Oracle (NYSE:ORCL) is the world’s second largest software company in the multi-billion dollar software market with revenues in excess of $37 billion and a market capitalization of approximately $175 billion. The company is the global leader in developing database management software products and commands a 48% market share in the relational database market. However, the company has limited presence in the niche NoSQL database market. The gargantuan rise in global unstructured data in recent times has pushed companies into adopting niche technologies such as NoSQL that offer more flexibility in dealing with unstructured data.
In this note, we take a look at various trends in the global database management software market and the differentiating factors between RDBMS and NoSQL technologies. We have a Trefis price estimate of $45 for Oracle against its current market price of $40.
Growth In Real-time, High-velocity Data Creates NoSQL Buzz
Traditional Relational Database Management Systems (RDBMS) that have been pivotal to Oracle’s huge success in the database market for so many years have been built to deal with sets of structured data. Relational databases are used to analysze alphanumeric data generated businesses and other entities, often for commercial purposes. The market is dominated by Oracle, IBM (NYSE:IBM) and Microsoft (NASDAQ:MSFT) and each is most strongly associated with a specific class of computing (Unix/Linux, Mainframe/Linux, and Windows, respectively). The data are “structured” in the sense they can be organized in columns and rows to be analysed by SQL (i.e., structured query logic). In comparison, NoSQL databases have been built to manage a mix of structured, semi-structured and unstructured data that are being generated in the vast data centers being built by companies such as Google (NASDAQ:GOOG), Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN) and Twitter (NYSE:TWTR). It is referred to as NoSQL because the data are heterogenous and can include images, audio and video files and other forms of non-alphanumeric data. Given the rapid growth of these companies, the growth in unstructured data is rapidly outpacing structured data output globally, with IDC estimating that approximately 90% of all data produced this decade would be unorganized and unstructured. 
In a bid to maximize their benefit in a weak macroeconomic environment, enterprises will need to increase their investments into Big Data analytical tools to capture insights from the vast and rapidly growing unstructured data expanse. This exists outside the enterprise domain associated with traditional RDBMS systems, which is limited capability in dealing with unstructured data. While RDBMS computing resides in well-established enterprise environments, NoSQL is solidly associated with Internet computing, residing in large data centers of white box servers running Apache server OSs and organized within a Hadoop based framework. Here it is instructive to think of a Facebook page and its thousands of elements, including the ads so carefully placed that drive the company’s revenue. Here what matters are the database analytics that drive the adroit selection of ads. These NoSQL technologies do not have the architectural limitations that constrain an RDBMS offering and have horizontal scaling capabilities as opposed to vertical scaling capabilities with an enterprise RDBMS system.
Oracle Has Big Opportunity In NoSQL
Despite the positives of a NoSQL database in this rapidly expanding unstructured data environment, the technology is still nascent. NoSQL databases still have not gained traction with a lot of enterprise customers, despite their enormous prospects for developers, because of the maturity of the relational database technology, and the fact it is so well suited to its workloads. Although leading NoSQL players such as mongoDB have gained a strong clientele, their advantages in terms of architectural flexibility has made limited in-roads into large enterprises.
Additionally, database support and maintenance are a challenge for NoSQL at the present stage. Most NoSQL systems are open source projects and these companies are usually start-ups without the global reach or support resources of an Oracle or IBM. Given the early stage of the NoSQL technology, finding expert developers in the area is a challenging task compared to finding an RDBMS expert, which is discouraging large enterprises from adopting the technology to analyzing their unstructured digital content. Although there is a distinct difference in NoSQL and RDBMS technologies and their applications, we are of the view that Oracle could attain significant first mover advantage by organically/inorganically venturing into the niche segment. We could also see Oracle acquire a few NoSQL players to build a strong footing for itself in this changing database landscape going forward.
- Big Data 101: Unstructured Data Analytics, Intel IT Center
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