Sybase: Off the Map?

Sybase still has one cosmetic trapping of the companies that hit the big time in Silicon Valley: Its headquarters sits on a street named after itself (Sybase Drive) in the San Francisco suburb of Dublin, Calif. But in many ways, this erstwhile database leader finds itself well off the beaten path.

It’s now a distant fourth behind IBM, Microsoft and Oracle in the database market. Back in 1995, Sybase pocketed $615.6 million in software sales. By last year, licensing revenue in its enterprise software group, which consists primarily of its Adaptive Server Enterprise (ASE) database and PowerBuilder application development software, had dropped to $155.2 million.

What happened? The fall from grace dates to Sybase’s initial refusal in the mid-1990s to add a feature to its database called row-level locking, which temporarily “locks” an individual record (such as a customer order) in a database when someone is updating it—preventing the record from being changed by anyone else. Without row-level locking, Sybase’s database couldn’t run packaged applications, such as enterprise resource planning systems, many of which work only with databases that provide that feature.

But Sybase felt databases “shouldn’t be accessed in that way,” says Carl Olofson, a research director at IDC. The company’s engineers thought row-level locking would cripple performance because a database needs to work much harder to lock rows than tables (a collection of records), given that there are more rows than tables to track.

Eventually, Sybase relented and added row-level locking, but only after customers had repeatedly asked for the feature—and competitors were already offering it. The company never recovered from the setback.

“Their database just seemed to fall off the map,” says Bill Laskey, director of information services at Manulife Financial’s Canadian pension operations division in Waterloo, Ontario.

Laskey’s group had been using Sybase since 1996 to run its pension administration system, which maintains information on 300,000 members. Two years ago, the division replaced Sybase’s database running on two Hewlett-Packard Unix servers with Microsoft SQL Server on an eight-processor Compaq server. Without any tweaking, Laskey says, SQL Server performed as well as the previous HP/Sybase setup at less than 10% of the overall cost, because it was running on less expensive hardware.

There was no reason to stick with Sybase, which, in Laskey’s view, was no longer putting significant effort into developing the database: “They seem to be just keeping it alive.”

On the contrary, says John Chen, Sybase’s president and CEO. “If people think we don’t do databases anymore, they’re mistaken,” he says, claiming the company is investing heavily in ASE’s next major release, Version 15, which is due out in mid-2005 (see box).

As much as it pains them, Sybase executives realize that more customers like Manulife are likely to conclude that the company will never recapture a top spot in the database world. To try to offset that erosion and carve out some differentiation, Sybase has emphasized its SQL Anywhere Studio software, which lets companies disseminate data to wireless and remote devices. The company’s main marketing message these days is that it “enables the unwired enterprise.” While Microsoft, Oracle and IBM each offers scaled-down databases for mobile devices, SQL Anywhere has established a reputation for being able to synchronize better with back-end databases from multiple vendors.

Still, three-quarters of Sybase’s software revenue still comes from ASE and PowerBuilder. Of that, Chen says about 80% is from its 22,000 customers running current versions of ASE, including Kodak’s division. Chen believes Linux versions of Sybase’s database hold the most promise for growth, though the company chalked up just 100 new Linux customers for the second quarter of 2004. “The actual number [of customers] on Linux is not really big, but we figure that will be a new business going forward,” he says.

And while it may have a large customer roster, Sybase has committed technical blunders that pushed even some of its fans to the brink of switching.

Trimac, a 6,000-employee Canadian trucking company, runs an order-entry and dispatch system for 3,000 trucks on Sybase’s database. In late 2001, Trimac wanted to upgrade to ASE 12.0 from 11.9.2, because on the older version its servers were hitting processor-utilization rates of 80%. “We were maxed out,” says Janet Topic, vice president of information technology.

But when Trimac tried to upgrade to 12.0, Topic recalls, “It was a disaster.” The software agent that replicated data to a secondary system would freeze up after about an hour and require a server reboot. Her team considered migrating to Microsoft SQL Server, and even rewrote some of the application’s code for the Microsoft database. In the end the company decided the switch would be too time-consuming and expensive. Instead, it chose to upgrade to ASE 12.5 in 2002, which fixed the replication problem and cut processor utilization to less than 50%. “Sybase was very attentive to helping us work through the problems,” Topic says. (According to Chen, only a “very small minority” of customers experienced problems upgrading to ASE 12.0.)

