The RDBMS Industry: A Northern California Perspective

Martin Campbell-Kelly
Warwick University This article describes the origins and development of the relational database management systems (RDBMS) industry, focusing on the firms IBM, Oracle, Ingres, Informix, and Sybase in the 1980s. The author analyzes the industrys evolution in terms of the disruptive technology paradigm and regional economics and then broadly outlines the industrys later development.

In 1986 an industry analysts report estimated that there were some 200 firms in the database industry, selling DBMS software, tools, and related products.1 The report also noted that the industry appeared to be on the cusp of change following IBMs announcement of its DB2 relational database software product in 1983. It was clearly recognized that the relational database was a turning point in the industrywhat would later be called a disruptive technology, a theme explored here. The report included detailed profiles of 43 significant firms both in the new RDBMS sector as well as what it termed the nonrelational holdouts. The profiles were primarily of vendors of database software per se, but they also included suppliers of complementary products, such as so-called fourth-generation languages. The firms were mostly independent software vendors, but there were also some leading manufacturers such as IBM, Burroughs, and DEC. The independent software vendors included long-established suppliers of the top-selling nonrelational products of the time: ADR, CCA, Cincom, Cullinet, and Software AG. The vendor profiles also included a set of relatively new firms that were selling relational database systems. The firms were: the Oracle Corporation, Relational Technology Inc. (later Ingres), and Relational Database Systems Inc. (later Informix). A fourth company, Unify, specialized in RDBMS tools. All of these firms were located in Northern California. Another Northern California company, Sybase, had been formed in 1984, but it had not yet appeared on the analysts radar. There were no other RDBMS company

profiles, apart from that of IBM. Evidently, the RDBMS industry had a strong regional basis, which is unusual in the software industry. Incidentally, the report also gave profiles of three suppliers of specialized processors that supported RDBMS applications: BrittonLee, Teradata, and Intel. A fourth company in the same line of business, Tandem, was inexplicably not profiled. It is noteworthy that all of these manufacturers were also California based, although a discussion of them is beyond the scope of this article. There is little literature on the business history of the RDBMS industry. Indeed, there is little literature on any software genrethe software industry is a massively understudied aspect of computer history. In writing this article, my sources have necessarily been the usual suspects: industry journals (primarily Datamation and Software News), incomplete sets of annual reports of individual firms, and the only two analysts reports on the database industry in the public domain that I am aware of. In June 2007, the Software Industry Special Interest Group of the Computer History Museum organized a series of workshops and interviews of pioneers focusing on the RDBMS industry. The key firms that participated were IBM, Oracle, Ingres, Informix, and Sybase. The transcripts of the sessions are important new sources that complement the existing literature. What the transcripts reveal, far more than formal annual reports and cursory evaluations in the business press, are corporate strategies and information networks. The articles that follow in two special issues of the Annals focus on the stories of individual actors and firms. This article is an attempt to place these

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Figure 1. RDBMS as a disruptive technology in the 1970s. The dotted lines indicate the demands for decision support (DS) and online transaction processing (OLTP). The positive slopes reveal the rising requirements of customers applications over time. The solid lines show the respective performance capabilities of conventional (nonrelational) and relational database technologies.

histories in the wider context of the software industry in general and the RDBMS industry in particular.

RDBMS as a Disruptive Technology

The database industry was established in the late 1960s with three main technologies: the hierarchical, network, and inverted models. The differences between these technologies are unimportant here, other than that they were all relatively efficient but difficult to navigate. Navigation referred to the necessity of a database administrator having to know the underlying structure of the database in order to interrogate it. The importance of navigation was underscored by the title of the 1973 ACM Turing Award lecture by Charles Bachmann (the inventor of IDMS, a hierarchical/network database technology): The Programmer as Navigator.2 During the early 1970s, a major database industry began to emerge. By the end of the decade, shake-outs, mergers, acquisitions, and organic growth had resulted in less than a dozen major vendors remaining. According to a contemporary analysts report, in 1978 aggregate world sales of database software were on the order of $130 million.3 The three leading firms (products) were IBM (IMS and DL/1), Cincom (Total), and Cullinane (IDMS), which had sales of $42, $27, and $14 million, respectively representing about two-thirds of the market. Smaller, but still significant, players included

Software AG (Adabas), ADR (Datacom/DB), and CCA (Model 204). Altogether there were approximately 10,000 database installations. Individual vendors did not publish the cost of individual packages because they tended to be priced on a what-thecustomer-could-bear principle. Frost & Sullivan reported prices as being upwards of $250,000, with most selling for at least twice that amount and the largest $4 to $5 million.4 One way to view the impact of relational technology on the database industry is through the lens of the disruptive technology paradigm of Clayton Christensen.5 Figure 1 shows, in a strictly qualitative manner, the trajectories over time of conventional (nonrelational) and relational database technologies. Databases have two principal uses: decision support (DS) and online transaction processing (OLTP). DS is the ability to make ad hoc inquiries and produce analytical reports. For example, a bank might want to tabulate the age-balance profile of its delinquent accounts. Such a report (necessitating the interrogation of every customer record) would demand a great deal of processing, but it was not time critical. It would be acceptable if the report generation took a few minutes or even many minutes. By contrast, OLTP (now a little-used term) involved the real-time interrogation of individual records, with a response time of a

