Forget Oracle. Think about Vendors of Proprietary Enterprise Search Systems.

June 14, 2015

Database revenue doom looms for Oracle. Who did not know that, Mr. BigTable and Ms. Spark? Navigate to “Oracle Sales Erode as Startups Embrace Souped-Up Free Software.” The write up makes this point:

The impact [use of proprietary software] shows up in Oracle’s sales of new software licenses, which have declined for seven straight quarters compared with the period a year earlier. New licenses made up 25 percent of total revenue in fiscal 2014, down from 28 percent a year earlier — a sign the company is becoming increasingly dependent on revenue from supporting and maintaining products at existing customers and having a harder time finding new business. Oracle reports fiscal fourth-quarter earnings next week. To blunt this, the Redwood City, California-based company is expanding efforts in cloud computing, which will let it sell packaged high-margin services to customers. That may help balance the slowdown in the basic business. It also operates an open-source database called MySQL.

The unarticulated issue is the word “startup.” Research we conducted and which was verified by various third party sources revealed in 2012 that open source software was getting more attention from Fortune 1000 companies. The reason was that these outfits had the resources to deal with the excitement open source software provides in a Blue Apron type package.

If this Bloomberg write up is correct, the startup crowd is stepping away from Microsoft software and other well known brands toward open source. One can raise prices in the Fortune 1000 arena for a short time. Then, as Thomson Reuters- and Reed Elsevier-type companies have learned, the big boys just go a different direction. Thus, the start up and mid sized market become more and more important to proprietary software vendors.

When the small folks head for the hills, where’s the growth? Price increases? Me too plays? Marketing two steps?

I don’t think so.

Ergo. Trouble ahead for Oracle, but the challenges facing the down market and up market proprietary enterprise search vendors are going to become more severe if Bloomie is on the beam.

Stephen E Arnold, June 14, 2015


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