On-Prem The New Legacy?

Gartner has come out with a new report on the database market, and their conclusion is that on-prem is the new legacy.

Now this is a rather bold statement, but the data does seem to support that. Does this mean that all on-prem databases are going away? Probably not in my lifetime, but the question is what is the direction for the industry, and that is trending strongly towards cloud.

So, let’s look at the numbers.

Gartner is reporting that database cloud services were already $10.4 billion of the $46.1 billion market in 2018 and this does not include the licensing for databases that are hosted in the cloud. The Database market grew 18.4%, and cloud counted for 68% of that growth. Here is the most interesting part to me, AWS and Microsoft account for 75% of the growth. 

This is upsetting the balance of power in the database space. Oracle still retains its leadership position, but IBM, who has always been second to Oracle, has now dropped two spots below AWS and Microsoft. AWS entered the chart in 2013 at #7, which I think speaks to the influence of the platform. Google who entered the chart in 2015 is already sitting in the #10 position. You can also see from the chart, just how chaotic the database market has become since 2015, clearly businesses are exploring their options.

And let’s not forget the rest of the world. One thing we in the West often don’t consider, is how powerful some companies serving the Asian markets have become. Alibaba sits ahead of Google at #9 and Tencent, which entered the chart in 2016 is already sitting at #13, that is an absolutely stratospheric rise. And how about an honorable mention for Snowflake which entered the chart in 2016 and has seen significant growth too.

We know that on-prem will not be going away any time soon, so what is the significance of all this? There is a clear shift in spend towards cloud, and this means that the money for the vendors is in the cloud. We are already seeing shifts in development towards cloud-first, or cloud-only. What this means is that innovation in on-prem databases is already drying up. This will cause even greater shifts in the market as new features will only be available in their cloud forms.

I am always interested in looking for industry tipping points, and we may be looking at one now. It will be interesting to see how this plays out going forward.