Is Oracle’s Position Secure in the Database Space?
A Look at Oracle's Strategies, Buyouts, and Performance in 2015
Rapidly growing database space
In the prior part of this series, we discussed how Oracle (ORCL) has maintained its leadership position in the database space in 2015. Though the popularity of open-source databases is rapidly increasing, Oracle has managed to keep its leadership position in this space.
There is no denying the fact that the database market is a massive and rapidly growing market. In mid-2015, IDC Research stated that the overall database market was worth $40 billion in 2015 and is expected to reach $50 billion by 2017, as the chart above shows. Also, the majority of the database market is comprised of proprietary databases such as Oracle and Microsoft’s SQL Server.
Open-source databases saw rapid growth in 2015
If we compare the growth experienced by the proprietary RDBMS (relational database management system) market and the open-source database market, the latter grew more than six times faster. According to Gartner, the RDBMS market grew by 5.4% in 2014, whereas the open-source database market grew by 31% to $562 million. Open-source databases catered to 25% of relational database usage in 2015, as stated by Gartner.
Alhough Microsoft’s (MSFT) SQL Server and IBM (IBM) DB2 continue to rank high in terms of organizations’ preferences, both databases some market share on a year-over-year basis, as shown by the latest DB-Engines ranking. However, that same ranking showed that open-source databases Apache Cassandra and MongoDB were just behind Oracle, Microsoft, and IBM in this space.
Though open-source databases’ popularity poses a threat to Oracle’s dominant position in the database space, considering the recent reports and Oracle’s tight control on the database space, the company will likely take stringent steps to retain its hold on its leadership position in the near future. Investors who wish to gain exposure to Oracle can consider investing in the Technology Select Sector SPDR ETF (XLK) and the iShares Core S&P 500 ETF (IVV). XLK and IVV have exposures of ~38% and 8.5% to application software and invest ~3.0% and 0.7% of their holdings in Oracle, respectively.
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