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The European Commission must be feeling a bit silly right about now. Despite insisting that Oracle has not responded to its requests for comment and concessions in its planned acquisition of Sun Microsystems (and the open-source database MySQL), Amazon.com recently offered the EC all the proof it needs that MySQL competition remains alive and well.

Competition at pennies an hour.

(Credit: Amazon)

For those who missed it, Amazon announced last week a fork of the popular MySQL database, called RDS (Relational Database Service). RDS is essentially a hosted version of MySQL, one that developers can write to at the minuscule cost of pennies per hour.

Oracle hasn't even started with MySQL yet, and it already faces significant competition, not to mention the other MySQL forks (e.g., Drizzle).

As Redmonk analyst Stephen O'Grady writes:

From here, it seems fairly clear that while RDS will not be the best option for every MySQL user, it will find a more than adequate market of customers who are willing to trade money for time, as (former MySQL CEO) Marten Mickos might put it. Assuming that Amazon can realize its typical economies of scale by amortizing the management and administration costs of the service over a wide array of machines, the product should more than pay for itself simply by widening the addressable market.

How much wider will it make the addressable market? At a minimum, it will lower the barriers to entry for customers with relational needs (read: most customers) and a lack of cloud expertise. It will be fascinating to see, however, if Amazon has far grander ambitions in mind.

Interesting, and somewhat unfair to Oracle. Presumably Amazon's entrance into the MySQL market is A-OK because Amazon isn't currently a database company, but it is a significant and growing infrastructure provider. Why should it get to own a complete stack, but Oracle can't?

That, after all, is what Oracle is attempting to accomplish with the Sun/MySQL acquisition. Sun gives it hardware, while MySQL gives it a strong entry into the Web database market and an effective hedge against Microsoft in lower-end enterprise needs.

Oracle's bid for Sun/MySQL, in other words, isn't about squelching competition, but rather about enhancing it. Amazon's RDS proves that strong, viable competitors to MySQL can arise from within the MySQL community, which disproves the EC's argument that Oracle's control of MySQL will somehow crush competition.

And if the deal doesn't hurt competition, as Amazon RDS all-but-proves it doesn't, then the EC's opposition is hollow and should be shelved, as The 451 Group's Matt Aslett argues.

It's time for the EC to acknowledge it was wrong, and move on. Amazon surely has. But until the EC makes a final decision, Oracle (and MySQL) can't.

Expanding its cloud-computing storage services to a higher level, Amazon.com unveiled a new option called Amazon RDS for companies that want to store information in a database on the other side of the Internet.

The suite of Amazon Web Services (AWS) already included a database option called SimpleDB, a basic database with its own interface standard for storing data and retrieving it. The Amazon Relational Database Service, in contrast, uses a more standard database interface, embodied in this case in an online implementation of the open-source MySQL software, the company said Monday.

"With Amazon RDS, you get full native access to a MySQL database," specifically, version 5.1 of the Sun Microsystems technology, the company said on its Amazon RDS site. "This means Amazon RDS works with your existing tools, applications, and drivers. You can port an existing database to Amazon RDS without changing a line of code--just point your tools or applications at your Amazon RDS DB instance, and you are ready to go."

Amazon raised minimized hassle and increased flexibility as reasons to use the service, which is currently in beta testing.

"Every hour that you don't spend fiddling with hardware, tracing cables, installing operating systems, or managing databases is an hour that you can spend on the unique and value-added aspects of your application," Jeff Barr, the company's Web services evangelist, said in a blog post. "I should point out that RDS enables a lot of really enticing development and test scenarios. You can set up a separate database instance for each developer on a project without making a big investment in hardware."

With its years-long effort, the Net retailer has built Amazon Web Services into a formidable presence in the information technology world. Competitors include Google App Engine, a computing foundation that can run Java or Python programs on Google's own BigTable database technology, and Microsoft's Azure, which is set to offer access to Windows servers in the cloud when it formally launches in November.

One potentially interesting rival is Oracle, already a giant in the database market and, if it can overcome European regulatory concerns, the future owner of MySQL assets. Because MySQL is open-source software, though, anyone may use and modify it, even without its copyright holders' permission.

