Sybase has rolled out a good Q2 in difficult times, reflecting once again the steady, effective management that has characterized the past few years. All-time highs in margins, earnings, and cash flow – coming at the bottom (one hopes) of the current recession – are nothing to sneeze at. The first highlighted item in chairman John Chen’s earnings call was double digit growth in database license revenue, showing that the flagship still has some sea legs.
He claimed 250 new ASE customers in the quarter – “we generally get 800-900 per year,” he added. There were 60 new IQ customers, half of who are non-ASE. Sybase IQ sees Teradata, Netezza and occasionally Vertica as competitors. Good performance, but will it be good enough?
Nobody is under any illusions that Sybase’s database is about to threaten the big three. Still, Oracle’s DBMS+Middleware revenue in its fiscal Q4 was down 10%. IBM reported its information management revenues as down 4%. Microsoft Server and Tools in the middle of a flat year down 6% year to year. Sybase’s continued success (ASE, IQ and RAP collectively up 23% year to year) demonstrates the continuing vitality of the “conventional RDBMS market” outside of the behemoths, and suggest a modest share gain by Sybase. Sybase raised its guidance for the second time this year. Chen touted some large renewals, customers who added IQ to ASE and RAP installations, and claimed some “very large deals in the pipeline.”
But these results take place even as the next crop of specialty ADBMS engines – admittedly including (and led by) Sybase’s own IQ – begins its assault with the premise that general purpose engines are just not suited for modern business intelligence needs. Sybase seems comfortably on board with the new analytics-driven surge; RAP (with added time series capabilities) added 64 new customers, and saw license growth in double digits. The Sybase IQ 15.1 launch was well-received by customers and analysts, and Chen claims the growth pace went up. But tricky waters lay dead ahead.
The challenge? The game is changing; the big guns are being trained on these markets after a decade when Sybase was relatively unchallenged where it chose to play. Sybase needs to raise its voice, proclaim its leadership and extend its marketing into other use cases and verticals. Analytics is a growth wave that has only begun, and Sybase needs to look over its shoulder as the giants rouse themselves and start to attack. As in other markets where its complacency ) has left it exposed (like replication, where Oracle has fired a shot across its bow with the GoldenGate acquisition, analytics could be a step up to another level, or just a chance to land squarely in 3rd or 4th place. It will take investment and aggressive moves. It’s not clear that Sybase’s “steady as it goes” style is going to change, and that’s a pity.