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NOTE: Although the information discussed in this paper is (mostly) up-to-date, the idea that the world of XML and databases can be seen through the data-centric/document-centric divide is somewhat dated.
At the time this paper was originally written (1999), it was a convenient metaphor for introducing native XML databases, which were then not widely understood, even in the database community.
Thus, while it may be possible to use an XML document or documents as a database in environments with small amounts of data, few users, and modest performance requirements, this will fail in most production environments, which have many users, strict data integrity requirements, and the need for good performance.
A good example of the type of "database" for which an XML document is suitable is an file -- that is, a file that contains application configuration information.
(Historical footnote: I first heard the terms data-centric and document-centric on the xml-dev mailing list.
I don't know who coined them, but I've found messages from 1997 using the term document-centric and messages from 1998 using both terms.) Data-centric documents are documents that use XML as a data transport.
Is the database used by an e-commerce application in which XML is used as a data transport?
In this case, you'll probably need a relational database and software to transfer the data between XML documents and the database.
If your applications are object-oriented, you might even want a system that can store those objects in the database or serialize them as XML.
It is a good bet that your data has a highly regular structure and is used by non-XML applications.
Furthermore, things like entities and the encodings used by XML documents probably aren't important to you -- after all, you are interested in the data, not how it is stored in an XML document.