With community, Oracle can reap what Sun sowed

While the vast majority of Sun Microsystems' current revenue derives from hardware, a new Goldman Sachs report ("CIO view on the Oracle/Sun deal: IT battle lines are being redrawn") suggests that the hardware business is the part of Sun that gives Oracle the least strategic value; Java, Solaris, and MySQL provide the crown jewels of Oracle's newest acquisition.

While Oracle called out Java as "the most important software Oracle has ever acquired," the executive team provided little detail as to what Oracle expected to do with the open-source programming language.

Goldman Sachs provides some sophisticated guesswork:

We would expect Oracle to find ways to leverage its control (of Java) to gain a competitive advantage against IBM in middleware. Additionally, effective monetization of the ubiquitous Java programming language has been a longstanding question for Sun.

Goldman Sachs' Sun Microsystems analyst, David Bailey, estimates that Java-based revenues for Sun should total a little less than $300 million in fiscal year 2009 (June), growing by more than 25 percent year over year...We would expect Oracle to be more aggressive than the culturally more open source-minded Sun in monetizing Java; Oracle's reach should also be considerably greater in opening new relationship opportunities for Java licensing.

Java is an open field, already plowed and planted by Sun, now ready to be harvested by Oracle.

MySQL, however, is another matter, given its competitive tension with Oracle databases, as The Wall Street Journal calls out.

I've suggested that Oracle stands to lose the MySQL development team, if it shoves the open-source database team to the side in an effort to prevent MySQL from cannibalizing its Oracle DB sales. But after assembling a panel including two Fortune 100 CIOs, as well as the CEO of Ingres and former head of IT at NYSE, Goldman Sachs assumes a more optimistic view, arguing that while Oracle will undoubtedly protect its proprietary margins against open-source MySQL, it will also likely use "MySQL as a way to seed customers who will eventually be moved to Oracle database deployments."

Even so, Oracle faces a delicate balancing act, one that nervous MySQL customers are watching with interest. As suggested by the Financial Times, Oracle can't treat Sun's open-source software assets as heavy-handedly as it might like: Java, MySQL, Glassfish, and other Sun assets all come "preloaded" with communities--communities that will chafe at strong-arm tactics from Oracle.

I think that Oracle will figure it out. But my experience with Oracle's community outreach team is that its members don't much like to be questioned on Oracle's motives or actions. This is going to need to change quickly, if Oracle wants to maximize the value of its open-source software assets.

It's one thing to contribute to a project like Linux as one contributor among many. It's quite another to own a project like MySQL, constantly having to worry about stepping on the toes of ancillary contributors. Oracle needs to learn this lesson quickly.

Follow me on Twitter @mjasay.

[Renegade Knight]

Sun needs to capatalize on it's own strengths. I didn't buy Oracle stock. I bougth Sun. Oracle has to buy it's future. It's peaked out on it's own. Sun actually has a future.

[divisionbyzero]

Oracle is one of the most arrogant companies in the business and run by one of the most arrogant people in the business. Expect MySQL to be marginalized. Java will be leveraged in a way that makes life difficult for IBM which will fracture the Java community. I'm not sure they care about the hardware either although I could see them building software stacks on Sun Hardware/Solaris and selling them as packaged solutions.

[ssampier]

According to some Oracle can't treat MySql any worse than Sun treated them.

Oracle should probably spin off the Mysql division to more easily attract new talented open source developers.

However keep a small staff of open source integrators around so it's painfully easy to move from mysql to the big boy toys of Oracle.

Oracle can either make or break this deal. I predict they will make it.

[shootthecops]

Matt, how about an interview with Larry Ellison? Ask him all the questions we are dying to know, what will Oracle keep and sell? What will they maintain and kill? Will we see a dual licensed CPL/GPL Solaris? Will we see 'laxed rules on OpenOffice contributions? C'mon... make the phone call happen, let's get some answers.

[ockiest]

Greedy!!
Most likely Oracle will commercialize Java.
I won't be suprise if developers must pay to use next version of Java Enterprise. Oracle wil make the free edition very limited features.

Finally Micro$oft .NET become the winner.....

[idfubar]

The notion that monolithic projects like Java and MySQL are subject to the whims of a single individual/company (let alone a nefarious individual/company) are patently absurd; the notion that (different?) management technology would somehow help to monetize either Java or MySQL is almost equally ridiculous.

Expect the biggest gains to come from the dissipation of doubt (and hate) surrounding Sun to make the biggest difference in profits.