Pretend you're Oracle CEO Larry Ellison for a minute (forget about the yacht and designer suits, though). You're spending $7.4 billion to buy Sun Microsystems, and all of a sudden the EU antitrust posse frets about the fate of MySQL, the popular, open source database. Would you risk the acquisition because you want to remain the proud owner of a product that may or may not have revenue potential, or would you throw it overboard?
If you're a Wall Street investment analyst, the answer is pretty clear: Give it the heave-ho.
"MySQL is a baggage, not an asset," says Trip Chowdhry of Global Equities Research. Given the EU investigation and MySQL's paltry revenue growth, Oracle's only smart option is to spin it off, he says. But spin off to where?
There's another way point of view out there, however, and it's been championed by Matthew Aslett, who follows open source for the 451 Group: "Oracle is well aware that it has little to gain from killing off MySQL. We expect MySQL to become the scale-out database for nontransactional Web applications and to compete with SQL Server in departmental deployments," he wrote this week.
Perhaps he's right. But it's far from clear that Oracle would do much with MySQL beyond channeling users toward its own larger and more expensive products.
Throw MySQL under the bus?
Oracle has said nothing about its intentions for MySQL other than a line on its Web site: "MySQL will be an addition to Oracle's existing suite of database products." Frankly, given the value of the Sun deal and the potential veto by the European Commission (the executive authority of the EU), Oracle is probably smart to keep its corporate mouth shut.
Even so, there's data that shows why Oracle may not fight very hard to keep the company.
"MySQL is almost impossible to be monetized. More than 98 percent of the customer base is DIY, and they don't see any value in paying for support. Contacts tell us that MySQL continues to struggle with monetization issues, with revenues probably not exceeding $50 million, and has been like that for the last three years. 'No revenue growth whatsoever,' said our [Sun] contact," Chowdhry wrote in a note to clients.
Interestingly, while users are worried about the future of MySQL under Oracle, the database soared in popularity, if not profitability, under Sun. According to Chowdhry, downloads of MySQL were averaging about 20,000 day before Sun purchased the company and soared to 60,000 a day after the acquisition. But it's dropped back to 20,000 or 25,000 more recently, quite possibly because of the Oracle takeover.
If Chowdhry's sources are correct, and MySQL's revenue has been flat, that's a bad omen for its future outside of Oracle. Even if the selling price were low, running a revenue-challenged company isn't a great idea in a wretched economy.
A multivendor foundation could be the answer
"My gut feeling is that the EC will not ask Oracle to spin off MySQL as its low market share does not justify such an action," Aslett told me. "However, I think the EC is well aware that the influence of MySQL in the market is greater than its market share, and that is why it is seeking more details from Oracle about its plans for MySQL and whether it will maintain the open source license and commercial relationships."
Although Aslett believes Oracle will ultimately see value in MySQL and keep it, if it does decide to spin it off, "the list of potential acquirers would include Red Hat (the database is a major hole in its portfolio) and (if it could raise enough money) the Monty Program. Private equity firms would also be interested in establishing the company as a stand-alone company again," he says.
Another possibility would be to hand MySQL to a multivendor foundation, which would relicense the code under a more permissive license or promise not to assert copyright against the use of the code with non-GPL software.
I like the sound of that. MySQL has earned a place in the software firmament, and it's not inside Oracle. An independent MySQL run by a neutral foundation may be the best hope for its long-term survival.
Disclosure: I own a small number of shares in Oracle.
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