“Sun Microsystems, Inc. (NASDAQ: JAVA) today announced it has entered into a definitive agreement to acquire MySQL AB, an open source icon and developer of one of the world's fastest growing open source databases for approximately $1 billion in total consideration. The acquisition accelerates Sun's position in enterprise IT to now include the $15 billion database market. Today's announcement reaffirms Sun's position as the leading provider of platforms for the Web economy and its role as the largest commercial open source contributor.” from the Sun Press Release on the acquisition.
Let’s start off with the easy Q&A. Why did MySQL sell out to Sun for $1 billion? $1 billion, that’s why. MySQL was planning on an IPO this year but must have thought that a sure $1 billion now is better than the IPO would produce. It’s great when you hear a software company’s CEO say that they are planning on remaining independent because it is best for their customers and then later, maybe just weeks alter, announce they are being acquired by a high-tech titan and of course say how wonderful it is for their customers. Don’t give me corporate-speak, it’s “Show me the money”.
But why did Sun buy MySQL? More precisely, how do they get a business ROI from the $1 billion purchase? Sun says there will be synergies with people buying MySQL (of that’s right you get it for free) and then figuring they should buy Sun stuff. Well maybe they’ll pick-up Solaris and Java (they’re free), but Sun hardware? That’s a $1 billion dollar “lose leader”!
Sun did not buy MySQL for its $100 million in sales and no profit. Do they think that if they own MySQL that they’d get more revenue for the product? Will those college students, bloggers and Web 2.0 folks give Sun money that they didn’t give to MySQL? Earth to Sun, these people wanted a free product.
John Dvorak's in his commentary today on MarketWatch “The Sun-MySQL deal stinks” states “Sun Microsystems Inc. gobbling up MySQL is perhaps the worst single event I have ever witnessed in the history of tech mergers and acquisitions. The move, announced earlier this week, is potentially a disaster for the entire sector…” John further states “So who is the real beneficiary of this deal? MySQL is a genuine nuisance to Oracle (ORCL). I'm close to being convinced that Oracle wanted to buy MySQL to kill the product, but knew that it couldn't pull off the stunt itself. It would be too obvious, especially to European Union regulators. So it sent in a stooge to do the job.” Conspiracies are nice to talk about (and John was just joking, sort of) but Sun did it all on their own.
I like MySQL as a product especially for the price. I like Sun and it used to be the “cool” company like Apple is today. I would recommend that Sun should get more into software but they should consider acquiring products that generate a profit. Just a thought. Other hardware-oriented high-tech titans, such as IBM (IBM), EMC (EMC) and Hewlett Packard (HPQ), have moved aggressively into software they purchased firms that make a profit. Sun may now have bragging rights to being the largest aggregator of open source software in the world and own an open source database that, as the PR materials state, is “…actively used by virtually every Web 2.0 and e-commerce company in existence today” but it would be nice for Sun “show me the money.”
Why did Sun buy MySQL? Please tell me, I really want to know.