IBM’s EnterpriseDB Stake: Not What You Think

Ever since Sun anteed up a billion in cold cash for MySQL a couple months back, we wondered when the next show would drop. Today, EnterpriseDB announced that IBM was one of several venture backers to fund its third $10 million round of financing.

At first glance, this appears to be IBM’s response to Sun. But it isn’t.

Lets drill down a bit. With the enterprise database market pretty mature, new opportunities have emerged with new workloads associated with web applications. MySQL has drawn the attention because most websites start pretty modestly and needed a low cost/no cost engine to get going. As we’ve stated, both our blog and main websites are powered by free open source versions of MySQL under the covers. We don’t pay for support because our application –- essentially an embedded database inside a blog and content management system for a relatively low-traffic website (OK, we’re not that tiny, but we’re not Amazon or Yahoo either) -– is rather pint sized and rudimentary.

Now the big guys also offer free databases. IBM, Microsoft, and Oracle offer freebie “Express” editions, but these really don’t compete with the open source folks for one reason: the commercial Express offerings are targeted solely at development or piloting, as they are typically limited to a single CPU and maybe 2 – 4 GB cache. Whereas with open source database, you’ll get the whole enchilada regardless of whether you subscribe to support or get it free. The open source folks claim their subscriptions are cheaper than the incumbents.

That fact is important because, while there are lots of modest websites (like ours), there is also an explosion of data among popular consumer websites. That explains growing demand for server, storage, and it also explains the explosive growth of VMware. You need serious databases for these apps. Increasingly, MySQL, joined by EnterpriseDB and a revived Ingres are muscling their way in. They’re not displacing the Oracle or DB2 systems running back end OLTP systems, but they are clawing their way to these new workloads.

But EnterpriseDB and Ingres claim to be different creatures from MySQL in that they contend they’re more scalable. Specifically, EnterpriseDB has pursued the Oracle market, adding Oracle compatibility (e.g., PL/SQL, stored procedures, etc.) to its Postgres engine (a 20-year old spinoff from the original Ingres) to sell to Oracle DBAs running new workloads. In its third year of business, it has tripled its customer base.

Ergo, this deal is IBM dipping its feet gingerly into a back door challenge to Oracle, not MySQL. Ever since IBM held back on its own SQL database invention, allowing Oracle to grab leadership of the market, it has always responded by making DB2 cheaper. But it still plays second banana. Investing a modest chunk in EnterpriseDB is a way of having somebody else test-drive a new strategy for carving a wedge inside the Oracle market, something that IBM has hungered for going back at least 20 years.

4 thoughts on “IBM’s EnterpriseDB Stake: Not What You Think”

  1. You have to wonder the strategy though. I guess it is easier for IBM to just throw money at the problem but they would have got a much larger bang for their buck just spending the 10 million on an autonomous engineering startup.

    10 million would pay for 5 engineers, plus a manager to keep them organized for 10 years with great pay and benefits. It would benefit PostgreSQL a lot more than burying the money into a huge infrastructure and what better to poke Oracle that something that is actually free.

    Joshua D. Drake
    Lead Consultant, The PostgreSQL Company

  2. Joshua,

    I don’t think you’re getting the picture here. IBM is getting more than some engineers. They already have the engineers and managers who could do the technical. IBM is buying into EnterpriseDB as a company and as a vision.

    Your tag line says, “The PostgreSQL Company”. In reality, there is no PostgreSQL company. PostgreSQL is a free piece of software with a BSD license. It’s developed by a community with all the pluses and minuses that entails.

    Any company that gets into that needs to deal with the lack of centralized authority, a dedicated vision, centralized support, monetization of a free license, etc. It costs a lot to be the owner of that vision.

    IBM, in my opinion, sees that EnterpriseDB has a broad vision for where they want to go and a great plan to get there. The database itself is really a small part of what IBM is buying into.

    LewisC
    http://blogs.ittoolbox.com/oracle/guide

  3. Tony,

    Thanks for the coverage! Small correction, though: PostgreSQL is not an Ingres “spinoff”; the PostgreSQL code in 1986 was 100% new code which was created by some of the same team members who created Ingres. Just for the record, you know.

  4. A wider view is needed when looking at some of IBM’s aquisitions. Over the past 15 years IBM has “dumbed down” it’s own staff, incorrectly believing that they could source the skills cheaper elsewhere for product development and support. They were so, so wrong, and now are reaping the whirlwind. Buying EnterpriseDB – and others – is an effort to plug the gap they are suffering by inabilities to develop at a pace of their rivals, without the need to keep skills on their books.

    It is typical of a corporation which has becoming lazy, and sluggish. The drive to push IBM as a “Services Based Organisation” – Lou Gerstners legacy has damaged the once proud company

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