Sun to buy open source titan for US$1bn

17 Jan 2008

Sun Microsystem’s decision to buy the second-largest independent open source software company in the world, MySQL, for US$1bn has been described as a “bold, surprise move”, and it could take some time for the markets to digest the implications.

The move will also be good news for Irishman Barry Maloney’s London-based venture capital company Balderton Capital, which was a lead investor in MySQL.

Sun said yesterday 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 US$1bn in total consideration.

Sun said the acquisition will accelerate its position in enterprise IT to now include the US$15bn database market.

Sun’s chief executive Jonathan Schwartz said that with millions of global deployments including Facebook, Google, Nokia, Baidu and China Mobile, MySQL will bring synergies to Sun that will change the landscape of the software industry by driving new adoption of MySQL’s open source database in more traditional applications and enterprises.

“Supporting our overall growth plan, acquiring MySQL amplifies our investments in the technologies demanded by those driving extreme growth and efficiency, from internet media titans to the world’s largest traditional enterprises,” said Schwartz.

“MySQL’s employees and culture, along with its near ubiquity across the Web, make it an ideal fit with Sun’s open approach to network innovation. And most importantly, this announcement boosts our investments into the communities at the heart of innovation on the internet and of enterprises that rely on technology as a competitive weapon,” Schwartz added.

“This is a bold, surprise move,” said Ovum senior analyst Laurant Lachal. “It will take some time for the market to digest its implications. On the minus side, Sun’s record when it comes to acquisition and overall software strategy is, at best, mixed. On the plus side, the company has recently pulled itself together and improved the way it interacts with the market.

“On the same day it announced the MySQL acquisition, it also pre-announced that its second-quarter results, to be released next week, would beat financial analysts’ predictions with about US$3.6bn in sales and US$230m to US$265m in profits.”

Lachal went on: “MySQL had been talking about becoming public for about a year now. But in the end it preferred to play it safe, turning to an acquisition to build on the momentum it had already gathered. This is good news for the company.

“No doubt Oracle would have done its best to torpedo MySQL’s IPO (intial public offering) with the view to minimising its chances to raise money. Sun will provide it with the resources required, not just in terms of money but also (support and channel) infrastructure, to go forward in the direction it has been following for the past two years, namely towards increasingly mission-critical deployments in large multinationals.

“It will be particularly helpful in the telecom industry, which MySQL had been specifically targeting in the past year,” Lachal said.

By John Kennedy