Oracle (NASDAQ:ORCL) is the leader in the database software market with a market share of more than 50%. IBM (NYSE:IBM) comes in a distant second with around 20% share. Oracle also competes with smaller players like Microsoft (NASDAQ:MSFT) and Sybase (now acquired by SAP (NYSE:SAP)) in this market. Database software is the most valuable business for Oracle and accounts for around 34% to our $37 price estimate for Oracle stock. Our price estimate stands about 20% above market price.
Oracle experiencing faster database business growth
According to the recently announced Oracle’s fiscal year Q4 2011 earnings release, its database software business grew 28% in this quarter compared to the same quarter last year, which is outpacing competitors by a healthy margin. 
Our Database business grew 28% in Q4 and 26% for the year. That growth rate is twice as fast as any year this past decade. We’re already more than twice as big as IBM, the former #1, and current #2 player in the Database business, and we’re consistently growing faster than IBM and taking market share away from them. 
Oracle striking more business deals
Oracle mentioned that it is winning more business deals for its database software, especially in the cloud-computing segment.
In its conference call:
Why is it the Oracle Database business suddenly growing so fast? Because we’ve advanced our database technology to take full advantage of the latest trends in the database market: cloud computing databases, in-memory databases and now big data databases. This year, we did a number of cloud computing deals, and including a very large one with Salesforce.com last quarter. And this quarter, we did one with the biggest and best name in mobile devices and cloud computing in the world.
You can see how changes in market share impact the stock price by dragging the trend line above using our modifiable charts.
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- Oracle FY Q4 2011 earnings conference call transcript, SeekingAlpha, June 23rd 2011 [↩] [↩]