Sun's $1B MySQL Buy May Be Its Entree Into Web 2.0 Software
Acquisition lets vendor plug hole in product line and dig deeper into open source market.
As Sun Microsystems acquires MySQL AB, the popular open source database system, it's plugging a hole in its software product line while moving into the tony Web 2.0 neighborhood.
MySQL, with an estimated $200 million in annual revenue, accounts for a small fraction of the $15 billion worldwide database market. But it's the database most frequently used for new Web applications, particularly those for social networking, active-user-input types of sites such as Facebook.
Sun is reinventing itself as a disruptive company, one that could grab revenue from established players such as IBM and Oracle by selling open source products backed by Sun's technical support, says Dave Rosenberg, CEO of MuleSource, supplier of a lightweight open source enterprise service bus. In the process, Rosenberg says, Sun's also likely to become a keener competitor to Red Hat (see "New CEO Must Prove Red Hat's More Than A One-Trick Pony").
"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 post last week. He went on to answer his own question, saying that Sun CEO Jonathan Schwartz "has shown real vision" in acquiring MySQL and positioning Sun as a major open source software player. Johnson is the lead developer of the broadly used open source Spring Framework for Java developers.
Schwartz wrote in his own blog last week: "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."
Noel Yuhanna, database analyst for Forrester Research, sees the MySQL acquisition pitting the LAMP stack, backed by Sun, against Microsoft's .Net. LAMP is a set of open source software that comprises the Linux operating system, Apache Web server, MySQL database, and PHP and other dynamic scripting languages. The elements of that stack work easily together and can be used to build ambitious Web applications. The MySQL acquisition "takes Sun where the Web is going, not where it used to be," Yuhanna says.
Schwartz digs into open source
MySQL, a pioneer as a commercial company organized solely to distribute open source code, isn't Sun's first foray into open source. Sun made its Solaris operating system open source code in January 2005, then followed with its suite of Java middleware, finally making Java Standard Edition itself available as open source in December 2006.
Schwartz wrote in his blog that Sun is committed to the open source business model, where revenue is made 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 MySQL moves into the heart of business operations, many companies buy support.
UP THE ANTE
Sun will pay about $800 million cash for all of MySQL's stock and assume about $200 million in options.
The $1 billion price tag almost equals the sum of the three major open source acquisitions that preceded it. Red Hat paid $326 million for open source middleware vendor JBoss in April 2006, Citrix announced in August its deal to buy virtualization specialist XenSource for $500 million, and a month later Yahoo paid $350 million for groupware vendor Zimbra. Oracle paid an undisclosed amount for open source database vendor Sleepycat Software in 2006.
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