The biggest competitor to this model is doing things the old way, with companies running their own computing infrastructure. Cloud computing poses security and trust issues for many companies considering whether to put their data and business applications on somebody else's computer systems. But researchers such as Gartner, an influential but not radical analyst firm, now recommend that companies look seriously at cloud computing.

Amazon is working on greater robustness for Amazon RDS. It offers automated backup, and it later plans to offer a "high-availability" option at no extra charge, with which customers can create a separate instance of a database in a different geographic region.

As with all services on AWS, Amazon RDS is priced on an as-used basis--with per-hour charges according to the server memory requirements of the database: 11 cents per hour for a small database of 1.7GB of RAM; 44 cents for large, or 7.5GB; 88 cents for extra-large, or 15GB; $1.55 for double extra-large, or 34GB; and $3.10 for quadruple extra-large, or 68GB. There also are charges for the size of data stored, the number of input-output requests, the amount of data written to the database, and the amount of data read from the database.

Former MySQL leader Mårten Mickos on Thursday urged European Union regulators to approve Oracle's acquisition of Sun Microsystems and its MySQL database group, arguing that further waiting undermines the very competitiveness the EU is trying to protect.

In a letter to Neelie Kroes, the European Commission's commissioner for competition, Mickos said the regulators were correct to question whether Oracle buying Sun and its open-source database software would harm the market. But Mickos, who ran MySQL from 2001 until 2009, believes that the Oracle acquisition won't hurt competition--and that holding the acquisition up will:

"Every new day of uncertainty is potentially very harmful to the various businesses of Sun, reducing competition in the market. A delay in the closing of this transaction is therefore only going to work against the respectable goal that you set out to achieve when launching the probe into this acquisition," Mickos wrote in the letter. (See this separate post with the full text of Mickos' letter to the EU.)

Mårten Mickos, surrounded by inflatable MySQL dolphin mascots.

(Credit: Benchmark Capital)

It's not clear what effect Mickos' letter will have on the regulators, but Mickos knows MySQL's business well, and Oracle can use any help it can get in dealing with the acquisition. The U.S. Department of Justice approved the Sun acquisition in August.

Mickos, now entrepreneur in residence at Benchmark Capital, said in an interview that he no longer has anything financially to gain from the transaction. Instead, he's motivated now by trying to help the employees still at Sun--and moreover, its MySQL unit--urging rational discussion about the matter.

"I couldn't live with the fact that I'm not taking action," Mickos said.

Mickos declined Oracle's advances when MySQL was independent, but he agreed to Sun's acquisition in 2008.

In September, the European Commission said MySQL was at the heart of its investigation of the Sun acquisition:

The Commission's preliminary market investigation has shown that the Oracle databases and Sun's MySQL compete directly in many sectors of the database market and that MySQL is widely expected to represent a greater competitive constraint, as it becomes increasingly functional.

The Commission's investigation has also shown that the open-source nature of Sun's MySQL might not eliminate fully the potential for anticompetitive effects. In its in-depth investigation, the Commission will therefore address a number of issues, including Oracle's incentive to further develop MySQL as an open-source database.

Oracle Chief Executive Larry Ellison said MySQL competes in a different part of the database market than Oracle's existing products and that Oracle has no plans to spin MySQL off into a separate company.

Mickos summarized his argument this way:

1. Oracle has as many compelling business reasons to continue the ramp-up of the MySQL business as Sun Microsystems and MySQL previously did, or even more.

2. Even if Oracle, for whatever reason, would have malicious or ignorant intent regarding MySQL (not that I think so), the positive and massive influence MySQL has on the DBMS market cannot be controlled by a single entity--not even by the owner of the MySQL assets. The users of MySQL exert a more powerful influence in the market than the owner does.

MySQL is used to power large-scale Web sites with many servers, a role for which Oracle's back-end database software isn't suited, he argued. It's therefore in Oracle's interest to boost the MySQL business, Mickos said.

