MySQL and BEA: Oracle and Sun Will Be At Each Other’s Throats!
Posted by Bob Warfield on January 16, 2008
Big news today is that Sun is buying MySQL and Oracle is buying BEA. This creates a couple of strange bedfellows to say the least. BEA is inextricably wrapped up in Sun’s Java business (is it really a business or just a hobby given the revenues it doesn’t produce?) which gives a reason for the two to get closer together. On the other hand, there is hardly a bigger threat to Oracles core database server business imaginable than MySQL, which has got to push the two companies further apart. What a tangled web! Is Sun leaving Oracle to its own devices in order to pursue cloud computing? Sure looks like it!
Let’s analyze these moves a bit. I want to start with BEA and Oracle.
As we all know, Oracle started that courtship dance not long ago and was rebuffed for not offering enough. Amusingly, they closed almost exactly at the midpoint of the prices the two argued were “fair” at the outset. Meanwhile, the recession is really setting in, stock prices are falling, and Oracle’s offer went up. Since Cisco’s John Chambers mused about IT spending will slowing, it has become a widely accepted article that this will happen. So shall it be said, so shall it be written, Mr. Chambers. That’s a very bad thing for BEA, which is primarily selling to that market. The corporate IT market is their bread and butter for a number of reasons. Many ISV’s and web companies will look to Open Source solutions like Tomcat or JBoss with which to reduce costs. Corporate IT wants to superior support of a big player like BEA. The darker truth is that big Java seems to be falling out of favor among the bleeding edge crowd. Java itself gets a lot of criticism, but is strong enough to take it. J2EE is another matter, though there is still a huge amount of it going on. There is also the matter of the steady ascendency of RESTful acrchitecture while BEA is one of the lynchpins of Big SOA. There is already posturing about the importance of BEA to Oracle Fusion. If it is so important, Fusion may be born with an obsolete architecture from day one.
The long and the short is that any competent tea leaf reader (is there any such thing?) would conclude that this was a good move for BEA to let themselves be bought before their curve has crested too much more. For Oracle’s part, its a further opportunity to consolidate their Big Corporate IT Hedgemony and to feed their acquisition-based growth machine. I am not qualified to say whether they paid too much or not, but if I do think the value curve for BEA is falling and will continue to fall post-acquisition. They are way late on the innovation curve, which looks to me like it has already fallen. In short, BEA is a pure bean counting exercise: milk the revenue tail as efficiently as possible and then move on. For this Oracle paid $8.5B. Not surprisingly, even though it is a much bigger transaction, there is much less about it on the blogosphere as I write this than about the other transaction.
Speaking of which, let’s turn to the Sun+MySQL combination. Jonathan Schwartz gets a bit artsy with his blog post introducing the introduction, which he calls “Teach dolphins to fly.” The metaphor is apropos. Schwartz says that MySQL is the biggest database up and comer news in the world of network computing (that’s how we say cloud computing without offending the dolphins that haven’t figured out how to fly yet). What Sun will bring to the table is credibility, solidity, and support. He talks about Fortune 500 needing all that in the guise of:
Global Enterprise Support for MySQL – so that traditional enterprises looking for the same mission critical support they’ve come to expect with proprietary databases can have that peace of mind with MySQL, as well.
That business of “proprietary databases” means Oracle. Jonathan just fired a good sized projectile across your bow Mr. Ellison. What do you think of that?
I know what I think. Getting my tea leaf reading union card back out, I compare these two big acquisitions and walk away with a view that Oracle paid $8.5B to carve up an older steer and have a BBQ while Sun paid $1B to buy the most promising race horse to win the Kentucky Derby. What a brilliant move for Sun! Now they’ve united a couple of the big elements out there, Java being one and MySQL the other. They could stand to add a decent scripting language, but unlike Microsoft’s typical tactics, they’ve learned not to ply a scorched earth policy towards other platforms, so they are peacefully coexisting until a better cohabitation arrangement comes along.
We talked a little about the Oracle transaction being a good deal for BEA: it’s a lucrative exit from declining fortunes. What about mySQL? Zack Urlocker comments about the rumor everyone knew, that MySQL had been poised to go public. Let me tell you: this is a far better move. Savvy private companies get right to the IPO alter, and then they find someone to buy them for a premium over what they would go out at. What they gain in return is potentially huge. The best possible example of this was VMWare. Now look where they are. I will argue that would not have been possible without the springboard of EMC. At least not this quickly. Sun offers the same potential for MySQL. It is truly the biggest open source deal in history. It’s also a watershed liquidity event for a highly technical platform based offering from a sea of consumer web offerings. The VC’s have been pretty tepid about new deals like MySQL. Perhaps this will help more innovations to get funded.
What do others have to say about the deal?
– Tim O’Reilly echoes the big open source and importance of database to platform themes.
– Larry Dignan picks up on my rather combative title theme by pointing out that it puts Sun at war with the major DB vendors: Microsoft, IBM and Oracle. Personally, I think any overt combat will hurt those three. The Open Source movement holds the higher moral ground and it just won’t be good PR to buck that too publicly. Dignan sounds like he is making a little light of Schwartz’s conference call remark that it is the most important acquisition in Sun’s history, but I think that is no exaggeration on Jonathan’s part. This is a hugely strategic move that affects every aspect of how Sun interfaces with the world computing ecosystem including its customers, many partners, and its future. When Dignan asks what else Sun needs, I would argue a decent scripting language. Since Google already has Python in hand, what about buying a company like Zend to get a leg up on PHP? Last point from Larry is he asks, “If Sun makes MySQL more enterprise acceptable does that diminish its mojo with startups? Does it matter?” Bottom line: improvements for the Enterprise in no way diminish what makes MySQL attractive to startups, providing Sun minds its manners. So far it has been a good citizen. With regards to, “Does it matter?” Yes, it matters hugely. MySQL is tapped into all the megatrends that lead to the future. Startups are a part of that. Of course that matters.
One other thought I’ve had: what if Sun decides to build the ultimate database appliance? I’m talking about order it, plug your CAT5 cable in, and forget about it. Do for dabases what disk arrays did for storage. That seems to me a powerful combination. Database servers require a painful amount of care and feeding to install and administer properly. If Sun can convert them to appliances, it kills two birds with one stone. First, it becomes a powerful incentive to buy more Sun hardware. This will even help more fully monetize MySQL, which apparently only gets revenue from 1 in 10,000 users. Second, it could radically simplify and commoditze a piece of the software and cloud computing fabric that is currently expensive and painful. Such a move would be a radical revolution that would perforce drive a huge revenue opportunity for Sun. They have enough smart people between Sun and MySQL to pull it off if they have the will.
Sun has made an uncannily good move in acquiring MySQL. As Wired points out:
One company that won’t be thrilled by the news is Oracle, makers of the Oracle database which has managed to seduce a large segment of the enterprise market into the proprietary Oracle on the basis that the open source options lacked support.
With Sun backing the free MySQL option (and offering paid support) Oracle suddenly looks a bit expensive.
How else can you simultaneously lay a bet on owning a substantial piece of the computing fabric that all future roads are pointing to and send a big chill down Larry Ellison’s spine for the low low price of just $1B? Awesome move, Jonathan!
VARGuy says the acquisition means Sun finally matters again. $1B is cheap to “finally matter again!”