Sun's MySQL Will Add Little Value to Oracle's Database Business

Includes: IBM, MSFT, ORCL, SY
by: Trefis

Oracle (NASDAQ:ORCL), which completed its acquisition of Sun Microsystems in January 2010, will get little direct value from Sun’s MySQL database software since the database market share boost from MySQL will be only about 1%.

In addition to database software, Sun offers hardware like servers, storage and SPARC processors, other software like the Solaris operating system and Java.

Database Business is 38% of Oracle’s Stock

Oracle competes with IBM (NYSE:IBM) DB2, Microsoft (NASDAQ:MSFT) SQL Server and Sybase (SY) in the database software market. Databases are used in a wide variety of businesses, ranging from social media sites like Facebook, MySpace, and YouTube to stores like Walmart (NYSE:WMT) and Best Buy (NYSE:BBY) to track inventory. We estimate database software licenses to constitute 38% of $37 Trefis price estimate for Oracle’s stock.

MySQL will add 1% to Oracle’s Database Market Share

Oracle leads the database market with share of close to 50% in the $6.6 billion global database software market, and has consistently increased its share over the years.

Sun’s MySQL software is an open source database, which is freely available for download, and developers are allowed to make changes to the software source code and design. The software has seen high adoption rates, as it’s primarily used by web-based small and medium businesses, the most price-sensitive segment of the market.

More than 20% of database installations worldwide use a free version of MySQL. The software comprises only 1% share of the global database market, although it has a paid version which comes with additional support services.

You can modify our forecast above to see how Oracle’s stock will be impacted if MySQL adds value to Oracle’s database business in contrast to our expectations.

For additional analysis and forecasts, here is our complete model for Oracle’s stock.

Disclosure: No Positions