Gartner's open source database forecast doesn't make sense
The annual growth rate estimates appear to be too aggressive and it's difficult to reconcile the market size with potential vendor revenues
Follow @SavioRodriguesI just read Gartner's estimate of the open source database market; the report states:
We also believe this growth will continue during the next five years at more than 40%, passing $1 billion in revenue by 2013.
Two things surprised me about this forecast.
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First, I can't think of many companies that can grow at a minimum annual growth rate of 40 percent over five years after their revenue has crossed a certain point. The "certain point" is largely tied to the market size, but $75M to $100M is a good range for a "certain point." It's much easier to grow 40 percent from $10M to $14M than it is from $100M to $140M in a year. For instance, let's look at the poster child of commercial open source, Red Hat.
| $Mil | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 |
| Red Hat Revenue | 523 | 401 | 278 | 196 | 125 | 90 | 80 | 81 |
| YTY Growth | 31% | 44% | 42% | 58% | 38% | 14% | -2% |
If you start with Red Hat's revenue since it got close to $100M in 2001, the annual growth rate is only 30 percent over seven years. Some readers may ask, 30 percent vs. 40 percent, what's the big difference? Well, over a seven-year period, had Red Hat's revenue grown at just 10 percent more than it did, Red Hat's 2008 revenue could have been nearly $900M, versus the actual $523M. To be fair, if you look at Red Hat's past five years, it has achieved a 43 percent annual growth rate. So I can't discredit the 40 percent annual growth rate estimate from Gartner. However, I would not base a forecast on being "like Red Hat," because few companies are in Red Hat's position. Based on my forecasting experience, even a 30 percent annual growth rate estimate for the open source database market is on the aggressive side (since the market is already past "a certain point").