Some customers, to be sure, say they’ve been consistently satisfied with Sybase. “The database has been just a dream to run; it doesn’t cause me any hassle,” says Michael Brundige, senior database administrator at Brink’s Home Security, which maintains information on 800,000 customers in ASE 12.5.2. He blames Sybase’s flagging fortunes on “poor marketing.”

The struggle for Sybase is to convince prospective customers it’s not fading away. And the job won’t be getting easier anytime soon for the bosses at 1 Sybase Drive.

The Company
Headquarters: 1 Sybase Drive,
Dublin, CA 94568
Phone: (925) 236-5000
Ticker: SY (NYSE)
Employees: 3,741
Founded: 1984
Business: Develops and sells database, data integration and application development software.

Executives: John Chen, president and chief executive officer; Raj Nathan, senior vice president of information technology solutions group; Terry Stepien, president of iAnywhere Solutions subsidiary.

Products: Adaptive Server Enterprise, transaction-oriented database management software; IQ server software, designed for analyzing large data warehouses; SQL Anywhere Studio, a software package that includes a stripped-down database for mobile devices; PowerBuilder, a development tool for building Web applications.

Market Share: 3.3% of the $13.6 billion market for relational database management systems, 2003 (IDC).

Competitors: IBM; Microsoft; Oracle

The Technology
Sybase’s stature has waned, but the company says it still has skin in the high-end database game. Major features planned for ASE 15.0 include:

  • Shared-disk clustering: Lets a single database run on multiple servers.
  • Bigger databases: Increases the maximum size of an individual database to 32 trillion bytes (32 terabytes) compared with 4 terabytes for the current Version 12.5.2.
  • Automatic database expansion: Allows an administrator to set thresholds to automatically increase the size of a database.
  • Reference Checks

    Jon Bridges
    [email protected]
    Project: Fast-food chicken chain runs SQL Anywhere on Windows NT 4.0 in 1,148 stores to replicate sales and employee data with its Oracle-based financial system at headquarters.

    St. Luke’s Hospital
    Bill Meyer
    (314) 434-1500
    Project: Hospital in Chesterfield, Mo., uses ASE as the data repository for its McKesson health-care information system and clinical applications, linked using Sybase data integration software.

    The Greenbrier Cos.
    Brad Ashton
    Systems Analyst
    (503) 670-3162
    Project: Railroad-car manufacturer uses Sybase’s EAServer application server to provide customers with Web-based order status reports. It built the Web application with PowerBuilder.

    Janet Topic
    VP, I.T.
    (403) 298-5100
    Project: Trucking and logistics company runs an order-entry and dispatch system on ASE running on a Sun Microsystems SunFire V880 server. A similarly configured second server generates reports.

    Brink’s Home Security
    Michael Brundige
    Senior Database Administrator
    [email protected]
    Project: Security- systems company in Irving, Texas, runs its billing and customer-care systems on ASE on an IBM pSeries 650 Unix server.

    Washington State Dept. of Social and Health Services
    Julius May
    Database Administrator
    (360) 725-4577
    Project: Copies data on agency programs (such as food stamps) from an IBM mainframe to ASE on eight Windows servers to let staffers look up information.

    Sybase Operating Results*

    Gross margin69.8%71.3%70.9%
    Operating profit$33.43M$104.33M$57.18M
    Net profit/loss$26.01M$87.27M-$94.67M
    Net margin7.0%11.2%-11.4%
    Earnings per share$0.26$0.89-$0.95
    R&D expenditure$59.77M$116.89M$117.78M

    * Fiscal year ends Dec. 31; YTD reflects first six months

    Other Financials**

    Total assets – $1.11B
    Stockholders’ equity – $698.54M
    Cash and equivalents – $252.79M
    Long-term debt – None
    Shares outstanding – 98.61M
    Market value, 7/29 – $1.38B

    **As of June 30, 2004, except as noted