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few seconds at most. In the case of a bank, for example, an OLTP transaction might be needed to validate an ATM cash withdrawal and adjust the customers account balance. The ability to support many simultaneous transactions was the most important and demanding use of a database. In the 1970s, traditional database technology could support hundreds of transactions per second later thousands and tens of thousands of transactions per second became possible. OLTP made much heavier computational demands on a database than DS (see the dotted lines in Figure 1). The positive slopes suggest the rising requirements of customers applications over timethat is, the need to perform DS over larger datasets and to support an increasing number of OLTP transactions per second, respectively. The upper solid line in Figure 1 indicates the performance of the nonrelational databases, which were capable of both DS and OLTP applications and were improving pari passu with computer performance. The lower solid line shows the inferior capabilities of the relational databases.6 The first experimental relational database systems appeared between 1973 and 1975. Relational technology offered a much simpler, nonnavigational method of interrogating the database using a system such as SQL (Structured Query Language). There were also benefits in data integrity from eliminating the possibility of inconsistent or duplicate records in the database. These benefits came at the cost of much higher computing resource consumption than the traditional database. The performance over time of an RDBMS (see the lower solid line in Figure 1) shows that relational technology could support DS adequately in the mid-1970s, but it could not realistically support OLTP. However, because computer technology was improving faster than the demands of customers, there would eventually come a time when relational technology could support both. For existing database users in the early 1970s, however, the only benefit of an RDBMS was in query formation and data integrity. Neither of these benefits was greatly needed by existing users because they were generally large firms running major business processes with traditional products; they had expert staffs who could cope with the navigational aspects of database usage and had the technical expertise to manage data integrity. More to the point, relational

technology could not in practice have supported their OLTP operations. Therefore, for incumbent firms in the traditional DBMS industry selling nonrelational products, a radical switch to relational technology would have meant destroying their investments in code and compromising their revenue stream in order to provide a product that was less satisfactory for their customers. Moreover, overcoming the complexity of using traditional databases generated an important additional income stream for vendors from consultancy, custom programming, and training. Hence, existing vendors and customers had no motive to respond to relational technology in the mid-1970s. It is important to recognize these were rational decisions made by all the leading incumbents. Only in hindsight do they appear to have been blind to the opportunity. This is the nature of a disruptive technology. To take one example, although IBM was the market leader in databases with its massively successful IMS product, it was in no sense complacent or resting on its laurels. Indeed, IBM originated and fostered relational technology in its San Jose Research Laboratory and developed the first implementation, known as System R.7 Then, as always, IBM was investing in long-term research that might or might not reach the marketplace. When, or whether, to exploit an emergent technology was a difficult business decision. However, for new firms with no prior investments in databases, relational technology was an opportunity. There were no largescale competitors, and relational technology offered benefits that would be appreciated by a new class of database customers. These customers were new to databases and were typically smaller enterprises with DS needs but modest or no OLTP requirements. For these customers, the usability of relational technology in query formation was a massive benefit, as was the relatively low price compared with database systems from the incumbents. The ease of use meant that, instead of a programmer, a database administrator with less technical knowledge (but possibly more business knowledge) could formulate queries. The prices of early relational database programs were typically an order of magnitude cheaper than traditional products, and the programs could run on smaller, less expensive computers rather than traditional mainframes. Thus, the market became segmented between large organizations with

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big OLTP needs, tied to the incumbent producers, and smaller enterprises that were about to embark on the RDBMS adventure without prior experience and only modest operational requirements.

RDBMS Start-Ups and Regional Geography

The initial flurry of RDBMS start-up companies was located in Northern California. Although the regional geography of areas such as Silicon Valley and Route 128 has been extensively studied, these investigations have mainly focused on the electronic hardware industries.8 These studies show that industrial concentrations arose from several causes, of which the most important was the supply of a highly trained labor force with specializations in the local industry. This supply of trained labor had a number of contributory inputs, particularly knowledge generation and dissemination as well as graduate training from a nearby technical university. Other factors favoring concentration included venture capital funds with a deep, specialized knowledge of the industry. Also important were mechanisms by which workers from different enterprises could interact (bars, sports clubs, and so forth), enabling them to pick up signals about the new technology and job opportunities. Industrial concentration in the software industries has been little studied in US contexts, although there have been studies of software concentrations in small countries.9 The only documented cases of the regional geography of specific software genres in the US are the spreadsheet industry around Cambridge, Massachusetts,10 and the RDBMS industry,11 which is further explored here. In the case of the RDBMS industry, the principal sources of knowledge generation, dissemination, and training are clearly identified. Knowledge of relational technology was first generated at IBMs San Jose Research Laboratory, which communicated its research findings freely through seminars, publications, and informal contacts. There was a regular information exchange between researchers at IBM San Jose and the computer science faculty at the University of California, Berkeley. The RDBMS workshops and interviews conducted by the Software Industry SIG of the Computer History Museum brought out details of many such exchanges. For example, Jerry Held (then with UC Berkeley and later with Tandem and Oracle) explained

