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Why did Sun buy MySQL?

“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.

BI independents get no respect

After SAP announced it was acquiring Business Objects the speculation immediately started about when and who would buy Cognos (COGN).

Although Cognos might very well be acquired, let’s examine two related arguments that people made. First, they infer that a BI independent company will not survive against the tech titans of Oracle, SAP and Microsoft. Second, when people refer to Cognos as the last major independent BI company they imply that there are not any other thriving or viable firms in the industry.

BI independents cannot survive

Oracle (ORCL) and SAP just spent $10 billion collectively to buy a couple of the top independent BI firms, Hyperion Solutions and Business Objects, during the last year. If the titans were so dominant why did they feel they needed to buy these firms? If the titans are the preferred business choice for BI software why are they ranked # 4, 7 and 8 according to IDC’s 2006 estimates for BI tools revenue?

There is a split personality in business technology purchasing: one side wants to purchase everything from one vendor, the other side just wants to buy the best tool to do the job. It is clear that to date, there are plenty of businesses buying the best rather than just buying whatever their app vendor sells.

Cognos is the last one standing

According the IDC 2006 estimates on BI tools revenue there are five firms with approximately $200 million or more sales that are not the titans or anyone they have acquired to date. SAS was number two, ahead of Cognos, but it seems to be forgotten because it is private. MicroStrategy, Information Builders, SPSS and Actuate have been successful in this market and have had loyal customers for years.

And there are plenty of smaller (less than $100M revenue) BI firms that sell very capable BI solutions. These include companies that you might have seen on industry analysts’ charts such as QlikTech and Panorama Software, as well as those firms below everyone’s radar except their customers such as Dimensional Insight and Board International. All of these BI independents have tools that their customers have chosen over the titans' products.

Finally, the rise of open source software (OSS) BI, such as Pentaho and JasperSoft, also shows there are market opportunities beyond the titans.

Wrap-up

The tech titans have been on a M&A (mergers & acquisition) binge the last few years, but large firms gobbling up smaller ones is not new to our industry. People will continue to launch new, innovative and nimble companies. Some with thrive and some will not. Those that succeed will offer their customers software of value. And maybe they will be acquired eventually only to replaced by newer firms.  

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Master Data Management in Data Migration

Heads-up on a new Aberdeen study: Master Data Management in Data Migration.

The study will analyze the labor and cost benefits as well as the improved value and usability of the resulting database when Master Data Management (MDM) strategies are employed before, during and after a data migration project. The goal is to prove or disprove that companies that implement a MDM strategy have more efficient data migration processes. Whether driven by a merger or acquisition, a system upgrade, a move to SOA, or a BPM initiative, data migration is a necessary step in achieving the business goal. Aberdeen research reveals that 98% of companies struggle with data quality, data integration, and data communication issues; yet less than half have made any investment in Master Data Management (MDM) tools. One-hundred (100) percent of Best-in-Class (BIC) companies have seen a greater than 50% improvement in on-time and on-budget completion of data migration projects, upon implementing a master data management strategy. Applying MDM tools and best practices can turn a data migration nightmare into a winning proposition.