Spinoff player to compete in open-source software

Ingres database software to be purchased from Computer Associates by private equity firm and operate as stand-alone.

A Silicon Valley private equity firm plans to announce today that it is buying the Ingres database software from Computer Associates and setting it up as a stand-alone open-source software company.

The move by the firm, Garnett & Helfrich Capital, is a sign that professional investors are increasingly willing to bet there is a profitable future for companies based on the open-source model of software development. Open-source companies typically distribute the code free, but charge for maintenance and support services.

The Ingres deal is unusual in that it is not a start-up firm but a commercial spinoff. The investors and new management of Ingres, which will have headquarters in Redwood City, Calif., has the look of an Oracle alumni gathering.

Terry Garnett, the chairman of Ingres, is a former senior vice president of marketing and business development at Oracle, the largest supplier of corporate database software. David Dargo, the chief technology officer at Ingres, was the Oracle executive in charge of running its database programs on Linux, the popular open-source operating system.

Michael S. Rocha, an Ingres board member, is a former executive vice president at Oracle. Another board member, Mark J. Barrenechea, the executive vice president for technology strategy at Computer Associates, is a former senior executive at Oracle.

Eating away at Oracle's hold on the corporate database market with a low-cost, open-source alternative is part of the long-term plan for Ingres. "Economically, open source is a disruptive pricing model in the software business and it is moving up from operating systems to the database market," Garnett explained.

There are already open-source database products, including MySQL, PostgreSQL and Cloudscape. So the first goal for Ingres, Garnett said, is to become "the primary database for business in the open-source market."

That will be a challenge, analysts say. MySQL, developed in 1995, has a big lead in the open-source database market and wide following among developers, said Noel Yuhanna, an analyst at Forrester Research.

Ingres, by contrast, dates back to the 1970s and was picked up by Computer Associates as part of a company it purchased in the 1990s. Ingres, Yuhanna said, has a reputation as a solid technology but a neglected one within Computer Associates.

Investment, independence and entrepreneurial incentives for employees, Garnett added, can give Ingres new momentum in the marketplace. Terms of the purchase were not disclosed, but Garnett & Helfrich specializes in making investments of $50 million or less. Computer Associates will retain a 20 percent stake in the new company.

To succeed, Ingres must attract a following among corporate customers and outside software programmers, who write the applications that run on databases.

At MySQL, there seems to be little concern about competition from Ingres. Like most traditional databases, said Marten Mickos, chief executive of MySQL, Ingres is made to accommodate more and more features, following the Oracle model.

MySQL, Mickos said, was created more recently and was made for Internet applications with ease of use, reliability and speed of performance in mind. MySQL, for example, is used behind Google's online advertising system and for 250 applications on Yahoo.

Analysts say Ingres could do well in corporate data centers as a low-cost database supporting the big applications, like those supplied by SAP, which automate manufacturing, procurement, human resources and other business operations.

For Computer Associates, the Ingres spinoff is part of the strategy of its new chief executive, John Swainson, who came from IBM less than a year ago. Under Swainson, the company is focusing more tightly on a few markets like systems management and security software.

Shortly before Swainson joined the company, Computer Associates declared Ingres would become an open-source product. "But what Ingres needed was a really focused team to run a different play," he said. "And that's what Garnett & Helfrich are trying to do."

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