that Ted Codd would literally come back and forth. Hed be at our place one week and at System R the next.12 Michael Stonebraker (cofounder of Ingres) explained that UC Berkeley alumnus Jim Gray (later the 1998 ACM Turing Award winner for his work on databases) joined the IBM System R group, and it was mostly his doing that we would go to IBM Research in San Jose or they would come up here. So we probably met every six months, and so we knew what they were doing and they knew what we were doing.13 Gary Morganthaler (another cofounder of Ingres) explained, Berkeley turned out to be a huge resource and we had a flow of students, undergraduate and graduate students, of exceptional talent.14 The Informix and Unify RDBMS companies also had close links with UC Berkeley. However, tangible contacts between individuals from different organizations are not the whole of the story. For example, Oracle did not have notably close links with either UC Berkeley or IBM San Jose. It initially learned of relational technology through Codds publications, although in its later development it benefited from manpower from other local RDBMS companies. Furthermore, it would be wrong to suppose that relational technology was in anyway confined to Northern California. IBMs publications were disseminated globally to those who were interested enough to read thembut it was particularly in Northern California where relational technology was in the air that they stood out from the mass of publications that crossed every researchers desk. Ingres, it should be noted, was originally a US National Science Foundation funded academic research program for a Unix-based database system. Over 1,000 systems were eventually distributed to universities and research organizations. It seems likely, however, that this did not so much result in industry formation beyond Northern California as stimulate an awareness of, and a market for, relational technology. Figure 2 shows the relative growth of the four main Northern California RDBMS companies: Oracle, Ingres, Informix, and Sybase. From the beginning of the industry, Oracle maintained an impressive lead. Oracle The first firm to commercialize relational technology was a small programming services firm, System Development Laboratories (SDL) established by Larry Ellison, a

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Figure 2. Annual revenues (in billion dollars) of Oracle, Ingres, Informix, and Sybase. Oracle maintained an impressive lead from the beginning.

journeyman programmer, in 1977. SDL had a customer, Precision Instrument (a former employer of Ellison), with a need for a DS system. SDL recognized the attractiveness of SQL in formulating queries, and using IBMs published materials as research background, a team of two created the first system. A subsequent contract with the US Central Intelligence Agency for a DS system (dubbed Oracle) enabled the company to refine the technology.15 By the late 1970s, the commercial potential of software products compared with programming services was well understood. However, the choice facing a new entrant into the software-products industry was whether to compete with established firms in an existing software genre or to be first on the market with a new genre with uncertain market acceptance. Both were difficult propositions, and this explains the high failure rate of software-product start-ups. Given the choice, however, being the first to market with a new software genre offered the greater potential reward (and risk). In 1978, Ellison decided to switch from programming services to software products. SDL changed its name to Relational Systems Inc. (RSI) and entered the market with its first relational product, Oracle, the following year. Over the years, the companys business practices were much criticized, but we should not lose sight of the fact that its entry in the RDBMS market was daring and pathbreaking. Its eventual rewards were not entirely undeserved.

The Oracle product was initially developed for DEC minicomputers, subsequently ported to other minicomputers, and only considerably later to IBM mainframes. Thus, the key initial strategy was to target not mainframes, which were already well supplied with high-performance database packages, but rather minicomputers which then had few significant database products. Furthermore, Oracle was marketed as a DS system with limited OLTP capabilities. This made it an appropriate product for departmental systems and small business installations making their first foray in database applications. With its early start advantage, RSI grew rapidly, doubling in size every year for more than a decade. Its rapid early growth made it a formidable competitor and market leader when the other RDBMS start-ups began to emerge from 1979 onwards. RSI changed its name to Oracle Systems in 1982, and selling and consulting for the Oracle RDBMS product became its primary business. Oracle (the company subsequently dropped the Systems from its name) benefitted from luck as well as superior operations. In the early 1980s, minicomputers began to compete with traditional mainframes, and Oracle became the acknowledged market leader for databases on these new systems. The company made its IPO in 1986 and the following year, 10 years after its founding, it had annual revenues of $131 million, 1,121 employees, and subsidiaries in a dozen countries. It was no longer a niche player and had soared

