Sun and Oracle's impact on open source acquisitions

While the Sun/MySQL/Oracle saga may cause concern, it'll be short-lived

By now you'll have heard that the EU has approved Oracle's acquisition of Sun. This is good news for Sun employees and for the broader open source vendor community. JBoss founder Marc Fleury recently wrot the following about the Sun/MySQL/Oracle situatione while the EU was still deliberating: "..here is the part that really bothers me: this is making OSS acquisitions look very dangerous and dicey."

Marc has a point -- some vendors in a position to acquire open source vendors may think twice, if even slightly, about acquiring open source vendors. I suspect that trepidation will be short-lived. The software industry relies on acquisitions for growth, and it’s not as if a large number of closed source startups are being formed these days.

[ After months of deliberation, the European Union approves Oracle's purchase of Sun | Stay up to speed with the open source community with InfoWorld's Technology: Open Source newsletter. ]

However, one has to wonder if the valuations for open source vendors will be somewhat tempered going forward. This has more to do with market trends than the results of an open source acquisition, RedHat/JBoss, Sun/MySQL, Oracle/Sun or otherwise.

Firstly, open source is no longer an unknown to be feared and possibly revered by established software vendors. These vendors have gotten more comfortable cooperating and competing with open source vendors.

Secondly, while acquiring an established open source vendor is still viewed as a great way to enter a market or expand offerings within a market, the shift toward cloud computing appears to be a more pressing trend to address. Said differently, why purchase adoption in the data center when customers are increasingly going to deploy workloads in the cloud, where a different vendor may end up winning with an offering built with the cloud in mind versus being adopted for the cloud?

I'm not suggesting we won't see any further open source acquisitions. That would be a silly statement. Rather, expect a larger number of cloud-related acquisitions than open source vendor acquisitions and expect higher multiples for cloud-related acquisitions.

Of course, vendors that fit into both the open source and cloud-related categories will be among the most attractive targets. And truth be told, a startup in 2010 is more than likely to use open source to drive developer adoption and monetize that adoption in the cloud. As a result, it'll become increasingly difficult to distinguish an open source vendor from a cloud vendor. Either way, the exit potential for these vendors looks bright.

Follow me on Twitter: SavioRodrigues.

p.s.: I should state: "The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions."

This story, "Sun and Oracle's impact on open source acquisitions," was originally published at InfoWorld.com. Follow the latest developments in open source at InfoWorld.com.

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