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Oracle shoves IBM out of world's No 2 software seller spot – Gartner

Larry Ellison squeaks in behind Microsoft, Salesforce breaks into top 10

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Oracle sold more software than IBM last year for the first time ever, making Larry Ellison’s database giant second only to Microsoft, at least according to analyst Gartner.

Oracle made $29.6bn during 2013, growing 3.4 per cent over the previous year and elevating it from world’s third largest to second-largest software vendor.

IBM, which had been world number two, fell one place to third – just behind Oracle on revenue of $29.1bn, representing a growth of just 1.4 per cent.

At the opposite end of the table, Salesforce also chalked up a first – breaking into Gartner’s top 10 for the first time.

Salesforce earned $3.8bn during 2013, an increase of 33.3 per cent on the 2012 number. Last year, Salesforce was outside the top 10, at number 12.

The company is the antithesis of Oracle and IBM, which has made a business from CRM sold not as an installable piece of software but as a service.

This is the first time a cloud or SaaS providers has made it into Gartner’s top 10.

Gartner research vice president Joanne Correia said in a statement the debut is testament to the fact cloud is driving the bulk of change in the software market.

Microsoft remained the world’s biggest software maker, earning more than twice as much as IBM or Oracle: $65.7bn, an increase of six per cent.

It’s the tussle between IBM and Oracle that’s significant, given they are both enterprise IT giants trying to reposition themselves to grab the cloud market.

The difference between IBM and Oracle is relatively small, but the psychological impact is significant.

Neither company has had a fantastic year. Oracle’s growth has been slowing while it has been trying to spin up belated cloud hosting businesses and services.

IBM has stumbled badly: hit by falling hardware sales and struggling on cloud, it’s now spending $1.2bn to roll out 40 cloud data centres to make up.

Software sales had been growing.

Larry Ellison has long wanted to make his company the new IBM, based on size and status.

Typically, however, the competition has been on servers – particularly integrated systems, one reason Ellison bought Sun Microsystems’ server business in 2010.

IBM, meanwhile, has pinned its future to software.

The giant’s goal under a five-year roadmap published in 2010 is for EPS of $20 a share in 2015 – with around half of IBM’s profits coming from software.

IBM has sold its x86 server business to Lenovo – the final step in exiting low-profit hardware that started with its sale of the IBM PC business in 2005, also to Lenovo.

Particularly painful for IBM will be the fact is Gartner reckons Oracle’s growth has come from big data and analytics. IBM has been pushing both, through sales of things such as its SPSS predictive analytics software and initiatives such as Smart Cities.

Chad Eschinger, Gartner research vice president, said in a statement: “Global trends around big data and analytics with business investment in database and cloud-based applications helped to drive Oracle's top-line growth." ®

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