Article ID: 2008668 - View products that this article applies to.
The following TechNet Article talks about the SQL Server collation for the SharePoint databases
“The SQL Server collation must be configured for case-insensitive. The SQL Server database collation must be configured for case-insensitive, accent-sensitive, Kana-sensitive, and width-sensitive. This is to ensure file name uniqueness consistent with the Windows operating system.”
However, we do not support changing the default collation (Latin1_General_CI_AS_KS_WS) for SharePoint databases to any other collations (CI, AS, KS, WS).
We support any CI collation for the SQL instance (for master, tempdb databases). However we recommend using Latin1_General_CI_AS_KS_WS as the instance default collation (master, tempdb databases).
(http://go.microsoft.com/fwlink/?LinkId=151500)for other considerations.