Sun Microsystems (JAVA) finally matters again. The company is buying MySQL, the open source database leader, for $1 billion. That's huge news for Sun, customers and investors. But this new opportunity for Sun also includes five key challenges. Here's a look at those challenges, and how Sun CEO Jonathan Schwartz will need to address them.
First, let's rewind a bit. A year ago, I told Schwartz to bet the company on open source applications. Looks like Schwartz got the memo. In addition to opening up the Solaris operating system, Schwartz was a surprise guest at SugarCRM's developer summit this past summer, and he networks closely with the open source community.
Meanwhile, MySQL, which makes the preferred database for running Web-intensive applications, is one of the 10 open source companies set to dominate in 2008, I stated back in December. In fact, MySQL was widely expected to explore an initial public offering this year. But then Sun came calling with a $1 billion buyout. Brilliant move, Mr. Schwartz. By writing a single check, you've transformed Sun from a legacy hardware provider into a leader in the open source market.
That won't solve all of Sun's short-term profit and growth challenges. But it assures Sun will remain relevant for years to come. So, what does Sun ultimately gain by buying MySQL? And what challenges will the company face? Glad you asked. Here are the biggest challenges related to the deal, and possible outcomes according to The VAR Guy.
1. Challenge 1 - Oracle (NASDAQ:ORCL): In some ways, MySQL competes with Oracle in the database market. While Oracle tends to focus more on closed-source applications and enterprise databases, MySQL thrives in Web-intensive settings. Still Oracle and MySQL will increasingly compete in the years ahead. But I'm not too worried about this. Oracle and Microsoft (NASDAQ:MSFT) compete and cooperate on many fronts. So, too, will Oracle and Sun. The duo share too many joint customers to walk away from one another.
2. Challenge 2 - Red Hat (NYSE:RHT): A few months back, I predicted that Red Hat and MySQL would wind up competing with one another. After all, Red Hat has pushed beyond Linux and now offers middleware. Red Hat also works closely with open source application providers like SugarCRM. Meanwhile, MySQL also works closely with open source application providers.
The question becomes: Will the database (MySQL) or operating system (Red Hat Linux) sit in the middle of the open source universe? For now, it doesn't matter. Both MySQL and Red Hat have plenty of room to grow. But the Sun/MySQL combo will need to both compete and cooperate with Red Hat.
3. Challenge 3 - Software Developers: Sun has a long legacy as a closed source software company. Sun Solaris coupled with Sun's SPARC processors dominated the dot-com years. But Solaris had a limited community of software developers, many of whom focused on high-priced Wall Street applications. In stark contrast, MySQL has a rapidly growing base of global developers who add value to the MySQL platform.
Sun will need to make sure that it continues to honor open source traditions, because the company can't afford to alienate MySQL's most critical followers.
4. Challenge 4 - Partners, Integrators and VARs: The open source market is hot. But many integrators -- especially high-end Sun integrators focused on Wall Street and financial services -- have yet to discover the power of open source applications. Sun will need to transform these skeptics into vocal open source advocates.
5. Challenge 5 - Culture Clash: Ever work for a small company that was acquired by a big, legacy technology company? Ever work in a nimble organization where decisions were made in an instant -- rather than debated in a committee? As a fast-moving Web 2.0 pioneer, MySQL will need to adjust to Sun's more mature culture. On the flip side, Sun will need to maintain the best of MySQL's fast-moving, creative, open culture.
Of all the challenges facing the Sun-MySQL combo, I believe #5 is the biggest of all. But boy, what a move by Sun. What's next from both companies? Circle April 14 on your calendar. That's when MySQL's annual conference and expo kicks off in Santa Clara. Jonathan Schwartz and team should have a lot to say to customers and partners at that event.