In a Vortex



In a vortex. That’s the only way to describe the past thirty days, during which we closed out our second quarter, and put together the transaction to acquire MySQL. How’d it all start?


“That’ll never happen, I’ve been trying for years.” That’s what I told Rich Green (EVP, Software at Sun) about six months ago in response to his assertion, “if there were one company I’d love to acquire, it’d be MySQL. They’re an amazing company.” Why’d I say it was impossible?


For nearly five years, I’ve been getting together for dinner with Marten Mickos, MySQL’s CEO, catching up on the industry, chatting about trends and business models, and just as the dessert was about to be served… I’d say, “geez, we have so much in common, Marten, we see the world so similarly, what would you think about becoming a part of Sun?”



At which point Marten would say he was flattered and honored, pour some milk into his coffee, stir, and start talking about Finland.


“I still think it’s worth trying,” said Rich. So we did – Marten, Rich and I set up another dinner for early December. At which we went through the same great conversation, updating one another on what we saw in the market and industry, how much we had common, and just as dessert was showing up, I popped the question. And…


…smile, stir, we’re talking about Finland again.


So we leave the restaurant, talk about scheduling another dinner six months from now, and I look at Rich with the “See what I mean?” look on my face.


But unlike prior meetings, the next morning, Marten called me back and said, “We’ve been doing some thinking. Are you still interested in talking about an acquisition?” Um, yes. Yes. Just like the past four years.


And that’s where it all started.


Tenacity pays, and Rich joins the growing list of people who can pull an “I told you so” card. (For the record, I’m happily proven wrong, it keeps me on my toes.)


Other than “how did this deal come to pass?” I’ve heard a lot of questions over the past few days, and thought I’d write down a few answers.


First things first.


A billion dollars for a company that gives its products away for free?


Facebook gives its products away for free, too. They make money on ads, we make money on service, support and infrastructure. MySQL has a big business, growing very rapidly. Investing in the future has more value than buying the past – which is why the latter so often comes at a discount.


What happens to your commitment to PostgreSQL?



It grows. The day before we announced the acquisition, and within an hour of signing the deal, I put a call into Josh Berkus, who leads our work with Postgres inside of Sun. I wanted to be as clear as I could: this transaction increases our investment in open source, and in open source databases. And increases our commitment to Postgres – and the database industry broadly. The same goes for our work with Apache Derby, and our JavaDB.


Josh says it exactly right on his blog – Sun wants to be the leading provider of datacenters. Not just MySQL datacenters. Exactly.


Who are you going to buy next?


Now that’s a great question, we’ll tell you after we’re done🙂


More seriously, I do agree with those that say Sun’s acquisition of MySQL proves the value of open source business models – and I’m hoping it fuels yet more investment from the venture community in truly open source innovation. There is a ton of value to be had, just ask MySQL’s investors.


What happens to your relationship with Oracle?



Oracle’s a very important Solaris ISV – and we have joint customers across the world that have relied upon the service and support Sun and Oracle provide in mission critical environments to run the world’s banks, retailers, telcos, governments, etc. Absolutely nothing changes about that commitment as a result of this deal – just as nothing changes in our willingness and ability to support DB2, or Microsoft’s SQL Server (which also happens to run quite well on our systems, btw). Customers want choice, and we maintain our commitment to offer it.


It’s important to remember, our service organization focuses on our customers, not our products.


Will the integration be complex like StorageTek?


StorageTek was 7,000 employees, with complicated supply chains, logistics processes, real estate, factories, redundant systems (like any big company), different engineering models and processes built up over a 35 year history. Integration was, to be blunt, complicated.


MySQL is 400 employees, without offices (their employees work from home), without a supply chain, no factories or real estate, and they have an engineering model and business process just about identical to ours.


So no, the integration won’t be complex. It’ll be quite straightforward.


After the transaction closes, Marten Mickos will continue to lead MySQL, will report into our Software organization, and will join my Executive Management Group (the top officers at Sun).



And strategically, there are technical synergies everywhere we look, as well – from MySQL on ZFS and Lustre, to better integration with Glassfish, OpenSolaris, NetBeans and our Grid Engine.


Will you change their platform priorities?


Absolutely not.


Why not?


Because the L in LAMP stands for Linux, not Looney. Customers prioritize MySQL’s platform choices, not Sun. As with Glassfish, their number one download platform is still Windows – and we’re very committed to those developers, as well.


Will you change MySQL’s choice of license (the GPL)?


No. As you can see with Java, and with Glassfish (and NetBeans and OpenOffice), we’re huge supporters of the GPL.


Are there cost synergies in the deal?


Nope.


Are there revenue synergies in the deal?


Everywhere we look.


Where are the revenue synergies?


The more interesting question is “where aren’t the synergies?” Wherever MySQL is deployed, whether the user is paying for software support or not, a server will be purchased, along with a storage device, networking infrastructure – and over time, support services on high value open platforms. Last I checked, we have products in almost all those categories.


In addition, the single biggest impediment to MySQL’s growth wasn’t the feature set of their technology – which is perfectly married to planetary scale in the on-line/web world. The biggest impediment was that some traditional enterprises wanted a Fortune 500 vendor (“someone in a Gartner magic quadrant”) to provide enterprise support. Good news, we can augment MySQL’s great service team with an extraordinary set of service professionals across the planet – and provide global mission critical support to the biggest businesses on earth.


