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Microsoft Debuts Database Update

Microsoft debuted the latest generation of its database software on Monday, hoping to leverage its strength in desktop software to win a bigger share of the data storage market.

Microsoft has trumpeted the fact that its Office line of products, which control the lion's share of the "productivity" software market, will run better on top of its database, SQL Server 7, than on rival products from IBM, Oracle or Sybase.

The world's largest software company, Microsoft generates most of its revenue from Office and from Windows 95 and 98. Sales of its SQL Server database currently represent a small slice of sales for the Redmond, Wash.-based behemoth.

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Nonetheless, the move is expected to turn up the heat on current database vendors, most notably Oracle. The Redwood Shores, Calif.-based company (ORCL) is the largest database maker, followed by IBM (IBM).

"SQL Server 7.0 is a major breakthrough for Microsoft database technology," Microsoft (MSFT) president Steve Ballmer said in a release. "It's the complete package, delivering the scalability, reliability and ease of use companies of all sizes are looking for to meet the needs of their business-critical applications."

Investors felt otherwise. Microsoft shares fell 1 3/16 to 108 13/16. IBM gained 1 13/16 to 159 1/4 while Oracle was off 3/4 to 32 7/16.

Not that Oracle sees much of a threat from SQL Server 7. Oracle Chief Executive Larry Ellison this week is promoting plans for a computer that can run a database more efficiently with an operating system like Windows NT or Unix.

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Regarding Microsoft's database, Ellison last week said Oracle8i "obliterates" the rival offering from Redmond.

Analysts also played down the benefits of Microsoft's database. Rob Tholeeier, analyst at First Albany's F.A.C./Equities, said "SQL Server 7 is really, really old."

"It's basically Sybase version 10," he quipped, referring to a earlier version of database software from the Emeryville, Calif.-based company (SYBS).

But other analysts point out that although Microsoft may not have the superior product, for a technological view, the software giant has the marketing muscle and distribution channels to push the new database.

Also, Microsoft is expected to "leverage" its dominance in other areas of software to push its new database offering. That strategy is similar to how Microsoft "leveraged" its foothold in the desktop operating system to accelerate the growth of its Internet Explorer web browser.

The Department of Justice was originally looking at the Office product for possible anti-competitive practices from Microsoft. However, the DOJ put that on hold as it concentrates on the possible anti-trust issues around the integration of IE into the Windows operating systems.

Written By Brenon Daly

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