As evidence for his case, Mickos pointed to Oracle's 2005 acquisition of InnoDB, whose database engine software is used within MySQL. "Oracle increased their investment in InnoDB since that time, making MySQL a stronger player in the market," he said.

And perhaps reflecting his new role at a venture capital firm, Mickos concluded with a note about the broader effect of the EU's actions:

"If...it becomes difficult or impossible for large companies to acquire open-source assets, then venture investments in open-source companies will slow down, harming the evolution of and innovation in open source, which would result in decreased competition," he said.

Mårten Mickos

As the European Commission continues to evaluate the potentially deleterious effects of Oracle's proposed acquisition of Sun Microsystems and its open-source MySQL database, concern is rising that delay will harm MySQL without helping competition.

One who shares this concern is former MySQL CEO Mårten Mickos. On Thursday, Mickos sent a letter to Neelie Kroes, the European Union's competition commissioner, urging that the deal be approved for the good of the market and MySQL. He also spoke with CNET News' Stephen Shankland on Thursday.

Below is the edited full text of the letter.

Helsinki 8 Oct 2009

Mrs. Neelie Kroes
Commissioner for Competition
European Commission, J70
B-1049 Brussels/Brussel
BELGIQUE/BELGIE

Dear Commissioner Kroes,

I am writing to you regarding your review of Oracle's pending acquisition of Sun Microsystems. As I understand it, the EU Commission is concerned about a risk of undue concentration of power in the database market. Having been the CEO of MySQL from 2001 to 2009, and built a business that was serving a new market unmet by Oracle and others, I can agree with the questions posed, but I do not share the concerns that have been expressed. In the following, I will explain why.

In brief, my reasoning is as follows:

1. Oracle has as many compelling business reasons to continue the ramp-up of the MySQL business as Sun Microsystems and MySQL previously did, or even more.
2. Even if Oracle, for whatever reason, would have malicious or ignorant intent regarding MySQL (not that I think so), the positive and massive influence MySQL has on the DBMS market cannot be controlled by a single entity--not even by the owner of the MySQL assets. The users of MySQL exert a more powerful influence in the market than the owner does.

Many expected Oracle to harm MySQL as far back as 2005, when they acquired the InnoDB storage engine that plays a crucial role for many MySQL customers. And yet Oracle increased their investment in InnoDB since that time, making MySQL a stronger player in the market.

For further detail on my views on Oracle's intent, please see this interview with me in Forbes Magazine in April 2009.

It may at first blush seem counterintuitive that control of the MySQL assets does not automatically bestow control of the MySQL installed base. But the free installed base of MySQL--enormous on a planetary scale--is voluntarily but not mandatorily coupled to the commercial market of MySQL. It produces huge benefits to the MySQL business, but it is not controlled by it.

Background

The impetus to write this letter comes from my concern with the talented teams of the MySQL business unit and of Sun Microsystems in general. I am also troubled by certain factual distortions about a subject matter that I am intimately familiar with: MySQL and its business model. Open-source business models are complicated and quite different, and it took many years to fully understand and shape the one of MySQL.

A Finnish citizen, I served as chief executive officer of MySQL from early 2001 to February 2008, when Sun acquired MySQL. After that, I served as senior vice president of the database group at Sun until the end of March 2009. Being the only person to have served as the CEO of MySQL and to have attended every board meeting ever held, I believe I have unique insights into these matters.

To be clear, I resigned from my position in March 2009, and I presently have no commercial or financial interests in the MySQL ecosystem, Sun, or Oracle (or any other vendor in the DBMS market, for that matter), other than my loyalty to Sun employees in general and the MySQL team in particular.

MySQL's Markets and Installed Base

MySQL is the world's most popular open-source relational database, and potentially the most popular relational database of all. It has an enormous influence and impact on the usage and the buying patterns of relational databases (also known as RDBMSs), in particular for Web applications. One might even state that the Internet would not be what it is today, were it not for MySQL. Staffed by a highly talented team of passionate employees, the Swedish company MySQL grew the MySQL business from a small one in 2001 to a massive one in 2008.

