As Sun Microsystems becomes the owner of MySQL, the pioneering open source database system, it plugs a hole that exists in the Sun software product line and moves the company toward becoming a supplier to Web 2.0 companies.
The company that pioneered the Java programming language said Wednesday it will pay about $800 million in cash in exchange for all of MySQL stock and assume about $200 million in options as part of the deal.
But Sun still needs to undergo the transition that will make it a software company that can capitalize on MySQL's popularity. Many young companies seek to become social networking-type sites and many of them already use MySQL. By buying the open source database company, Sun could become a supplier of the companies that seek to maximize customer interactions, capitalize on user input, and gain a position in the second phase of Web operation.
"This is a move that helps Sun's strategy. It pits the LAMP stack, backed by Sun, against Microsoft .Net. It's a strong initiative," said Noel Yuhanna, database analyst for Forrester Research. The LAMP stack is a set of open source software that includes MySQL as the database -- Linux, Apache, MySQL, and PHP or other dynamic scripting language. The elements of the set work easily together and can be used to build ambitious Web applications.
The acquisition also represents a bid-up price for an open source company. The $1 billion Sun will pay almost equals the sum of the open source acquisitions that have preceded it. Red Hat paid $326 million for JBoss; Citrix paid $500 million for XenSource; Yahoo paid $350 million for Zimbra; Oracle paid an undisclosed amount for Sleepycat.
MySQL represents a small portion of the world's $15 billion in database revenue, perhaps $200 million a year, Yuhanna said in an interview. But it represents the database most frequently used for new Web applications, particularly those for the social networking, active user-input types of sites, such as Facebook.
Dave Rosenberg, CEO of MuleSource, supplier of a lightweight, open source enterprise service bus, said Sun is reinventing itself as a disruptive company, one that could gain revenue from better-established players, such as IBM and Oracle, by pursuing an open source strategy with Sun's technical support behind them. In the process, it's also likely to become a keener competitor of Red Hat's, he added.
"How do you reinvent a gigantic company as a software company -- challenging powerful incumbents in the process?" wrote Rod Johnson, CEO of SpringSource, in a blog Wednesday. He answered, "I believe that [Sun CEO] Jonathan Schwartz has shown real vision" in acquiring MySQL to position Sun as a major supplier of open source software. Johnson is the lead developer of the broadly used, open source Spring Framework for Java developers.
The acquisition of MySQL, a pioneer as a commercial company organized solely to distribute open source code, pushes Sun further down the road toward becoming a major open source player itself. It has made its Solaris operating system open source code, and followed up with its suite of Java middleware, finally making Java Standard Edition itself available as open source.
"Customers confirmed what we've known for years -- that MySQL is by far the most popular platform on which modern developers are creating network services," Schwartz wrote in his own blog.
Schwartz wrote that Sun is committed to the open source business model, where revenue is made by supporting a product rather than in up-front license sales. Consumers may freely download and use the product without signing up for commercial technical support. But as a database, such as MySQL, moves into the heart of business operations, many businesses buy support.
This acquisition, Yuhanna said, "takes Sun where the Web is going, not where it used to be."