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to eighth position on the Top 50 Independent Software Vendors list.16 Ingres The Ingres Corporation was a spin-off from UC Berkeleys Computer Science Department, the most active academic center for relational technology research in the 1970s. The leaders of the research activity were two academics: Michael Stonebraker, an assistant professor, and Gene Wong, a fully tenured professor. In 1972 they established the Ingres project, which in the way of contrived acronyms, stood for Interactive Graphics REtrieval System. The original project was for a graphical database, although it eventually morphed into a relational, textual database. As it happened, both the Unix operating system and relational technology came to Stonebraker and Wongs attention just as the Ingres project was beginning. These were two of the most important software developments of the 1970s, and their combination would be market defining. The Ingres database technology was heavily based on the IBM San Jose research, and both Codd and Gray were regular visitors to the UC Berkeley group. At that time, SQL had not been developed, and Wong devised a retrieval language known as QUEL (QUEry Language). QUEL was highly regarded and considered by many to be superior to SQL. The first practical database program was completed at UC Berkeley in 1975, and it was freely given to other Unix-using organizations. As more and more universities and research institutes adopted Unix in the mid1970s, Ingres became the preferred database. The group licensed Ingres somewhat in the way that Unix was licensed; they charged a nominal fee to cover the cost of media and distribution, but the rights remained with the creators. Thus, both Unix and Ingres were free to use and the source code was disclosed (but they were not open source in the modern sense). By 1977, there were 50 or 60 users, and in the next two years this exploded into some 300 installations. By this stage, Ingres was being used for critical applications that required proper support and maintenance, which the UC Berkeley group could not provide. This fact, and the arrival of Oracle, indicated that there was potential to commercialize Ingres. Stonebraker and Wong, however, were academic entrepreneurs, rather than business entrepreneurs. (Stonebrakers main concern at the time was to secure tenure.17) Stonebraker

and Wong therefore decided to establish a firm in which they would serve as board members but not take part in the firms day-to-day operation. The company, Relational Technology Inc., was formed in November 1980 with modest venture capital funding from local sources. Because Unix was not yet a commercial platform, the companys first task was to port Ingres to the VMS operating system, then the standard operating system for business users of DEC minicomputers. The company grew rapidly, and in 1983, it was the first relational-technology company to have an IPO. Stonebraker and Wong remained full-time academics but continued to be active in database research and to generate a steady flow of trained manpower for Ingres and the other RDBMS companies that were coming into existence. At first, when relational technology was primarily a DS tool, QUEL was a strong selling point. However, by about 1985, SQL had become the de facto standard and Ingres was increasingly at a disadvantage. For this reason, and Oracles aggressive business practices, there was an ever-growing gulf between the two. By 1989, Oracle had soared to annual revenues of $571 million, while Ingres had only achieved annual revenues of $131 million (although this would have been a perfectly reasonable growth trajectory had Oracle not been doing so much better). Informix Informix was formed at about the same time as Ingres. The principal founder was Roger Sippl, the son of Charles Sippl, author of the leading computer dictionary of the 1960s. Sippl graduated from UC Berkeley with a computer science degree in 1975 and subsequently worked as a programmer with Cromemco, an early manufacturer of microcomputers. While there he developed a (nonrelational) database system and, in 1980, decided to form Relational Database Systems. The firm avoided direct competition with Oracle by focusing on DS applications on low-end Unix systems. SQL had not yet become the de facto standard method of accessing a relational database, and like Ingres, Informix developed its own proprietary access method known as Informix4GL. At this time, installing a database was beyond the capability of most low-end users, and Informix was mainly sold as a component of a turnkey system supplied by value-added resellers. A fully relational product and SQL access method

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was introduced in 1984. In 1989, as computer performance improved, the company began to compete in the OLTP market with Informix Online. Sybase Sybase, established by Bob Epstein and Mark Hoffmann in 1984, was the last of the major start-ups in Northern California. Epstein had been a member of Stonebrakers group at UC Berkeley from 1977 to 1980. At that time, relational technology was unable to support significant transaction-processing rates on general-purpose computers, and two local entrepreneurs, David Britton and Geoffrey Lee, established Britton-Lee in 1979 to develop a specialized database machine optimized for RDBMS applications.18 In 1980 Epstein joined Britton-Lee to lead software development. During the next few years, however, the speed of general-purpose computers improved so rapidly that Epstein and his Britton-Lee colleague Hoffman decided to create an RDBMS software product for the transaction-processing market using conventional computer equipment. Sybase was established just as Stanford-based Sun Microsystems was in the ascendant and was competing with DECs more traditional products. Sybase initially targeted its database to Sun client-server systems. Following financial deregulation in the mid-1980s, Wall Street computerized rapidly and favored the new client-server architecture. The Sun-Sybase combination proved extremely popular with the financial community, and by 1990 Sybase had achieved annual sales of $100 million.

