A while ago I wrote a post discussing commercial imperatives for opensource software. That time I cam from a perspective of finding a natural intersect between the rabid community mindedness of opensource with the rabid commercialism of SaaS (generalisations notwithstanding).
The recent announcement of the acquisition of MySQL by Sun Microsystems falls into a similar theme. MySQL is an open-source database, given away for free, created by people working from home. It seems, at first blush, a little incongruous that Sun Microsystems would pay $1bill for it.
But is it really incongruous?
In the new economy, scale is created by aggregating disparate revenue streams and creating a compelling, integrated and diverse product offering. The MySQL acquisition helps Sun to do this. Even if MySQL were to bring zero revenue to the deal, it brings a product that is the defacto standard for databases in the online world. We’re talking about a prduct that is downloaded 50000 times a day here.
As Jonathan Schwartz, CEO of Sun says;
A billion dollars for a company that gives its products away for free?
Facebook gives its products away for free, too. They make money on ads, we make money on service, support and infrastructure. MySQL has a big business, growing very rapidly. Investing in the future has more value than buying the past – which is why the latter so often comes at a discount.
Now Sun isn’t stupid, clearly there needs to be some downstream revenue benefits to the acquisition. Clearly Sun’s core business is in supplying all the other things that are needed when a user installs a databse – the hardware, the infrastructure, the support. Also MySQL gains some serious cred with the enterprise world via this deal. Again as Schwartz says;
Where are the revenue synergies?
The more interesting question is “where aren’t the synergies?” Wherever MySQL is deployed, whether the user is paying for software support or not, a server will be purchased, along with a storage device, networking infrastructure – and over time, support services on high value open platforms. Last I checked, we have products in almost all those categories.
In addition, the single biggest impediment to MySQL’s growth wasn’t the feature set of their technology – which is perfectly married to planetary scale in the on-line/web world. The biggest impediment was that some traditional enterprises wanted a Fortune 500 vendor (“someone in a Gartner magic quadrant”) to provide enterprise support. Good news, we can augment MySQL’s great service team with an extraordinary set of service professionals across the planet – and provide global mission critical support to the biggest businesses on earth.
All in all it’s a logical deal – and a chance to make some cool stuff happen to boot…..