Sun Re-Stacks Database Deck
Purchase of leading open source database maker could herald Sun's entry into new markets.
By almost any measure, Jan. 16 was a busy, busy day. Not only did Sun Microsystems Inc. announce a surprise $1 billion purchase of leading open source database maker MySQL AB, but software giant Oracle Corp. kicked off a massive $7.2 billion acquisition of application platform provider BEA Systems Inc. The double-barreled buyouts promise to shake up two markets: database software and messaging-oriented middleware.
Despite being the smaller of the two acquisitions, the purchase of MySQL by Sun could have far-reaching implications. The acquisition immediately makes Sun a factor in the database systems arena, dominated currently by Oracle, IBM Corp. and Microsoft. It could also breathe new life into the open source database market, industry watchers say, creating opportunities for developers to write data-driven apps across a range of platforms.
Though not the company's largest acquisition -- Sun paid $4.1 billion for StorageTek in 2005 -- Sun CEO Jonathan Schwartz characterized the agreement to buy MySQL as the most significant in its 26-year history.
"We're entering the $15 billion database market by acquiring the fastest growing and the leader of the open source database marketplace," Schwartz said during a conference call announcing the deal.
MySQL revenues in 2007 were approximately $75 million, according to Gartner Inc. analyst Donald Feinberg.
"It's by far the most widely used in production of the open source DBMSes [database management systems]," he says.
The MySQL platform is a fast-growing open source database, boasting top-flight customers that include Facebook, Google Inc., China Telecom Corp. Ltd., Toyota Motor Sales U.S.A. Inc. and others. MySQL entered the enterprise database market two years ago with MySQL 5.0.
Nonetheless, MySQL has a small piece of that $15 billion marketplace. In 2006, open source database revenues accounted for just $140 million in revenues. MySQL confirmed to analysts that its revenues in 2006 were $50 million, or slightly more than one-third of the entire market, says Feinberg.
By comparison, Oracle's database sales in 2006 were $7.2 billion, accounting for 39 percent of the entire DBMS market. IBM came in at $4.3 billion with a 24 percent share and Microsoft came in at $3.2 billion with an 18 percent market share, according to Gartner.
Changing the Landscape?
By acquiring MySQL, Sun can only accelerate the growth of the open source database market, Feinberg says. That's because Sun has a sales force of 4,000 and a huge partner program, compared with MySQL's sales force of 400.
"It changes the landscape," Feinberg says. "It's immediate in some areas but it's really more of a play for the longer term. I think over the next five years it'll really start to grow."
While Feinberg acknowledges that Sun has a spotty track record with acquisitions, including StorageTek, he believes Sun's new leadership under Schwartz has learned from prior mistakes. Feinberg, who spoke with MySQL CEO Marten Mickos twice on the day the deal was announced, says Mickos is committed to making the deal work.
"I know him quite well and he wouldn't have said yes if he didn't believe it would help them grow the open source DBMS business," Feinberg says.
Observers say Sun's acquisition of MySQL should have little bearing on the overall database landscape. However, it will position Sun in the growing data warehouse and business intelligence appliance market.
"The data warehouse appliance market will become one of the core markets," says Forrester Research Inc. analyst James Kobielus. "The vast majority of data warehouse appliances on the market run on open source databases."
Kobielus says he doesn't believe MySQL, even with its improved resources, will have a major impact on the general database market.
Josh Jones, a consultant with Consortio Services LLC and author of the forthcoming book "Architecting Database Models for SQL Server" (Pearson Education, 2008), agrees. "If anything, it might push those few people who were implementing -- or planning on implementing -- MySQL in Windows back toward SQL Server," Jones explains in an e-mail.
"It's really only a good thing for Solaris users, since they might end up with more options from an enterprise database standpoint," Jones adds. The Sun Solaris 10 operating system ships with PostgreSQL, a competing open source database.
Gartner's Feinberg says Sun shouldn't be underestimated. Though it has never owned a database, it has worked with Oracle for nearly 20 years. The growth of open source DBMSes is more likely to come at the expense of Oracle and IBM, while it could actually bolster Microsoft's SQL Server business.
"Functionality wise, they have some catching up to do," he says of MySQL, describing the product as more advanced than SQL Server 7 but not quite up to par with SQL Server 2000.
MySQL's Mickos expects the deal to have a much broader impact than some critics contend.
"With this acquisition by Sun, we'll be able to offer those customers even better service, a full stack, and, at the same time, heterogeneous solutions running on a number of platforms with a number of environments," Mickos said on the conference call.
"We think it strengthens our ability to serve our existing customers and very importantly serve the new customers that we see coming as enterprises move over to Web-based architectures in their enterprise architectures, which is now happening."
Sun says it hopes to close the deal in the third or fourth quarter.
Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.