In the beginning, XML database vendors would tell a story:

As more and more data are stored in XML format, it is best to store and process XML in environment and platform specifically designed for XML using technology built for this express purpose ie XML database.

Problem was that almost nobody bought this story. There were few reasons to put data into XML databases because of

• stickiness of data ie most of data are stored in non-XML format,
• high cost of transforming existing and future data to XML,
• concerns over interoperability with existing data,
• and lack of capable, usable technology eg basic query language.

Kimbro Straken (of Apache Xindice nee dbXML fame) writes there will be room for embedded XML databases but native XML databases are doomed given that Oracle 9i and other RDBMS are for all intents and purposes native XML databases.