Sun / MySQL - Acquisition Rationale
In my last post, I said that I thought the news that Sun is to acquire MySQL for $1B is a good outcome for all involved. However, checking around the blogosphere, it seems that quite a lot of people are confused by this move. “How will this make money for Sun?” they ask, worrying that “Open Source software doesn’t make any money.” In this case, the M&A rationale looks pretty simple to me - although obviously, I don’t speak for Sun or Jonathan Schwartz. To my mind, the rationale goes something like this…
- MySQL currently has tiny revenues ($50M per year out of an annaul $15B market for databases) and no profits; but it is the fastest growing database in the world. So there’s a big gap between what the revenues are today, and what they might be in the near future.
- Sun is well-placed to accelerate the growth of the revenues and profits because companies that want to pay for databases tend not to trust small vendors like an independent MySQL. As a part of Sun, the idea will be create an offering that companies want to pay for.
That’s it, in a nutshell. Whether it turns out to be a high price or not (and, with revenues of $50M, a $1B acquisition will look expensive to a some people; whereas other will see that means there’s a big opportunity there) depends on how much Sun can grow revenues in the future as a result of this acquisition.
However, there’s even more to it than that. Owning the world’s most popular Open Source database is a strategically valuable addition to Sun’s hardware and software stack. Sun now has:
- A great hardware line-up - innovative industry Intel and AMD servers, along with great servers based on their own multi-core chips
- A great Open Source OS, in Solaris with innovations like ZFS
- A (soon to be) great Open Source virtualisation platform in xVM and xVM Ops Center that virtualises Solaris, Windows and Linux
- A great Open Source database in MySQL
- A great Open Source apps server in Glassfish
- A great Open Source programming platform in Java (suitable for the
- Great Open Source developer tools in Netbeans
- A potentially great (if they deliver!) Open Source RIA platform in Java (including JavaFX)
From the above, it’s easy to see that MySQL plugs an important gap in Sun’s IP for creating a complete Open Source offering to power modern Internet-based computer systems. Sun really should be able to do some pretty damn interesting (and valuable) things with assets like those…
Mr X wrote:
Or it could be a ‘two can play at that game’ two fingers at Oracle who shipped 11g on linux first, have their own OS and virtualisation and are even writing a zfs like fs ( btfs ) - and have not yet shipped 11g for solaris x64/x86.
Posted 17 Jan 2008 at 8:36 pm ¶
simon wrote:
Yes - I bet Sun would just love to take a bite out of Oracle’s ever-growing revenues with their new offering.
There are certainly many companies that choose to run expensive Oracle software when they could actually do just as well with MySQL. For sure Sun will see that as an opportunity.
Posted 17 Jan 2008 at 9:06 pm ¶
Mr X wrote:
They have been looking at this area for a while - for example their work on PostgreSQL on solaris
http://www.sun.com/software/products/postgresql/index.jsp
Posted 17 Jan 2008 at 11:19 pm ¶