Oracle gets Sun for $7.4 billion, MySQL for $0

Oracle's bid for Sun takes the industry back to the olden days of integrated hardware and software, and in the process reveals a great way to monetize open source.

Back in the early days of computing, there was no such thing as a "software vendor." Companies like IBM sold hardware/software integrated solutions and, really, software was developed simply to sell the value of the hardware.

With Monday's announcement that Oracle is acquiring Sun for $7.4 billion , however, Oracle is signaling its own "iPod moment," seeking to compete with Hewlett-Packard, IBM, and others in integrated hardware/software systems.

It's a bold move, and not for the faint of heart. But then, no one would ever accuse Oracle of being faint-hearted.

"I believe this is the first step down a different path," Sun CEO Jonathan Schwartz said in an e-mail to Sun employees, except that it's not, as Gordon Haff points out in a post on CNET.

What is new in the deal is that Oracle finally gets its wish to own MySQL. In 2007 Oracle offered as much as $850 million for MySQL , the third of its offers for the open-source database company.

This time, Oracle effectively got MySQL for free, as the valuation for Sun almost certainly wasn't raised much by its MySQL asset, acquired in 2008 by Sun for $1 billion.

What Oracle will not want, however, is for its customers to get MySQL for free.

Importantly, Oracle's new "systems" approach gives it the ability to digest a host of open-source projects like MySQL that might otherwise struggle to make money, and monetize them heavily by burying them in hardware "systems." It's a smart move driven by a company that knows that open source as a religion faded, and that open source as a key driver of innovative IT is just beginning .

It does, however, potentially give Oracle an antitrust problem in MySQL, as ZDNet's Dana Blankenhorn posits. MySQL's market share in the enterprise database market is negligible, but its share of the exploding Web database market is dominant and exploding.

While I don't expect the U.S. Justice Department or Federal Trade Commission to launch an antitrust action against Oracle relative to MySQL, it's important to note that this acquisition makes Oracle the clear behemoth in databases, past (enterprise) and future (Web).

Ultimately, however, this acquisition is not about MySQL. At least, not yet.

It's about hardware/software systems, primarily, and to the extent that software is involved, it's about Java, as called out by Oracle CEO Larry Ellison. Over time, the MySQL component will become increasingly important, but for now this Sun acquisition gives Oracle exceptional control over integrated solutions for its customers, as well as a software portfolio with massive potential.

The industry just changed. Oracle raised the stakes of the game. The new ante to get into the game is integrated hardware/software systems, and as IBM, Microsoft, and Oracle increasingly demonstrate, open-source software plays an increasingly important role in feeding these systems.

Updated at 10:48 AM PDT with links to interesting commentary:


Follow me on Twitter @mjasay.

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About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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