Market Share Analysis

Date last updated: Match 18^th, 1997

You can contact Nigel Pendse, the author of this section, by e-mail on NigelP@compuserve.com if you have any comments or observations.

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There are more than thirty vendors claiming to provide OLAP products. Despite the consolidation that might have been expected in this high profile sector of the software industry, and the number of takeovers that have occurred, there are actually more OLAP vendors now than there were when the first edition of The OLAP Report was produced in 1995. This is because the companies acquiring OLAP vendors and products have not previously been OLAP suppliers, so the change in ownership has not reduced the number of products, while several new products have been launched. No significant product has dropped out, and most vendors are growing their OLAP revenues even though they may be losing market share.

This is unlike other sectors, such as the database industry, or desktop productivity tools. Some might suppose that this is because of the relative immaturity of the OLAP sector, presuming that it was an all-new area. In fact, while it might indeed be immature, this is not a new area: the oldest OLAP product (Express) and OLAP vendor (Comshare) date back to 1970 and 1966 respectively, long before the eras of relational databases, client/server computing or desktop tools. However, with the imminent entry of Microsoft, competing with its old adversary Oracle, some consolidation may occur in 1997.

The OLAP market currently has no dominant players, and we do not expect any single vendor to dominate it within the next two years. The largest current supplier (Oracle) has only a 20 percent market share, and this is not increasing significantly. The largest potential player (Microsoft) has yet to enter the market, and is not expected to release a product until mid-1997.

Background to the market share analysis

Measuring market size and share is more difficult than a casual observer might suppose. First, one has to decide which companies actually belong in this sector. We do not accept the claims of all those companies claiming to offer OLAP products, and we do regard some products as being in the category even if the vendors have (for marketing reasons) chosen not to use the term. We do include pre-built applications, as well as the technology products from which such applications should be built. Our guiding principle in this is the FASMI test, described in The OLAP Report.

However, this is the not the end of the process. There are many complicating factors that must not be ignored (although we suspect that other market researchers tend to gloss over them):

Many vendors of OLAP products and applications are also active in other areas, so we have to try and estimate the proportion of their total revenues represented by OLAP. Some vendors are unable or unwilling to help us make these estimates, and even those that do try to help do not always provide reliable information (if only because their own internal records do not clearly distinguish OLAP related from non-OLAP related revenues).

A number of the vendors are US private companies who are not obliged to publish financial information. Some choose to do so voluntarily, but in other cases we have had to make estimates.

Some vendors concentrate on direct sales, so their own revenues are equal to what final customers paid. These figures are a good guide to market size and share. But, other vendors make many of their sales through re-sellers, and the original authors' revenues are only a fraction of the true market value. In order to treat all vendors equally, we do not want our figures distorted by differences in their sales models, so we try to gross up these companies' indirect revenues to what we believe to be the "retail" market value.

Some OLAP vendors are value added re-sellers (VARs) of other commercial OLAP products. If an author and a re-seller are both included in the survey, there is a risk of double counting the same revenues. We eliminate these "intra market" royalties by excluding them from the revenues of the original author. Thus, we measure them at the point where the customer bought the final application, and exclude the trade between OLAP vendors themselves. This means that Arbor Software and Applix (TM1) are shown with lower market shares than their products alone would justify (in fact, if all of the Essbase revenues, including applications based on it, were grouped together, the virtual "Essbase Inc" would rank third in the table, with a 10 percent market share).

Most OLAP products require assistance in implementation. We include these in the market totals, because it would otherwise be difficult to compare products that are sold either as complete applications, or as tool-kits from which applications can be built. Many, but not all, of the vendors have their own revenue earning services groups to provide this assistance and the resulting fees are included in their total revenues. Most products are also implemented by independent third party firms, and the proportion varies by supplier. Again, for consistency, we have tried to treat all vendors equally, by making suitable allowances for external consulting.

Many OLAP solutions are implemented using both OLAP and non-OLAP technologies. As far as possible, we exclude the latter from the figures (so, for example, we exclude all relational database costs).

We are publishing estimates for 1996 market shares soon after the end of the year, which obviously means that we are estimating the fourth quarter's revenues. Consequently, we expect to revise these figures in due course.

We believe that the results of all these adjustments give the fairest possible assessment both of the size of the OLAP market, and the shares of the various vendors. Of course, great precision is not possible, and it would be pointless to look at shares to more than two significant figures (this is, of course, true of almost all market surveys and opinion polls, but some people ascribe a spurious degree of accuracy to the results).

Readers should not attempt to view the OLAP market in isolation. It overlaps many other "markets", including data warehousing, EIS, decision support, query and reporting and even databases, so there is no point in trying to aggregate the figures of several of these indistinct sectors.

Market Shares

We estimate that the total OLAP market, including implementation services, will be about $1billion in 1996. It has shown a 40 percent growth rate over the last three years, but we expect this to drop slightly in 1997, for several reasons: it is hard for markets of this size to grow so rapidly, there is a degree of market saturation, and we expect average prices to reduce once Microsoft enters the market.

We rank vendors, not products, because many of the vendors supply multiple OLAP products and applications. As described in the background notes above, calculating OLAP market shares is quite an involved process. Our resulting estimates for the top fifteen OLAP vendors are shown below. Improvements in market share or position are shown in green, and reductions in red. A link to the updated product review is shown, if available (open only to subscribers)

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