The Entry of IBM: An Industry in Turmoil

IBM dipped a toe into the relational waters when it introduced SQL/DS, a decisionsupport RDBMS in 1981, which was based on the System R code developed at IBMs San Jose Research Laboratory during the 1970s. SQL/DS was, however, something of a niche product intended to operate on IBMs smaller mainframe computers, and it had relatively low sales.19 Two years later, in June 1983, the company announced DB2, its first mainstream, fully relational product. The announcement legitimatized the relational concept and was an inflection point in the ascendancy of relational technology. Before DB2, relational technology was admired by many and adopted by

some, but most conservative installations stayed with their proven, nonrelational products. Now, with IBMs imprimatur, even conservatives could potentially be won over. In terms of operational efficiency, however, nonrelational technology remained superior, and this gave the incumbents some breathing space. (Indeed, nonrelational technology has always been computationally superior, but the importance of this has declined as the cost of computer power fell.) IBM had the classic dilemma of a disruptive technology, and it handled the dilemma with considerable finesse through its dual database strategy.20 For IBM, relational technology was both a threat and an opportunity. If IBM endorsed relational technology, then its existing IMS and DL/1 customer base would no longer be so securely locked in; customers would likely evaluate the whole spectrum of RDBMS products, not just IBMs, and DB2 would have to compete on its merits. On the other hand, doing nothing was not an option; relational technology was improving, and it would eventually become suitable for OLTP database applications. In 1983, however, relational technology could not yet support demanding transaction-processing applications, and the inertia of users meant that it would be some years before they made such a radical change. There was therefore no possibility that there would be an overnight switch. The opportunities for IBM were perhaps greater than the threats. First, while IBMs traditional DBMS product revenues were growing somewhat, its competitors were growing faster and IBMs market share was declining. In 1984, while its 15,000 IMS users represented approximately 50 percent of the installed base, IBM was believed to be capturing only 20 percent of new sales.21 The database market was far from saturated and offering a relational product to new users enabled IBM to differentiate itself strongly from the other nonrelational incumbents, which were not yet offering relational products. Moreover, as the inventor of relational technology, IBM conferred a prestige and credibility to its relational technology that even the first-movers such as Oracle and Ingres did not possess. Meanwhile, IBM continued to perfect its relational technology, and in February 1986, it released a second version of DB2. The new product was OLTP capable and was offered on a six-month free trial. According to a contemporary report, potential users

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began poking it with a stick in order to assess its potential.22 This was a turning point for the incumbent nonrelational vendors; there was now no escaping the competitive threat of relational technology. In fact, some of the incumbents had already been half-heartedly responding to the threat of relational technology. For example, Cullinane introduced a product variant IDMS/R with relational features in 1983, while others were offering SQL front ends for their nonrelational products. Others were creating market confusion by using adjectives such as relational-like. This advertising fog was cleared when Ted Codd published his 12 Rules in Computerworld in the fall of 1985. Codds intervention shone a bright light on the entire relational industry, exposing products for what they truly were. The 12 rules were a set of technical criteria that a true RDBMS had to meet. Codd argued that a product meeting less than half of the rules could not credibly call itself a relational system. The rules were demandingeven DB2 met only seven of them. It was far worse for the other incumbents; two leading products that claimed to have relational features (Cullinanes IDMS/R and ADRs Datacom/DB) did not meet any of Codds criteria. Now that relational technology was in the ascendant, the incumbents had three options: first, to evolve their existing product into a relational database; second, to develop a new relational product; or, third, ignore the relational threat altogether. All three options were taken by the incumbents. Cullinet (formerly Cullinane) took the evolutionary approach. It had responded to the original release of DB2 by rebranding its IDMS product as IDMS/R in April 1983. The fact that IDMS/R met none of Codds criteria was, to say the least, an embarrassment. The company attempted to disarm criticism by shooting the messenger, arguing that Codds 12 Rules were analogous to building an airplane that will not fly.23 This created some ambiguity as to whether the company was serious about relational technology, and it did not flatter the judgment of its users. The company nevertheless stuck to its original strategy of converting its product to relational technology over timealas, this merely legitimized the technology for the Cullinet installed base, which was later forced to turn to other vendors, primarily IBM.24 Cullinets market share halved in two years, and the company was acquired by

