Sun to fork out $1 billion for open-source firm MySQL
Sun Microsystems will plunk down $1 billion to buy MySQL, the maker of a popular open-source database.
Sun said Wednesday that it will pay about $800 million in cash for MySQL's privately held stock and will assume about $200 million worth of options. MySQL CEO Marten Mickos will join Sun's senior executive team after the transaction closes.
The acquisition is a bold move for Sun, which has embraced open-source software and development practices in an effort to garner more revenue from its software business. Until now, it has sold support services for a competing open-source database, PostgreSQL.
Company executives said they will continue to support PostgreSQL and continue to partner with database giant Oracle.
MySQL, founded in 1995, is one of the most successful open-source companies. It's part of the popular combination of open-source development products referred to as LAMP, for Linux, Apache Web server, MySQL and the PHP development language, which is broadly used on the Internet and within companies.
Mickos had previously said that the company intended to go public rather than be acquired.
Its business model is to give away the source code and its database for free and to charge customers an ongoing subscription fee for support and services. Speaking during a conference call, Sanford C. Bernstein analyst Toni Sacconaghi said he estimated MySQL's revenue over the past year was in the $60-$70 million range.
In the call, Sun CEO and president Jonathan Schwartz called the deal the most important acquisition in the history of the company.
Sun will gain access to MySQL's large customer base and have the opportunity to sell hardware and addition software, he said. About 75 percent of MySQL installations run on hardware from other vendors than Sun. About 20 percent of them run Sun's Solaris operating system, although the majority of MySQL databases run on Linux, executives said."This is really about one thing: reaffirming Sun's position at the center of the Web," Schwartz said. "We view ourselves as a platform for the Web economy and we certainly believe and can demonstrate that we have the hottest products and platforms."
In his blog, Sun CEO Jonathan Schwartz said that Sun will begin offering support services to customers of MySQL before the deal closes later this year.
He said that Sun intends to provide the sort of support services that large corporations demand.
MySQL is a "part of every Web company's infrastructure, to be sure. And though many of the more traditional companies use MySQL (from auto companies to financial institutions to banks and retailers), many have been waiting for a Fortune 500 vendor willing to step up, to provide mission critical global support," Schwartz said.
Schwartz also outlined a number of areas of technical integration designed to optimize MySQL's flagship database--as well as MySQL's Falcon storage engine--on Sun's Solaris operating systems and servers.
A new benchmark for open sourceThe size of the acquisition, at $1 billion, reflects the indelible mark that the open-source business model--in which companies give away source code and charge for services or high-end products--has left on the software business.
"I think that open source is becoming the business model that enterprises want to pursue...and there are legions of software engineers graduating from college who won't use anything else," said Kevin Harvey, general partner at Benchmark Capital and chairman of MySQL's board. "Open source and software-as-a-service are the only two viable software business models going forward."
There are plenty of open-source start-ups, but few that have reached the size and influence of MySQL. Most of the successful open-source companies have been acquired.
Novell bought SUSE Linux four years ago for about $210 million. JBoss was acquired for more than $400 million by Red Hat in 2006. And last year, Citrix paid $500 million for XenSource, a virtualization software provider, and Yahoo paid $350 million for Zimbra.
"This is a great move for Sun, and answers the question of 'SunDB' that Scott McNealy posed several years ago," said The 451 Group analyst Raven Zachary.
However, the acquisition also comes with some potential difficulties. "This raises a whole bunch of issues concerning Sun's close ties to Oracle, as well as their investment in PostgreSQL," Zachary said.
He believes other potential suitors include Red Hat, Sybase, Hewlett-Packard, and Oracle. Indeed, Mickos confirmed in 2006 that Oracle had attempted to acquire MySQL.
MySQL, which is based in Cupertino, Calif., and Uppsala, Sweden, has about 400 employees. Investors include Benchmark Capital, Index Ventures, IVP, Intel, SAP, Red Hat.
The deal is expected to close near the tail of Sun's fiscal third quarter, which ends in late March, or early in its fourth quarter.
CNET News.com staff writer Stephen Shankland contributed to this report.
Martin LaMonica is a senior writer for CNET's Green Tech blog. He started at CNET News in 2002, covering IT and Web development. Before that, he was executive editor at IT publication InfoWorld. E-mail Martin. 
That is the power of open source.
Also, didn't many people contribute their efforts for free over the years in a move to have an "anti-establishment" database available? They just got their work sucked up by a corporate giant.
It seems to me that the GNU/CC system is not as useful as idealist presume. Principles walk when money talks.
If Sun decided they wanted to remove the GPL from MySQL, they would have every right to do so, as long as none of that code is licensed under GPL by any other copyright holder. As MySQL holds the copyright on the MySQL database, this theoretically wouldn't be a very hard thing to do.
I'm betting that we will start to see some of the potential weakness of the GPL in the coming years with a number of these large acquisitions - especially in large open source projects where the acquiring companies find that "support subscriptions" don't offer the same economic benefit as software sales would.
The problem with the GPL (as with any license that relies on Copyright law) is that it can only be enforced "down" the chain (ie, MySQL can enforce copyright against Red Hat for distributing a non-GPL'd version of the database, but the opposite isn't necessarily true unless there is specific Red Hat code in the distribution that was licensed to MySQL in some way but where Red Hat still holds the copyright).
What also doesn't bode well for smaller "down-line" contributors to the original source code, is in many cases they have given their *COPYRIGHT* (rather than a license) to the head company to ensure that the GPL can be effectively enforced (since copyright can only be enforced by the copyright holder - having a thousand different copyright holders for one piece of software would make it completely impossible to enforce the GPL). This means they have no recourse of the GPL is removed as they don't own the right to their contributions, and in fact may even find that they can no longer distribute their own derivative works because it will violate whatever new license is granted for the software.
Sun is a great company that is committed to open source, and good products. I think that this is great news for the MySQL community, because now finally MySQL can really begin competing with the proprietary systems like MS SQL Server - which is brilliant, and would be pretty difficult to beat.
Remember that MySQL didn't become popular because it's better than proprietary systems. It's popularity stems from the fact that it's light weight - relatively, thus great performance, however, the greatest reason is that it's "freely" available. Although those whom have never used the likes of MS SQL Server will never understand the deficiencies of MySQL. This is an area where Sun could be of great assistance.
You'll have to wait for the revised balance/income sheets.
MySQL wasn't purchased for its revenue, but rather its potential value, and large customer base. The potential return on investment on this transaction is "insane"! Sun will be selling servers optimized for the database, and various other products and services that over the next few years will add up to billions more.
MS bought DOS for about $50K, which may have seemed like a lot back then, but they made billions more from it that created the most successful company of all time. So just wait an see what Sun is able to do with their "seemingly" large investment.
Hardly insane when you are also acquiring all of their proprietary data, customer base, and tech services resources.
And if the business is showing strong growth in their sector, as well as innovation, for Sun it could be worth double the price in the next 5 years.
either company has a poor commitment to open source. In
particular, Solaris 10 is not crap.
You do realize that you can use just about any DB with Java, don't you?
There is no reason to spend the time or money to create a MySQL version with Java.
- Ech. Why oh why MySQL?
- by limefan913 January 17, 2008 12:43 PM PST
- Personally I think this was a stupid move. MySQL has the largest market share of any db. Why would you sell your self out to a company that you compete with? They should have stayed independent.
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- Oracle is bigger IIRC
- by The_Decider January 17, 2008 6:20 PM PST
- MySQL is the largest of open source databases, and in most areas can match Oracle and SQL Server.
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