The announcement by John Chen, CEO of database software maker Sybase that his company was reporting its “highest year-over-year licence growth in 12 years [and its] highest Q2 operating margin in [its] history as a public company,” was clearly meant to please shareholders. But they’re unlikely to be so easily flattered.
Chen glossed over a less-than-stellar 5% overall revenue growth, with services down 3%, as he began the quarterly earnings call, instead pointing investors towards new licence sales: up 31% in its database division, 21% in mobile and wireless, and 22% overall. On the back of these more profitable sales, margins hit 15%. Quite a turnaround from the double-digit decline it saw earlier in the decade.
Sybase remains a stalwart of high availability industries like financial services and telecoms providers. When the New York Stock Exchange and 45% of all Chinese telecoms applications run on Sybase databases, says Chen, “if we weren’t scalable you’d be reading about it on the front page of the Wall Street Journal.”
But it is mobile databases that are driving new sales, as Sybase looks beyond its traditional relational database management systems market, where, according to analyst group Gartner, it languishes behind Oracle, IBM, Microsoft and Teradata.
Chen began investing in this mobile future five years ago. Following a string of acquisitions, Sybase’s mobile division now encompasses a diverse range of products such as Avantgo, a news reader for PDAs and smartphones.
The latest product launch is its iAnywhere suite, bringing together the individual components of its mobile middleware – including email, security, management and development tools.
“We are extending the capability of the data centre to where [the user] is. But that has to be done with maximum security and transparency.”
John Chen, Sybase
This will help to clarify its bewildering breadth of offerings. Chen says his mobility products come together to create an “event-driven” mobile experience, where the “information is looking for the individual”. Only Sybase can provide infrastructure that runs “from the database to the device”, he says. “We are extending the capability of the data centre to where [the user] is. But that has to be done with maximum security and transparency.”
Some analysts have doubted whether there is significant demand for a suite of such products, with many companies still preferring point products. And even if Sybase is riding the crest of the mobile wave for now,
several other big names with more obvious mobile associations are chasing this market, including Nokia, Research in Motion (RIM) and Microsoft. As more mainstream applications go mobile, the more crowded that market will be.
Chen remains optimistic that these two problems will solve each other: “We want other people to compete so the market is bigger,” he says.
However, analysts at Gartner remain unconvinced. A recent briefing paper notes: “Sybase’s strategy in many areas remains solid, and its products can compete feature-to-feature with those offered by industry leaders. Yet, lingering uncertainty regarding Sybase’s corporate future leaves many customers unwilling to expand their commitments to its products.”