In this discussion, the term "MySQL" refers to two things. On the one hand, there is the huge phenomenon MySQL--an estimated 12 million active installations under a free and open-source software license, millions, if not tens of millions, of skilled users and developers, and tens of thousands of corporations who use MySQL one way or the other.

On the other hand, there is the business of MySQL, which is growing rapidly, thus rewarding the owners of the assets (currently Sun Microsystems).

Those two meanings of the term "MySQL" stand in a close mutually beneficial interaction with each other. But most importantly, this interaction is voluntary and cannot be directly controlled by the vendor.

What I mean is that the vast and free installed base of MySQL is using it of their own free choice, unencumbered by the vendor and under no obligation or restraint. That is the nature of open source. And conversely, the MySQL business is supporting the free installed base of MySQL (by improving the product) voluntarily and in the hope of deriving benefit from the installed base.

This is the paradox of an open-source business, and it took me a long time to truly understand how powerful a force it is. It is unlike any traditional business. The key point is that both the users and the vendors of open source are engaged in a powerful free-market dynamic that cannot be contained by any single entity.

It is in everybody's interest that the two sides of MySQL produce benefit for and derive benefit from each other. But neither group can mandate or control the other one. This is a core philosophy of open-source software and more generally of the "architecture of participation" (as defined by Tim O'Reilly). There is a mutually beneficial voluntary relationship, but there is no control by one group over the other. In more colloquial terms: the owners of MySQL cannot force MySQL users to pay up, and the nonpaying users cannot force the business to subsidize them.

Anyone acquiring the MySQL assets will therefore acquire an ability to control the business aspect, i.e., meaning how MySQL is licensed commercially, but only an opportunity (and no free reign) to derive benefit from the free user base.

This explains how the MySQL business can be valued highly in the market ($1 billion, when acquired by Sun in February 2008) while at the same time providing no way of controlling its installed base. This unusual relationship between market share and installed base is at the core of the topic. The market share is small but controllable, to some degree. The installed base is enormous but not controllable. The installed base is, and can be, hugely beneficial to the owner of MySQL, but only to the extent and for as long as this owner of MySQL enjoys the trust of the installed base.

To put it in numbers, it may be useful to see the usage of MySQL, as divided into three categories:

Microsoft has released a free trial of its cloud-based relational database.

The community technology preview (CTP) of SQL Azure Database was made available Tuesday, along with a preview of an SQL Server driver for building PHP applications for the Azure platform.

The Azure Services Platform, first announced at a developer conference last year, is Microsoft's move into the rapidly growing cloud-computing market. As with all cloud platforms, the idea is to provide scalable, hosted services on a pay-per-use basis, running remotely in Microsoft's data centers.

(Credit: Microsoft)

SQL Azure Database, a key component of the platform, is a rival to Amazon.com's SimpleDB. Unlike that service, however, it is a relational database.

Other components of the Azure Services Platform include Windows Azure for running applications and storing data, .Net services for linking the applications to the distributed infrastructure, and Live services for linking Azure to Microsoft's Live web applications.

"With SQL Azure, developers building Web 2.0, ASP.Net and PHP applications can use familiar tools and data models to develop on a pay-as-you-grow, secure, scalable and highly available database service at minimal infrastructure cost," Microsoft senior program manager David Robinson wrote in a blog post Tuesday, adding that "there are really no comparable solutions available today."

SQL Azure's relational data model supports Microsoft and Sybase's proprietary extension to the SQL database language, Transact-SQL. Robinson said there is a high degree of compatibility with SQL Server, allowing for easy migration of business and Web applications to the cloud.

The free trial of SQL Azure Database will last until November, when the service is fully launched. There will be two editions, a Web Edition that stores up to 1GB of data for $9.99 per month, and a Business Edition that stores up to 10GB at $99.99 per month.

David Meyer of ZDNet UK reported from London.

One of original authors of MySQL, Michael 'Monty' Widenius, has founded the Open Database Alliance, a consortium that aims to become the industry hub for the open source database.

The move was announced Wednesday. The two founding parties of the vendor-neutral consortium are Widenius' engineering company, Monty Program, and the MySQL services and support company Percona.

