UPDATED: In a surprise move, Sun Microsystems today said it’s acquiring privately held open source database vendor MySQL AB for approximately $1 billion.
The move is a bold one for Sun, which analysts note has been under pressure to make money from its Solaris enterprise software since it began offering it as open source. MySQL is arguably the most widely deployed open source database in existence, with over 100 million installations and about 50,000 new copies downloaded daily.
“Sun has been struggling to build a recurring software maintenance revenue stream with its open source software releases, and this acquisition should help considerably in building out this business,” 451 Group Analyst Raven Zachary told InternetNews.com.
During a morning conference call with press and analysts, Sun CEO and President Jonathan Schwartz described the deal with MySQL as “the most important acquisition Sun has made in the history of the company.”
The acquisition also makes Sun a database player in earnest.
To date, the company’s efforts in the field have included working with the open source PostgreSQL database in the past, as well as serving as an Oracle partner.
“We’re entering the $15 billion database market by acquiring the fastest-growing and leader of the open source database market,” Schwartz said.
He added that Sun sees the future of the database market as being in open source. Between MySQL and PostgreSQL, Sun will have a large portion of the market covered, he said.
Executives positioned the deal as a boon for both Sun and MySQL. In Schwartz’s view, Sun can help better sell the database to customers, since he said the single biggest impediment to MySQL’s growth has been concerns by large, global businesses about its suitability for mission-critical uses.
“That peace of mind is what we can deliver and that’s what we’ll be focused on immediately as we put the companies together,” he said.
Schwartz also said MySQL would likely bring new business to Sun, both on the software side and potentially on the hardware side as well. He noted that databases are always attached to servers and storage, which presents new upsell and cross-sell opportunities.
“We’re building a business that spans as broadly as the Internet reaches,” Schwartz said. “This is all really about one thing — reaffirming Sun’s position at the center of the Web. We view ourselves as a platform for the Web economy and this will certainly add to the portfolio.”
Schwartz also was quick to note that neither PostgreSQL nor Oracle should feel slighted by Sun’s acquisition of MySQL.
“We have been one of the earliest backers of PostgreSQL, and we are reaffirming that commitment today in part by saying we believe in the future of open source databases so much that we just put a billion dollars behind one of them,” Schwartz said in response to a question from InternetNews.com. “We’re committing to figuring out the ways we can optimize and integrate innovations across the two communities.”
Rich Green, executive vice president of software at Sun, said the move is all about providing choice for customers.
Green said Sun would continue to invest in and drive opportunities to PostgreSQL as well as the JavaDB
effort that Sun also backs.
As for Oracle, he described its relationship with Sun as complementary, noting that Sun has spent many years in partnership with the database giant.
“Oracle is not just a technology that runs on Sun’s technology,” Green said. “We have
hundreds of engineers that work closely with that organization to optimize our systems and software to perform at a world class level.”
“We’re going to keep investing in that, it’s vital to our business,” he added. “But we
can also use and share that experience to similarly optimize MySQL.”
The deal is expected to close in late first or early second quarter next year. Of the $1 billion sum Sun is offering, it will shell out approximately $800 million in cash to acquire all of MySQL’s shares while paying about $200 million in options.
The Sun acquisition also wards off what many observers had expected to happen to MySQL sooner or later — namely, an IPO.
“There were a number of potential pre-IPO suitors for MySQL AB, Sun being one of them,” 451 Group’s Zachary said.
Additionally, with one major open source deal now in motion, the stage could be set for further drama in the space — giving more reason for open source companies to pair off with potential suitors to talk deals.
“2008 looks to be an exciting year for open source M&A,” Zachary said.