Case Study: Databases - Signals of Change

In the last blog, I outlined a short history of the database industry for the three companies we're are going to use in this case study. Oracle (as the lead company), Microsoft SQLserver (as the second tier company) and MySQL as the disruptive company.

So where are the signals of changes in the database marketplace. Innovation theory and the impact of disruption theory suggest that when the leading companies overshoot on the performance demanded by customers that customers will start to value other things in the product. The primary phases being functionality, reliability, convenience and price.

Where are we at in the database lifecycle? I believe we are in the price phase.

Oracle has remained the leading database company through functionality, reliability phases.

In 1995 it was attacked by Microsoft SQLserver from below with the release of SQLserver 6.5 ,when customers started to value convenience.
SQLserver 6.5 was easily supported by DataBase Administrators (DBA) via a Graphical User Interface (GUI). This allowed companies to employ less skilled staff to look after databases compared to Oracle and its command line interface. The GUI tool allowed SQLserver DBAs to administrator more easily a larger number of databases.
I remember having to support both Oracle and SQLserver as a junior DBA and SQLserver was easier to support. Oracle provided more in-depth tools to support, however everything had to be done via a command line and you had to remember syntax and complex relationships to retrieve the correct information.

Oracle released in own version of Enterprise Manager (the GUI admin tool) in response to SQLserver, however Microsoft also attacked Oracle from a convenience value point by using its famous bundling strategy. Companies could choose Microsoft when they started and grow into the higher end products as they grew. So the company could start with Microsoft Access database, which was functionally limited and migrate to SQLserver when they required more functionality, better reliability and ease of use.

At the same time SQLserver was attacking Oracle from a convenience value point, some customers had already moved on to value price. The open source/freeware movement started to gather steam in the lead up to 2000. After the tech bubble burst in early 2000, plenty of struggling IT companies looked at slashing costs via the use of open source software. They would employ IT staff at a discount (due to the market slump) and rather than pay license fees and support fees get their own staff to support the product. The staff relying on search engines and online support forums to support the product, rather than dedicated support consultants (Oracle).
MySQL is a free database, which started with basic functionality and as subsequently added new features in its pursuit of the database leaders. It also has been able to pursue a bundling strategy as a partner product in the open source/freeware LAMP (Linux, Apache, MySQL, Php/Python/Perl) web application suite.

I believe we are in the price phase as the database leader, Oracle, has responded to the threat of MySQL taking the market share by releasing a free version of its database software Oracle Express in 2005. Whilst also buying one company Innodb which provided a more robust database file structure to MySQL.

Side Note: MySQL has actually broadened the total database marketplace. As customers who would have not used a database in the past have now been exposed to the benefits of using a database.

The threat to Microsoft from MySQL comes from the LAMP, as it attacked Oracle offering convenience at a lower price, so MySQL as part of the LAMP bundle as attacked Microsoft offering a lower price.

I will post some charts in the next blog. Please feel free to comment.

Have Fun

Case Study: Databases - History

Given my background I figured databases were a good place to develop and use innovation theory. This industry is showing clear signals of change for a while now.

I plan to apply the theory of innovation as presented by Clayton Christensen in "Seeing What's Next".

A quick database historical summary:

Databases are software for managing data and information within organizations. The industry took off when the first relational databases were developed. Databases are one of the most important IT parts of any company. The recent explosion of Open Source software has lead to a couple of new database vendors.

I am going to concentrate on Oracle, Microsoft SQLserver and MySQL.

Oracle was one of the first companies to introduce a relational database. It has followed the innovation path of increasing features and better performance for the most demanding customers, basically following the classic trajectory. Oracle is rightly seen as an industry leader in databases, delivering cutting edge functionality and performance to the enterprise market.

Microsoft SQL server partnered with Sybase to produce an relational database product for its move into the enterprise server market. Following its bundling strategy which has worked well in other areas of software it provided a complete server/database solution. This strategy also provided a smooth path to upgrade for companies which had outgrown the Microsoft Access database on individual PCs.

MySQL is a "free" software database released under GPL. As the Open Source/Free software movement increased with the release of different similar licensed Unix distributions (Linux, Open BSD) the use of MySQL increased. The ability to have a database which could be queried using SQL enabled people who couldn't or wouldn't afford a database to now use a database.

So we have an industry leader, servicing the most demanding customers with good margins and we have two other companies both attacking from below, with products which in the beginning were not good enough for those demanding customers.

I am going to look more closely at the signals of change in the next blog.

Have Fun

Paul

The tools of Analysis

The innovators collection have reference notes to Michael Porter's Five Force Analysis.
A quick google search provides plenty of hits on Michael Porter.

I choose the wikipedia entry as a start as it provides a nice profile of his work.
Wikipedia is also good as it provides plenty of links (if it has been written and edited well) to other useful wiki-links and also to other websites.

A more refined search for his Harvard Business Review paper "How competitive forces shape strategy" finds plenty of sites. If that doesn't provide enough information to understand the concept searching for "Five Forces Analysis" finds more sites with distilled summaries of the work.

I recommend starting with the wikipedia entry on Five Forces Analysis

Using Google to search is the first step, you should go and check some of the websites which had a good pagerank (at least 2 or 3 deep sometimes) and see how the keywords fit within the site. All of the main keyword search "Michael Porter", "How competitive forces shape strategy" and "Five Forces Analysis" were referenced from business consultant websites to marketing websites to university lecture notes. This gives a good feel for how important the work is.

I have a couple of industries which I would like to perform innovation analysis on, however I am open to suggestions.

Have Fun

Welcome

Welcome to DisruptionCity,

In an effort to understand the ideas put forward by Clayton Christensen within the "Innovators Dilemma", "Innovators Solution" and "Seeing What's Next", I am going to analyze different industries to see where disruptive and sustaining innovations are occurring and could possibly occur.
The analysis of innovations within each chosen industry will draw heavily of the theory provided in the "Seeing What's Next" and other sources which have been referenced heavily throughout each of the three books.
In performing analysis using this theory I hope to gain a better understanding of the innovation theory.
Any feedback is more than welcome.

Lets go!