Microsoft, Oracle databases gain share vs IBM

BOSTON, Aug 26 (Reuters) - Sales of business database software made by Microsoft Corp (MSFT.O) and Oracle Corp (ORCL.O) are holding up strongly this year after the companies gained share from IBM (IBM.N) in 2007, according to market research firm Gartner.

"Microsoft and Oracle continue to make advancements in certain faster-growing areas," Gartner analyst Colleen Graham said in an interview. "IBM continues to struggle."

Sales of Microsoft's database software climbed 16.5 percent to $3.1 billion last year, buoyed by growth in Asia and Eastern Europe. The No. 3 player in the market also expanded sales to mid-sized businesses in North America, Graham said.

Microsoft's market share widened to 18.1 percent from 17.6 percent, according to data that Gartner released to Reuters on Tuesday.

Graham said that Microsoft's software is gaining popularity because it generally includes more bells and whistles in basic versions that rival software from Oracle and IBM.

"The product is cheaper," she said.

Sales at Oracle, by far the market leader, rose 14.9 percent in 2007 to $8.3 billion. Its market share grew to 48.6 percent from 47.9 percent.

Oracle's strategy for boosting sales is to introduce new features that it can sell to its broad, existing customer base, an approach that Graham said has paid off.

"Oracle is like a really tricked-out car. You can get all this really great stuff, but you have to pay extra for all the options," Graham said.

While sales at No. 2 player International Business Corp rose 10 percent to $3.5 billion, its market share contracted to 20.7 percent last year from 21.3 percent, according to Gartner.

One factor hampering IBM's growth rate is that customers who buy its database software tend to use the programs on IBM hardware, whose sales are not growing as quickly as the systems that are most often used with databases from Microsoft and Oracle, Graham said.

Microsoft's database, by contrast, is generally used with the software maker's own Windows Server operating system. Oracle's database is typically run on the widely used Linux operating system.

Database sales at the three companies accounted for about 87 percent of the $17.1 billion global market for database software last year, according to Gartner. (Reporting by Jim Finkle; Editing by Steve Orlofsky)