Monty Widenius

(Credit: MySQL/Sun Microsystems)

According to a statement from the Open Database Alliance (ODA), the consortium will act as a hub for MySQL and its derivative code, binaries, training, and support. Specifically, the ODA will work on the software, support and service for Widenius' branch of MySQL, MariaDB.

MariaDB is an enterprise-grade, community-developed branch of MySQL. Its name is a function of the fact that Sun owns the trademark for the term "MySQL" and the fact that the source uses the Maria storage engine, in turn named after Widenius' daughter.

Sun, which oversees MySQL, is currently being acquired by Oracle. Oracle has its own proprietary database, which is a major competitor to MySQL. The ODA said in its statement that its formation was in part due to "uncertainty" facing the community.

"The intent of the Open Database Alliance is to unify all MySQL-related development and services, providing a solution to the fragmentation and uncertainty facing the communities, businesses and technical experts involved with MySQL," the ODA statement read.

Widenius said the ODA's goal was to "encourage a true open development environment with community participation, and to ensure that MySQL code remains extremely high quality."

"Participating members at this stage in the 'Alliance' will have a strong voice in how the organization is structured, and we look forward to collaborating with anyone in the industry that provides or depends on MySQL," he said in the statement.

In a blog post on Wednesday, Widenius said the ODA's nature as a "one-stop shop for anything related to MariaDB/MySQL"--where any member could provide services, tools, and software--was close to the original vision that David Axmark and Widenius had when they created MySQL.

"We planned to create a partner network where MySQL AB was a small technical company in the center with a lot of partners around us facing the large customers," Widenius wrote.

Widenius has previously expressed fear for the future of MySQL, in the wake of the Oracle takeover. At the time, he said "the biggest threat to MySQL future is not Oracle per se, but that the MySQL talent at Sun will spread like the wind and go to a lot of different companies which will set the MySQL development and support back years."

Correction: Sybase reported a 13 percent increase in license revenue, based on constant currency.

Update at 7:49 a.m. PST, with comments from the conference call.

Sybase posted fourth-quarter results on Wednesday that sailed past Wall Street's earnings expectations.

With earnings driven by strong growth in its core database business, company shares jumped 7.8 percent to $27.87 in early-morning trading.

Revenues during the quarter rose to $305.1 million, up 3 percent over the same time a year ago. Wall Street was expecting the enterprise software company to make $300.3 million, according to Thomson Reuters.

Sybase reported net income of $47.3 million, or 59 cents a share, compared with net income of $73.5 million, or 81 cents a share, a year earlier.

When excluding one-time charges and special items, the company posted earnings of 78 cents a share, soundly beating Wall Street's expectations of 61 cents a share, according to Thomson Reuters.

"They really blew it out this quarter, " said Terry Tillman, an analyst at Raymond James & Associates. "The theme for them is, they have the right kind of products in this type of market. Their database had one of the strongest product cycles in a decade."

Sybase posted a 38 percent increase in database sales, as customers continued to spend on such enterprise software as their data capacity needs continued to grow, despite recessionary times, noted Tillman.

He also noted that customers have been increasingly responding well to efforts Sybase has made in retooling its database, which began in late 2005. The company's Advanced Server Enterprise 15, otherwise known as ASE 15, has gained traction, and Sybase has taken advantage of its database with additional features to sit on top of the software, such as analytics.

Tillman noted that business intelligence software is performing well in this recessionary climate, as customers are particularly eager to gain insight into their own businesses.

John Chen, Sybase CEO, said during the conference call: "Clearly, we are taking share from our (database) competitors with these results."

During the quarter, Sybase reported that new licenses grew 8 percent to $122.1 million, compared with a year ago, when accounting for changes in currency. Based on constant currency, that figure rose 13 percent for the quarter. Investors tend to keep a keen eye on new license revenue because it serves as an indicator for future business in other parts of Sybase, from tie-on products and services to maintenance and support.

Sybase also provided guidance for how it expects to perform throughout 2009, a move that many companies are shying away from in these tumultuous economic times, as customers' orders are becoming increasingly difficult to predict.