Computer Associates in August 1989. Computer Associates made many similar acquisitions during the late 1980s and 1990s. Its general strategy was to take over existing products and essentially just maintain them, while making large savings in development, support, and marketing; typically less than half of the employees of an acquired firm were retained by Computer Associates. Currently marketed as CA-IDMS, the product remains a viable second-tier DBMS. Cincom was the first independent software vendor to offer a database product, Total, in 1969. In response to the relational threat, Cincom decided to develop an entirely new product. Somewhat like IBM, it conceived a dual database approach: it would continue the evolutionary development of its traditional database, Total, while developing a new relational product, dubbed Supra. The company invested in a major development effort, reportedly costing $50 million and consuming 21 percent of its revenues between 1979 and 1983.25 As a privately held company, Cincom was able to forego shortterm profits for long-term gains. Cincom diversified and grew its product range over the years, and Supra remains a key product within its portfolio. Other notable incumbents at the time of the DB2 launch included ADR (Datacom/ DB), Software AG (Adabas), and CCA (Model 204). They each have their individual histories, but all the products have survived the vicissitudes of evolving technology and corporate ups-and-downs. Indeed, the relational story illustrates one of the truisms of the software industry: that successful products typically outlive the firms that created them. ADR was acquired by Ameritech in 1985, which planned to invest heavily to convert Datacom/DB to relational technology. However, this plan was overshadowed by the problems of an aging product portfolio within ADR and financial problems at Ameritech. ADR was acquired by Computer Associates in 1988 from Ameritech, and CA-Datacom/DB remains a viable nonrelational product for transactionprocessing applications. Software AG took an evolutionary approach with Adabas, adopting some relational features but focusing more on its transaction-processing capability. Adabas remains a successful database system, but whereas in the 1980s Software AG was essentially a one product company, Adabas is now but one of a portfolio of products,

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Table 1. RDBMS market, 2005.

Total software and services revenue ($ millions) 10,156 61,307 33,969 1,467 788

Company Oracle IBM Microsoft Teradata Sybase Other Total

RDBMS software revenue ($ millions) 6,238 2,946 2,073 468 450 1,149 13,324

Market share (%) 47.1 21.1 17.4 3.2 3.2 7.9 100

* Table sources are Gartner Says Worldwide Relational Database Market Increased 14 Percent in 2006, press release, http://www.gartner.com/it/page.jsp?id=507466, and company annual reports.

and Software AG is ranked about 50th on the Software 500 list. With a similar strategy, CCA also focused on the high-performance transactionprocessing market in preference to going relational. The company survived independently until its acquisition by Rocket Software in 2010, and the Model 204 database system is still a viable transaction-processing database product.

Maturing of the RDBMS Industry, 19852005

Three factors shaped the RDBMS industry in its maturing phase: the evolving hardware environment, the rise of Enterprise Resource Planning (ERP) software, and the trend toward software industry integration and concentration. In the hardware environment, processing speeds rose and costs fell dramatically. This was enabled first by minicomputers competing with mainframes and then by client-server systems competing with minicomputers and mainframes. However, while the mainframe declined in importance, it did not disappear; it remains the foundation for many legacy applications and the most intensive transaction-processing environments.26 For these reasons, the most prominent nonrelational databases, particularly IBMs IMS, have not disappeared and continue to generate considerable ongoing maintenance and support revenue. During the 1990s, ERP software transformed enterprise applications. Previously, application software had been custom written, or organizations had purchased industry-specific and cross-industry packages from a variety of vendors. Software acquired in different eras and from different vendors was difficult for users to integrate, which

led to two industry developments. First, the software industry consolidated so users were able to acquire multiple packages from a single source, thereby shifting the integration burden onto the vendor. Computer Associates was the most prominent software firm adopting this strategy. Second, ERP software offered a single application program that met all of a users needs, instead of the user having to purchase multiple packages. ERP software and relational databases both came of age in the mid-1980s, and they have evolved synergistically. An ERP package and a relational database became the most popular option for all but the most intensive transactionprocessing environments. From the late 1980s, major firms in the software industry increasingly grew by developing or acquiring complementary products and services. For example, applications vendors began to bundle systems software, and systems software vendors began to offer applications software. As infrastructure and applications software became more complex, the firms also began to offer consulting services to help install their products. Table 1 shows market shares in the RDBMS industry in 2005, some two decades after it became an established software category. Of the original Northern California startups, Oracle prospered beyond expectation, becoming not only the largest RDBMS vendor, but also the worlds second largest independent software firm (second to Microsoft). Sybase also survived as an independent entity, while the other firms disappeared. Perhaps the most unforeseen development was the rise of Microsoft in the RDBMS industry. In the mid-1980s, Microsoft was exclusively a vendor of desktop software and productivity applications. Oracle was the first firm to offer a relational product, and it was the market leader

