Oracle tried to buy open-source MySQL

Move reveals just how far the software giant is willing to go to adapt to the burgeoning open-source environment.

SAN FRANCISCO--Oracle tried to acquire open-source database maker MySQL, an indication of the profound changes the software giant is willing to make as it adapts to the increasingly significant collaborative programming philosophy.

MySQL Chief Executive Marten Mickos confirmed the acquisition attempt in an interview at the Open Source Business Conference here but wouldn't provide details such as when the approach was made or how much money Oracle offered.

He did, however, say why he turned down Oracle's offer: the desire to keep his company's independence. "We will be part of a larger company, but it will be called MySQL," Mickos said.

Oracle didn't immediately comment on the acquisition offer.

Though it is increasingly diversified, Oracle's primary business is selling its own proprietary database software. MySQL, in contrast, is a leader among several companies trying to commercialize rival open-source products.

The acquisition would have been a smart move for Oracle, said Redmonk analyst Stephen O'Grady.

"It all comes back to the question of cannibalizing an existing business," O'Grady said. "If you determine that to some extent it's inevitable, wouldn't you prefer that you do it, instead of your competitors?"

O'Grady said Oracle could benefit from MySQL in the way that IBM has from its acquisition of Gluecode, a company that commercializes the open-source Geronimo Java application server software and competed with IBM's own proprietary WebSphere product. IBM now offers Gluecode's software as a free product called WebSphere community edition.

"They could position it as a lower-end alternative, much as IBM has done with WebSphere CE, recognizing that their larger accounts aren't likely to switch from the enterprise-class database anyhow," O'Grady said. At the same time, buying MySQL could "open up a very sizable new market for themselves."

The database market is in the midst of major changes. IBM now offers a lower-end version of its DB2 product for free, following similar moves by Microsoft and Oracle. At the same time, companies such as Ingres and EnterpriseDB are trying to build high-end open-source database packages.

MySQL, based in Sweden and Cupertino, Calif., announced in January that it's been profitable for two quarters. But it's not turning down outside money. MySQL announced Monday it raised $18.5 million in a third round of funding from Institutional Venture Partners, Intel Capital, Red Hat, SAP Ventures and Sumitomo's Presidio STX investment subsidiary.

Oracle's financial moves, however, are orders of magnitude grander. Its major buying spree resulted in the acquisitions of Siebel Systems for $5.8 billion and PeopleSoft for $10.3 billion.

Oracle already has bought two small open-source database companies--Sleepycat on Tuesday and InnoDB in 2005. But its open-source ambitions clearly are larger; for example, BusinessWeek reported that .

Mickos and other executives eagerly note that the MySQL database is gradually maturing with higher-end features, but they deny they've got Oracle in their crosshairs. Oracle is often used in back-end databases that power complex, massive software such as enterprise resource planning packages (ERP) from SAP or PeopleSoft.

"We are not used in all the ERP stuff. We are adding those features, but we are not going to be running PeopleSoft applications any time," Mickos said. Instead, MySQL is aiming for next-generation applications at companies such as Workday, a software-as-a-service start-up being launched by PeopleSoft co0founder Dave Duffield.

In reality, the MySQL and Oracle do compete. "They're obviously entrenched in different areas of the market--Oracle at the high end, MySQL in the higher-volume, lower-end space," O'Grady said. "But is there overlap in the middle? Sure."

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