Oracle (
ORCL
) continues to maintain its leadership position in the database
software market with a share of close to 50%, thanks to constant
innovation in its database business and positive feedback from the
Exadata line of servers, which should also boost the company's
software business. With continued focus on lower costs and higher
performance for its database products, we expect Oracle will
maintain its market lead over competitors like SAP (
SAP
), Microsoft (
MSFT
), IBM (
IBM
), and Sybase (NYSE:SY).
While we expect Oracle's database software market share will
rise slowly from 50% in 2010 to around 54% by the end of our
forecast period, Trefis community members anticipate that this
metric could hit 60% by 2016, implying a modest upside to our price
estimate for ORCL stock. We note that our price estimate, at
$35.98
, already stands about 17% ahead of market price.
Innovation, Wide Offerings Will Boost Oracle's Database
Share
According to Gartner's market share numbers by relational
database management systems (RDBMS) for 2009, Oracle leads
worldwide RDBMS software market share and total software revenue,
with its Linux and Unix garnering 74.3% and 60.7% market share
respectively.
Oracle's RDBMS stores data logically in the form of tablespaces
and physically in the form of data files. Oracle has introduced
newer and upgraded products on a regular basis with a focus on
improving performance and reducing costs. Oracle Database 11g
Release 2 boasts of reducing server costs by a factor of 5,
reducing storage requirements by a factor of 12, and eliminating
idle redundancy in the data center. The company offers different
services based on clients' needs.
We believe that a sustained focus on innovation and efficiency
will help Oracle maintain its lead in database software.
Oracle Database Business to Benefit from Exadata
Servers
Oracle's Exadata servers, launched in 2008, have seen a large
number of satisfied users. With the Exadata Database Machine,
customers can reduce IT costs through consolidation, manage more
data on multiple compression tiers, improve performance of all
applications, and make better business decisions in real time. We
expect Exadata to significantly boost Oracle's hardware
revenues.
Along with hardware revenues, the Exadata server will also
benefit Oracle's software business. Software operations like online
transaction processing (OLTP) and data warehousing (
DW
) become more efficient with faster servers that facilitate bulk
data uploads and store data in real time. (See
Oracle's Exadata & Software Give Oracle 20%
Upside
)
Trefis Community Forecast
Trefis members expect Oracle's market share in the database
software market to increase from 54% in 2010 to nearly 60% by 2016,
compared to the baseline Trefis estimate of an increase to 53%
during the same period. The member estimates imply a slight upside
to our base
$35.98
price estimate, which already implies a roughly 17% premium to
market price.
Our
complete analysis for Oracle's stock is here
.