments and definitions, see "Dataquest Guide: Software Market Research Definitions" and "Dataquest Guide: Software Market Research Methodology."

Table 3 lists vendors' RDBMS offerings by each operating system.

RDBMS adoption is growing rapidly outside of North America. Consequently, currency fluctuation has an increasing impact on growth measures. When looking at Gartner's estimates of global revenue growth for the market in general or multinational vendors in particular, it is important to remember that these estimates are dollar-valued rates based on dollar-valued revenue figures. By convention, Gartner uses the U.S. dollar as a common denominator for all global revenue data to ensure easy aggregation. Revenue originally recorded in other currencies is converted to U.S. dollars by applying the prevailing annual exchange rates as needed. The dollar's sharp decline against most major currencies in 2007 means that dollar-valued revenue growth outside the United States exceeded revenue growth measured in local or constant currency in those areas (in 2005 and 2006, the dollar remained constant relative to most major currencies so there was little difference between dollar-valued and constant-currency growth). Thus, although our estimates accurately reflect dollar-valued market growth, they skew market growth in regions in which software is transacted in currencies other than the dollar. Accordingly, great care should be exercised interpreting our dollar-valued growth rates, especially in European markets in which the dollar declined especially sharply against local currencies.

The following describes some of the market forces that can impact those participating in the RDBMS market during the next five years.

Gartner expects a slight softening during 2008 in response to weaker economic conditions, particularly in the U.S. Despite this slowing, the RDBMS software market is forecast to grow 9% to 11% year over year in 2008. Growth is being driven by several factors, including demand generated for BI and data warehousing activities, as well as increasing adoption of enterprise application technologies, such as supply chain management, that are intended to drive greater customer and supplier satisfaction through better visibility and planning.

Spending earmarked for RDBMS technologies is driven by the economic realities facing organizations worldwide, in which costs are skyrocketing while competition and customer demands are intensifying. To address these challenges, many organizations are focusing on information management as a larger, cohesive strategy requiring close coordination of multiple efforts and a holistic view of the organization and key initiatives. The RDBMS is foundational to supporting such activities.

As open-source RDBMSs are rapidly maturing and becoming more accepted for use in production environments, an increasing number of organizations are beginning to experiment with the products as they become more scalable, mature and easy to install. Open-source RDBMS engines can be easily used today for non-mission-critical applications with reduced risk compared with several years ago (see Notes 1 and 2 for more information about mission-critical systems and mission-critical use). The primary issue remaining is the use of open-source RDBMS engines in mission-critical applications because the functionality necessary to support mission-critical applications comes both from the DBMS and the tools to support a highly available mission-critical environment with disaster recovery. Open-source RDBMSs are not supported by tools vendors used to set up these environments, such as automatic switching to a backup system ("heartbeat"), fast backup and recovery, and monitoring tools used for system failures. In addition, most open-source RDBMS vendors, with the exception of Ingres, are generally missing some of the necessary functionality to support mission-critical systems. Therefore, although mission-critical use of open-source RDBMSs is possible, it will require database administrators (DBAs) with a higher level of technical ability and a higher time commitment to implement and run the system, replacing the missing functionality and tools with people resources and manual procedures. During the next two years, organizations should plan for use of open-source RDBMSs in mission-critical situations with care.

In light of tighter IT budgets, particularly in North America, the battle for market share has been fierce. In part, this is a result of slower growth in terms of new license sales of core database products, which makes add-on products increasingly critical to vendors. In this $17 billion market, even a small shift in market share can equate to hundreds of millions of dollars in revenue from licenses and services. While some of these options are available for an additional fee, adding to a vendor's revenue, some of this added functionality is available free with the DBMS license, usually the standard or enterprise edition. This is frequently done to make the product seem more "cost-effective" during product selection.

Vendors are continuing their efforts to redefine the RDBMS as an enterprise information platform. They are seeking to add new usage of their products by adding new functionality to the RDBMS and repositioning it as an enterprise information platform. Examples of such functionality include improved data warehousing capabilities, content and storage management, BI, data integration tools, and management of other devices, such as storage and other functionality intended to integrate and add value to a vendor's applications.

Other market forces are as follows:

• Continued strong growth of the RDBMS market is projected, particularly for the Asia/Pacific and Latin America regions, which are in the midst of an adoption cycle for enterprise applications such as ERP and CRM, as well as data warehousing and BI implementations.
• To be more competitive, SMBs are increasingly investing in IT in terms of infrastructure and performance management. This is driving increased demand for RDBMSs to support these new applications and BI initiatives.
• New releases from vendors are expected to drive higher growth in the second half of 2008 and into 2009. Gartner is predicting strong adoption of these new versions.
• Data warehousing is driving a higher percentage of growth in the RDBMS software market than in previous years, as compared with online transaction planning. Increasing numbers of organizations are expanding the use and deployment of BI and performance management applications to more types and numbers of users.
• As open-source RDBMS products continue to improve in functionality and scalability, they will begin to exert pricing pressure on the market. While this inhibits growth in new license revenue for the proprietary RDBMS vendors, it is generally a benefit to the user and results in greater RDBMS penetration through the market.
• The availability, ease of acquisition and ease of installation of open-source RDBMSs will cause them to proliferate through the organization, with little or no security, governance, reliability or compliance. Most of these will be "skunk works" projects, and customers will rely on the open-source community for support, rather than purchasing support from the vendor supplying the RDBMS. This will impact the revenue growth of open-source RDBMS vendors.

The RDBMS software market is expected to see ongoing growth and investment during the next several years. While price remains one of the key factors driving product selection, many organizations are starting to look at some of the add-on functionality that is included, or can be purchased, with the RDBMS, such as basic BI functionality or data integration tools. In this context, it's important that vendors highlight these capabilities, even in routine RDBMS selection opportunities, because some organizations are looking for cost-saving opportunities wherever they can find them, as they respond to a tighter economic environment.

Open-source RDBMSs are suitable for non-mission-critical applications to a higher degree than several years ago. During the past two years, the primary open-source RDBMSs have significantly improved in terms of maturity, scalability and reliability. In addition, some open-source RDBMSs are now available as a complete, easily installable package, as opposed to separate components needing to be pieced together to create a complete system. However, several factors still remain that bound the growth prospects of the open-source RDBMS vendors during the next two to five years. Additionally, use of open-source RDBMS products is not generally recommended for mission-critical environments. Open-source RDBMSs can be used in mission-critical environments if the technical capabilities of the staff can replace the missing functionality and tools such as rollback, redo, database mirroring and other capabilities supporting high availability, scalability and disaster recovery. For further information about the state of the open-source RDBMS market, see "Open Source Database Management Systems are Maturing and Usable" and "Open Source in Database Management Systems, 2008."

As increasing numbers of SMBs purchase RDBMS, the indirect channel to the market is becoming more strategic. Vendors must increase and strengthen relationships with VARs and other channel partners that cater to the SMB market.