Listening to Sun’s Jonathan Schwartz, it was obvious that the real driver of the deal was that Sun badly wants to penetrate new customer bases. MySQL is one of the few trophies left (aside from Red Hat/JBoss) that has a growing customer community in the enterprise Internet computing space. And given Schwartz’s directive for the company to literally open source everything under the (S)un, on paper, the MySQL acquisition jibes well with Sun’s strategy. Furthermore, as database, along with storage, is at the fault lines of Internet apps, buying the right database could be a hot ticket for growth. Sun absolutely needs a move that could energizes and excites its business, and MySQL could be it.
So now the LAMP stack becomes the LASP stack…
For Sun, of course, the challenge is in execution. For instance, name a software acquisition that has been successful. Although Sun has been trying to switch its course from systems to software, the dollars are still coming from systems. On the open source side, it’s managed to paint itself into a corner with NetBeans. So the company that invented Java finds itself on the outside looking in when it comes to the mainstream of Java development.
We always thought that Red Hat would have been the more logical suitor, if only because MySQL’s business model is more at Red Hat’s, not Sun’s level. But obviously, Sun was in much better position to fork out a billion dollars. Of course, that leaves open the question, for Sun to fully seal the deal, wouldn’t it make sense to go the next step and fork out $4 – 5 billion for Red Hat?
Dana Gardner had an interesting take on the acquisition, saying that, “Yes, it makes a lot of sense, which makes the timing so frustrating. I for one — and I was surely not alone — told very high-up folks at Sun to buy and seduce MySQL three years ago.” He makes a persuasive case that this could be the deal that saves Sun because it could take a lot of air out of Oracle, Microsoft, and IBM in the hottest part of the $15 billion database market – Internet applications. Put another way, a good case could be made that Internet apps are more data-driven than ever, and so, if Sun succeeds in removing oxygen from Oracle et al, dare we say it could once more become the dot in dot com?
Maybe, but at what price? Our concern is that MySQL’s sweet spot has been the low cost/no cost part of the database market. And compared to its grown up cousins, MySQL is simpler and more approachable. But does this business scale? Let’s assume that Sun successfully pulls off this deal, MySQL survives intact, and with more feet on the street and enterprise-class support, its business organically grows. Will MySQL generate the kinds of margins that Sun needs to run a $10+ billion business? Will it be the engine that pulls through the higher value iron?