The company expects to report revenues of $1.14 billion and earnings, excluding charges and special items, of $2.16 to $2.21 a share for 2009. The revenue forecast is slightly below Wall Street's expectations of $1.16 billion but higher than analysts' predictions of $2.14 a share.

"Customers are still buying and spending, but they're highly selective," Chen said. "While they are less willing to spend on professional services, they are still willing to spend on mission critical applications."

Some of those critical enterprise software applications include security software, real-time reporting, and risk management business intelligence software.

Chen noted, however, that sales cycles have been a little bit lengthened.

Oracle reported Thursday a 6 percent rise in fiscal second-quarter revenue over last year, fueled by growth in software sales and its support and maintenance business.

Net income for the quarter, however, declined 1 percent to $1.3 billion, or 25 cents a share, for the period ending November 30, compared with the previous year. Excluding special items, Oracle posted non-GAAP net income of $1.7 billion, or 34 cents a share. That was below Oracle's September forecast of 35 cents to 36 cents a share.

Oracle was up less than 1 percent in after-hours trading to $16.70 a share. Investors may have seen some encouragement in its growth in software sales.

The company, which had previously issued a forecast of a 2 percent to 12 percent rise in new software sales, posted an 8 percent increase to $4.5 billion in the quarter.

Another growth area running counter to the downturn in the economy included its steady-as-she-goes support and maintenance revenue, which rose 14 percent to $2.9 billion.

But new software license revenue, a metric that investors tend to keep a close eye on as a means to gauge future growth for the company, fell 3 percent to $1.6 billion. Oracle's services revenue also fell, slipping 2 percent to $1.1 billion.

SAN FRANCISCO--Oracle on Monday unveiled a new open enterprise software application designed to improve the way users collaborate and communicate on projects.

Oracle's Beehive is a 3-year-old project that the acquisition-happy software giant built from scratch. The goal is to take a company's setup, in which various communication and collaboration software applications from a number of vendors are running on an army of servers, and integrate the offerings into one Beehive system, Charles Phillips, Oracle co-president, said during the company's annual Oracle OpenWorld developers conference here.

Beehive seeks to take communication software, from e-mail to instant messaging to chat, and the various security rules, databases and storage that are tied to each product on separate servers, and integrate them with few servers on one platform. For example, one security rule would be set to handle disparate functions across the servers, yet the user interface would appear the same to users, even though they may be using different instant-messaging applications.

Collaboration features are also built into the Beehive software, which allow users to add members to their collaboration team, once the new member has accepted the invitation. Once members have been added to the collaboration team, the software will automatically populate their calendar with the team's meetings dates, they will be added to the team's e-mail loop and will be able to share documents, video, and other materials through Beehive's team workspace feature.

During the event, Phillips briefly shared the stage with swimmer and Olympic gold medalist extraordinaire Michael Phelps, who discussed his determination to set a record for the number of gold medals earned. Phelps took home eight gold medals from this year's Beijing Olympics and has 14 career gold medals.

As for the buttoned-down Phillips, he joked that he was relieved that he and Phelps didn't have to don swimsuits.

Michael Phelps (left) and Charles Phillips at Oracle OpenWorld.

(Credit: Dawn Kawamoto)

Other news coming out of OracleWorld included the following:

• Oracle officially added two industry-specific business units to its acquisition-happy approach to widening its breadth of applications for targeted sectors. One will include an insurance business unit, which was recently bolstered by the company's acquisition of Skywire Software, and the other is a health sciences business unit.

• The company unveiled an update to Oracle E-Business Suite 12, with a preview of E-Business Suite 12.1. The latest version will include enhanced financial applications, with an emphasis on offering more global financial management capabilities, as well as adding supply chain and manufacturing features.

• The recent acquisition of middleware vendor BEA Systems has met its integration milestones and product road map laid out in July.

ZDNet video: Oracle unveils Beehive
At Oracle OpenWorld in San Francisco, Oracle President Charles Phillips
and Chuck Rozwat, the company's executive vice president of product
development, talk about the open, integrated communications system.