Oracle has kept its lead as the number one database management software maker, but rival Microsoft is gaining ground in the highly competitive market, a new study shows. Oracle widened its lead to 33.8 percent of the overall database market in 2000, up from 31.4 percent in 1999, according to a study released Wednesday by research firm Gartner. IBM remained in second place, eking out a small increase in market share from 29.9 percent to 30.1 percent, while Microsoft jumped from 13.1 percent to 14.9 percent. Microsoft did surpass Oracle in one key area. In 2000, Microsoft narrowly topped Oracle 38 percent to 37.3 percent to claim the top spot in market share for database software that runs on the Windows NT and Windows 2000 operating systems. In the past few years, Oracle has faced fierce competition from IBM and Microsoft in the database software market, which grew to $8.8bn in revenue in 2000, a 10 percent increase from the previous year. Database management software -- which accounts for the bulk of Oracle's overall revenue -- is crucial for businesses and Web sites because it stores, manages and retrieves vast amounts of data. The new study, though, shows signs that Oracle's position in the market could be weakening, which could result in market share losses in 2001, said Gartner analyst Betsy Burton. And while Oracle continues to dominate in the Unix operating system market, IBM snagged market share and leapfrogged Informix to become the number two player in that market. Last month, IBM purchased Informix's database unit for $1bn in cash, which should augment slowing mainframe software sales and boost the company's market share, particularly in the Unix market. "The competition is increasing on Oracle," Burton said. "It is possible that when we do a new study at the end of this year, Oracle may have a loss of market share." In Windows-based database sales, which reached $2.4bn in 2000, Microsoft's market share grew from 35.2 percent to 38 percent, while Oracle fell from 40.4 percent to 37.3 percent. IBM also captured market share from Oracle, as its market share grew from 15.2 percent to 18.5 percent. In the $3.6bn market for databases that run on the Unix operating system, Oracle still has a commanding lead with 66.2 percent of the market, followed by IBM with 14.4 percent. Informix, which recently was acquired by IBM, snagged 6.7 percent of the market. Microsoft does not sell databases for Unix. Oracle announced earlier this year that database sales were slower than executives had expected, but they blamed the US economic slowdown. Some Wall Street executives have speculated that IBM and Microsoft may be stealing market share from the database giant. Although the Gartner study does not reflect this year's sales, Burton said Oracle could potentially lose market share this year. While the tepid economy has hurt Oracle's sales, Burton believes Oracle could be losing customers because of a new pricing change by the database giant. In the past, Oracle charged customers three ways: "named users", where the databases are licensed to specific users' machines; "concurrent users", where the database can be accessed by a set number of users, no matter who they are; and "power units", where Oracle charged based on the size and power of server processors. Oracle recently stopped offering "concurrent" pricing, forcing its customers to move to the other pricing schemes, which could lead to higher costs, Burton said. The pricing change affects 70 percent of Oracle's customers. "Oracle is under more pressure [this year] because customers are frustrated with the company's pricing," Burton said. Despite the stiff competition, Oracle remains a formidable player in the market, Burton said. Oracle next month will begin shipping its new Oracle 9i database, which the company says is more powerful and more reliable. The database will compete against IBM's DB2 and Microsoft's recently released SQL Server 2000 database. "Oracle has grown its market share and has not rested on their laurels," Burton said. "They continue to enhance their database and continue to show a commitment to the product line." IBM saw small growth in overall market share because its strong growth in Unix and NT sales was offset by slower sales of its databases for mainframe computers, Burton said. Being ranked first in Windows-based sales will help Microsoft sell more databases to large customers. Historically, Microsoft's database was used in smaller companies or departments of larger companies. "IBM and Microsoft are nipping at Oracle's heels," Burton said. "IBM is still transitioning from some of their legacy [products]. For Microsoft, it's a shot in the arm in terms of credibility in the marketplace." Overall revenue from database software sales grew 10 percent, from $7.9bn in 1999 to $8.8bn in 2000, the study found. But database sales growth in 1999 was 18 percent. The decline is a sign that the economic slowdown that began last year has hurt overall sales, Burton said. In the overall market, Sybase and Informix ranked behind leaders Oracle, IBM and Microsoft. Sybase captured 3.2 percent of the market, while Informix captured 3 percent. Executives from the database leaders said they were pleased with the results. "It validates and confirms everything we've been saying about SQL Server," said Stan Sorensen, director of Microsoft's .Net Enterprise Server marketing. "We've demonstrated that we've got the availability, reliability and manageability to meet companies' requirements." But Oracle executives believe they can capture more market share with the upcoming release of 9i. "We have the momentum going into the coming year," said Bob Shimp, an Oracle marketing director. "Microsoft was able to grow their market share in the Windows space, but Oracle's coming out with a brand new product with a renewed emphasis in that market. We believe Microsoft has seen the high watermark there." Take me to ZDNet Enterprise Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet News forum. Let the editors know what you think in the Mailroom. And read what others have said.