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from the beginning. However, it would be wrong to attribute its success solely to firstmover advantage and aggressive business practices. Oracle has been a master of integration, both into services and up and down the software stack. The firm established a consulting division in 1988 that soon generated 15 percent of its revenue.27 In 1995 it developed its own ERP software, Oracle Applications. Between 1994 and 2005, Oracle made approximately two dozen acquisitions to add capabilities to its applications and infrastructure software, including the purchase of the ERP vendor PeopleSoft in 2005. By that time, only 60 percent of Oracles revenue came from database sales, the rest coming from consulting services and complementary software products. In the last two decades, perhaps no company has undergone such a dramatic transformation as IBM. Following its fall from grace in the early 1990s, when it recorded the largest loss in business history, it switched its sources of revenue from predominantly hardware to services and software. In 1985, hardware accounted for more than 95 percent of IBMs revenue, whereas by 2005, its revenue breakdown was 52 percent services, 27 percent hardware, 17 percent software, and 4 percent other.28 As a percentage of sales, however, IBMs software income has remained relatively static since 1990, in the region of 15 to 20 percent of total revenues. IBMs prominence in the RDBMS industry owes much to the fact that it is the largest single-source supplier of complete information processing systems. It has never achieved the rapid growth of software sales shown by Oracle or the more successful independent software vendors. Microsoft was a latecomer to the RDBMS scene. Although Microsoft was the worlds largest software company by 1990, this was based on selling a high volume of low cost, relatively simple software products for desktop computers. In the late 1980s, however, Microsoft caught the wave of workgroup and networked computing with the development of its NT operating system.29 Microsoft offered an alternative to Unix-based systems and became the platform for tens of thousands of new ERP applications. Microsoft introduced a relational database (SQL Server based on Sybase code) in 1988 and an ERP system (MS Dynamics, following its acquisition of Great Plains Software) in 2002. Along with Oracle, Sybase was the other prominent survivor among the early

start-ups, although in 2005 it was less than a 10th the size of Oracle. From the beginning, Sybase adopted a strategy of specializing in client-server systems for transaction processing. It consolidated its position with technically sophisticated complements to support high-integrity systems and high-transaction rates across complex client-server configurations. Its revenue streams were further buoyed by a five-year agreement with Microsoft in 1987 to license it code for SQL Server.30 Similar to other successful software vendors, it integrated consulting services (with the acquisition of D&N Systems in 1990). By 1995, services accounted for a quarter of its annual revenue. Sybase became a popular platform for ERP systems, and in 2008, it was acquired by the leading ERP vendor SAP, enabling the latter to offer better integrated solutions. And what of the other firms? In 1990, Ingres was acquired by ASK Computer, when both were at the peak of their success. ASK ran into difficulties, however, and was acquired by Computer Associates in 1994. CA-Ingres remains a successful product. Informix made some ill-judged acquisitions, experienced management difficulties during the 1990s, and was acquired by IBM in 2001.31 Informix remains an IBM product. As noted earlier, software products typically outlive the firms that create them, and all the major DBMSs described here still exist.32 At the time of this writing, the new threat on the horizon is competition from open-source products, particularly MySQL. In order to compete, the major vendors (IBM, Oracle, and Microsoft) all introduced free, reduced functionality (but not open source) versions of their flagship products in 2005 and 2006 (dubbed DB2 Express, Oracle XE, and SQL Server Express).33 Computer Associates released Ingres as an open source product in 2004.

Conclusions
This article has focused on the niche market of the RDBMS. To what extent can such a study shed light on the broader software industry? There are perhaps three themes brought out by this article: the role of usability in shaping software, the longevity of software products, and the population dynamics of the software industry. As noted earlier in this article, in terms of efficiency, relational technology has always been inferior to its more traditional counterpart. Relational technology has nonetheless

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The RDBMS Industry: A Northern California Perspective

become dominant because the price exacted for usability is tolerable. The RDBMS user decided to trade somewhat lower performance, or somewhat higher equipment costs, for ease of use. This phenomenon is not of course confined to RDBMS products. Within the desktop sector, where usability is of particular importance, ease of use has profoundly shaped the trajectory of software products and the industry. The issue of usability is less commonly observed in infrastructure software such as databases and operating systems, but it is there just the same. Second, software products are commonly long-lived. The majority of database products, both relational and nonrelational, continue to exist 30 or 40 years after their creation, in many cases outliving the firms that invented them. These products continue to compete and survive in a surprisingly heterogeneous universe of databaseseach product seemingly a different horse for a different course. By contrast the universe of hardware is homogeneous and commoditized. Clearly, software products benefit from lock-in effects, but there is additionally a form of brand loyalty. The database of today is massively improved compared with the databases of the 1970s or 1980s, but the improvements have been incremental and continuous and serve to keep users loyal to their first choice. Lastly, this study of the RDBMS industry sheds a sliver of light on the dynamics of the software industry. Most studies of the industry have focused on specific products or companies, whereas when we study a particular genre we see a richer set of interconnections between industry players. Very little is understood about the population dynamics of the software industry, particularly in quantitative terms. We know that thousands of software firms are created each year. Many of them fail, many others survive for decades as small- and medium-sized enterprises (SMEs), some are taken over by larger firms, and a tiny number grow to become giants of the industry. What we cannot presently do is supply any numbers to illuminate this assertion.

