Oracle gets Sun for $7.4 billion, MySQL for $0

Back in the early days of computing, there was no such thing as a "software vendor." Companies like IBM sold hardware/software integrated solutions and, really, software was developed simply to sell the value of the hardware.

With Monday's announcement that Oracle is acquiring Sun for $7.4 billion, however, Oracle is signaling its own "iPod moment," seeking to compete with Hewlett-Packard, IBM, and others in integrated hardware/software systems.

It's a bold move, and not for the faint of heart. But then, no one would ever accuse Oracle of being faint-hearted.

"I believe this is the first step down a different path," Sun CEO Jonathan Schwartz said in an e-mail to Sun employees, except that it's not, as Gordon Haff points out in a post on CNET.

What is new in the deal is that Oracle finally gets its wish to own MySQL. In 2007 Oracle offered as much as $850 million for MySQL, the third of its offers for the open-source database company.

This time, Oracle effectively got MySQL for free, as the valuation for Sun almost certainly wasn't raised much by its MySQL asset, acquired in 2008 by Sun for $1 billion.

What Oracle will not want, however, is for its customers to get MySQL for free.

Importantly, Oracle's new "systems" approach gives it the ability to digest a host of open-source projects like MySQL that might otherwise struggle to make money, and monetize them heavily by burying them in hardware "systems." It's a smart move driven by a company that knows that open source as a religion faded, and that open source as a key driver of innovative IT is just beginning.

It does, however, potentially give Oracle an antitrust problem in MySQL, as ZDNet's Dana Blankenhorn posits. MySQL's market share in the enterprise database market is negligible, but its share of the exploding Web database market is dominant and exploding.

While I don't expect the U.S. Justice Department or Federal Trade Commission to launch an antitrust action against Oracle relative to MySQL, it's important to note that this acquisition makes Oracle the clear behemoth in databases, past (enterprise) and future (Web).

Ultimately, however, this acquisition is not about MySQL. At least, not yet.

It's about hardware/software systems, primarily, and to the extent that software is involved, it's about Java, as called out by Oracle CEO Larry Ellison. Over time, the MySQL component will become increasingly important, but for now this Sun acquisition gives Oracle exceptional control over integrated solutions for its customers, as well as a software portfolio with massive potential.

The industry just changed. Oracle raised the stakes of the game. The new ante to get into the game is integrated hardware/software systems, and as IBM, Microsoft, and Oracle increasingly demonstrate, open-source software plays an increasingly important role in feeding these systems.

Updated at 10:48 AM PDT with links to interesting commentary:

• Larry Augustin runs the numbers on the acquisition and comes up with Java + MySQL for $0.00. Good analysis.
• The VAR Guy works through whether this could really be about hardware.
• Glyn Moody rightly points out that the acquisition turns Oracle into an open-source company...albeit a somewhat ambiguous one.
• Larry Dignan at ZDNet takes a different slant, arguing "MySQL is toast" since Oracle won't let MySQL mess with its database margins.

Follow me on Twitter @mjasay.

[aMUSICsite]

So they have a free database and one they charge for....

[Marcus Westrup]

I suspect that Larry Ellison would like to see MySQL fade out of the picture altogether. The open source community could respond by forking the code to keep a version free and open, but legal maneuvering and FUD by Oracle could be in the future for this project.

[Random_Walk]

Funny thing is, MySQL is still just as free now as it ever was. If Oracle tries to strangle it, I could see the likes of IBM, Google, and such getting together, forking the codebase, and rally the community to their flag instead. Oracle then would lose what little control they have over it.

[ericyen]

That funny . . . what is left of Open Source community.

[totalmonkey]

Great article, Matt!

[warspartan]

What's to stop Oracle from doing the same with a plethora of Sun's other Open Source projects? I'd especially hate to see some of these go belly up because of a bad move on Oracles part.

Maybe they'll even fix MySQL so it actually works like a real database. You know, so it will error out instead of silently truncating, accepting invalid data, and/or failing referential integrity.

[TodoInTX]

Just so you know... it already does this and has for quite some years... read the documentation.

http://dev.mysql.com/doc/refman/5.0/en/server-sql-mode.html#sqlmode_strict_all_tables

[odubtaig]

This does appear to be the same fool who claimed MySQL had no development roadmap when putting the words 'mysql' and 'roadmap' in Google, Yahoo, Live and Ask searches brings it up right at the top as a standard part of the MySQL 5.1 manual which anyone who's bothered themselves to read the first chapter would know.

If someone's going to have an agenda, I'd like to think they could at least try to not be so immeasurably thick about it. Apparently not.

[JimPratt3]

Hope it's not another AOL-Netscape merger in the making.

[mjdinsmore]

Fascinating. It will be interesting to see MS and IBM reactions to this. Of course, if the deal goes though, there will be another large company making large layoffs in this economy. I hope Oracle can manage the breadth of services and software that the combined entity will encompass. I'd hate for either companies products to falter!

[gggg sssss]

MS already has free SQL server express. Blows mySQL out of the water. Now, it needs windows to run on, Hard to see an economic reason for MS to rework it for linux, but wouldntthat be nice? With an AD component for linux as well.

[pentest]

MS SQL blows and the free version comes with the high cost of lock-in.

[dmarkle]

LOL, now Oracle owns a database which properly supports NULLs!