Costs Force Startups to Let Go of Oracle Databases

Free open-source databases lap Oracle

We noted in Part 1 of this series that Oracle (ORCL) is losing out to open-source technologies in the database space. In fiscal 4Q15, Oracle’s Software License and Support operating segment contributed 49% toward overall revenues. Thus, any technology that disrupts its subscription model will cause a huge dent in its revenue and earnings prospects.

A key factor that impacts startups when choosing a database is cost. According to David Wolff, the CEO of database consultancy Database Specialists, “The only thing that people complain about with Oracle is how much it costs.”

Costs Force Startups to Let Go of Oracle Databases

Oracle charges in the range of $2,000–$10,000 per computer to provide the extra features of MySQL, an open-source database. However, Alibaba Group, Facebook (FB), Linkedin (LNKD), and Google (GOOG) created WebScaleSQL, a MySQL-based open-source database management system.

IT research firm ComputerEconomics notes that these data points demonstrate why enterprise users prefer open-source software.

Generous funding raised in the open-source database space

In February 2015, MariaDB, an open-source database company, raised $3.4 million from Runa Capital, a VC fund based in Russia (RSX). MariaDB provides a platform between MySQL and NoSQL databases.

DataStax raised $106 million in September 2014 to expand its database operations. MongoDB and Couchbase—both open-source NoSQL database developers—raised $231 million and $115 million, respectively, in 2014. According to consultancy firm Market Research Media, spending on NoSQL technology in 2013 was less than $1 billion. Its spending is expected to reach $3.4 billion by 2020, which explains why this segment is attracting such huge investments.

As open-source databases improve over time, it seems that companies are likely to opt for open-source databases rather than pay for Oracle’s products.