References
1. Database Management Systems, Intl Resource Development, July 1986, p. 8. 2. C.W. Bachman, The Programmer as Navigator, Comm. ACM, vol. 16, no. 11, 1973, pp. 653658.

3. Data Base Management Services Software Market, Frost and Sullivan, 1979, p. 203. 4. Data Base Management Services Software Market, p. 134. 5. C.M. Christensen, The Innovators Dilemma: When New Technologies Cause Great Firms to Fail, Harvard Business School Press, 1997. 6. Figure 1 shows that relational databases did not surpass nonrelational systems in terms of performance. The advantage of relational technology to the consumer lay in its usability, and this increased in relative importance as processing costs declined. 7. W. C. McGee, Data Base Technology, IBM J. Research and Development, vol. 25, no. 5, 1981, pp. 505519. 8. See for example A. Saxenian, Regional Advantage: Culture and Competition in Silicon Valley and Route 128, Harvard Univ. Press, 1994, and M. Kenney, ed., Understanding Silicon Valley: The Anatomy of an Entrepreneurial Region, Stanford Univ. Press, 2000. 9. See for example A. Arora and A. Gambardella, From Underdogs to Tigers: The Rise and Growth of the Software Industry in Brazil, China, India, Ireland, and Israel, Oxford Univ. Press, 2005. 10. M. Campbell-Kelly, Number Crunching without Programming: The Evolution of Spreadsheet Usability, IEEE Annals of the History of Computing, vol. 29, no. 3, pp. 619. 11. D. Mindell, The Rise of Relational Databases, National Research Council, Funding a Revolution: Government Support for Computing Research, Natl Academy Press, 1999, pp. 159168; M. Campbell-Kelly, From Airlines Reservations to Sonic the Hedgehog: A History of the Software Industry, MIT Press, 2003, pp. 185191. 12. D. Jerger, moderator, RDBMS Workshop: Ingres and Sybase, Computer History Museum, 2007, p. 5. 13. M.B. Hoffman, interview by B. Grad, 13 June 2007, Computer History Museum, p. 10. 14. G. Morgenthaler, interview by L. Johnson, 8 Dec. 2005, Computer History Museum, p. 12. 15. M. Wilson, The Difference between God and Larry Ellison: Inside Oracle Corporation, Morrow, 1996. 16. Top 50 Independent Software Vendors, Software Magazine, May 1988, p. 21. 17. M. Stonebraker, interview by B. Grad, 23 Aug. 2007. 18. J. Desmond, Sybase Seeing Payoff, Software News, Mar. 1992, pp. 4042. 19. B. Grad, moderator, RDBMS Workshop: IBM, Computer History Museum, 12 June 2007, p. 12. 20. Database Management Systems, p. 11. 21. Database Management Systems, p. 122.

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22. J. Desmond, Here Comes DB2: DBMS, Application Vendors Respond, Software News, July 1988, pp. 3252. 23. Desmond, Here Comes DB2, p. 32. 24. M. Bucken, CAI Picks Up Cullinet, Software Magazine, Aug. 1989, pp. 2427. 25. Campbell-Kelly, From Airlines Reservations to Sonic the Hedgehog, p. 189. 26. See for example D.L. Stearns, Electronic Value Exchange: Origins of the VISA Electronic Payment System, Springer, 2011. 27. G. McWilliams, Oracles Olympian Challenge, Datamation, 15 Nov. 1988, pp. 3138. 28. Datamation 100, Datamation, vol. 31, no. 11, 1985; IBM Ann. Report, 2005. 29. G.P. Zachary, Show-Stopper: The Breakneck Race to Create Windows NT and the Next Generation at Microsoft, Free Press, 1994. 30. Desmond, Sybase Seeing Payoff, p. 41. 31. S.W. Martin, The Real Story of Informix Software and Phil White: Lessons in Business and Leadership for the Executive Team, Sand Hill Publishing, 2005. 32. Apart from Intel, the dedicated RDBMS hardware firms also mostly survived in the database market. The most successful was Teradata, which acquired Britton-Lee in 1990. Tandem Computers was acquired by Hewlett

Packard in 1997, and HP Integrity NonStop remains an important brand. Intel withdrew from database machines (and its other specialized architectures) in the late 1980s to focus on the burgeoning PC sector. 33. M. Campbell-Kelly and D.D. Garcia-Swartz, The Move to the Middle: Convergence of the Open-Source and Proprietary Software Industries, Intl J. Economics of Business, vol. 17, no. 2, 2010, pp. 223252. Martin Campbell-Kelly is an emeritus professor in the Department of Computer Science at the University of Warwick. His primary interest is in the history of the software and computer industries. His books include From Airline Reservations to Sonic the Hedgehog: A History of the Software Industry (MIT Press, 2003). He is a member of the ACM History Committee. Contact him at M.Campbell-Kelly@warwick.ac.uk.

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