Where will you take MySQL next?


That’s a question you’ll need to vector to MySQL – both before the acquisition (given that we’re still separate companies), as well as after. We’re not acquiring them to tell them what to do – we acquiring them to listen. To their leaders, their community, and their customers.


And having listened to about 10 customers face to face over the past couple days, I’ve heard only one comment, made consistently – “Congratulations, this is absolutely fantastic news for all of us!”


I totally agree.


______________________________


Here’s a quick interview Rich, Marten, Greg and I did on the Sunday before we signed (personally filmed by noted director Anil Gadre)… pay attention to the good luck charms that show up around the 3:30 marker…




(sorry for all the reposting…)

47 Comments

Filed under General

47 responses to “In a Vortex

  1. Free Dude

    Still no Ogg format? And at the launch it was only RealPlayer format. Other like Red Hat have worked out that it’s an issue. Do you just want to alienate people like me or what?

  2. I’m left wondering what you mean by "Microsoft’s SQL Server (which also happens to run quite well on our systems, btw)"… can you point me in the right direction?
    [As a side note, this specific entry crashes my Firefox install every time I click on it, and pegs my Internet Explorer to 100% CPU utilization…can you have someone review it? It seems like it might be caused by that weird media player thing at the bottom.]
    Thanks!

  3. It’s good to know that Sun will maintain it’s commitment towards Open Source software and not give up on PostgreSQL to promote MySQL.
    If this purchase results in better support on Sun’s platforms, integration with Solaris tools (ex: DTrace probes similar to those for PostgreSQL) and doesn’t get too much unwanted attention from the other vendors, that’s great.

  4. Anantha

    This is in response to Scott’s comment on SQL Server on Sun equipment. We’re currently running SQL Server 2003 EE X64 on a X4600 running Win2003 R2 EE x64 and can tell you there isn’t a better choice for running SQL Server. BTW, I wrote about this as a review for the X4600 server on the Sun website.
    On the main blog about Sun/MySQL merger, I’m a reluctant believer. Sun has no track record (like Cisco) in making acquistions (Afara maybe the only exception) work. I can go back to the late 80s or early 90s (I can’t remember) when Sun bought Encore and their track record of poor mergers continues unabated.

  5. This acquisition could not come at a better time. I am starting a new service company focusing on deploying open source solutions/services for learning/training environments. I’ll hopefully be on the Sun Partner Program because we need MySQL support as we are planning all deployments in SAMP/LAMP fashion. I don’t think I have to wish you luck, but thanks for supporting the open source community and making it more "enterprise-friendly/acceptable"! Take care.

  6. OMG! you REALLY do read these comments. Thanks a million for accepting our suggestion to summarize the history of this milestone.
    Will be submitting this to social sites – know many techies will be intrigued😀

  7. I must admit yr blog is really talking… and leading how to use this medium. Good Impressive stuff the way u are putting up the words and probably the best deal in years

  8. Thanks for the reassurance, Jonathan. In any integration, there are undoubtedly places where X and Y have different priorities or desires. If neither MySQL nor PostgreSQL will be restricted ("Don’t do that–you’ll step on the other guy’s toes!"), and if MySQL will have even more resources to throw into developing and marketing the MySQL and MaxDB databases, I’m definitely for that.

  9. Thanks for your post – it makes everything a lot more clear.

  10. Daniel

    "There is a ton of value to be had, just ask MySQL’s investors."
    Excellent, you have proven that you can make money for MySQL’s investors. We eagerly await the day that you make money for Sun’s investors.

  11. Whats the overall plan for future releases of MySQL? Are you looking at re-branding MySQL at all?
    Will be interesting to see how it pans out? I think it is a good business decision.

  12. "Who are you going to buy next?"
    "Now that’s a great question, we’ll tell you after we’re done :)"
    I would argue that sun lacks a few key applications in an enterprise-worthy stack. I mean, Sun has:
    – the hardware
    – the os
    – now, with MySQL, a client/server database too
    – application server
    – middleware technology and programming language (java)
    – development tools (netbeans)
    – part of the end-user desktop (open office / staroffice)
    Now what would be nicer than to add:
    – A BI solution (yes there are still a few un-acquired BI companies – and those happen to be open source😉
    – maybe an ERP…
    – Content managment / Document management
    Actually – all of these are existent already in the open source world, and based on a java platform.
    Of course, it is probably not wise to start an acquiring spree, but personally I think it would make sense to expect seeing something like this added to the sun software portfolio.
    Roland Bouman
    http://rpbouman.blogspot.com/

  13. Is SUN going to change any of MySQL milestone or team? I am really concern about the changes that SUN might bring to MySQL.

  14. Roland:
    "- A BI solution (yes there are still a few un-acquired BI companies – and those happen to be open source ;)"
    What do you think about pentaho?
    Jonathan, congratulations. We are many the enthusiastic ones of mysql, that we are knowing SUN. With my colleagues we agreed in which it is the best acquisition in long time…
    The best news to begin the year.

  15. Gregory Coburn

    Jonathon – Congratulations, you’re now the guardian of the only complete opensource technology stack, and I am relieved to see it in such good hands.
    The implications here are quite breathtaking, Sun can now deliver a completely opensource solution that truly turns business computing into a commodity. I look forward to ordering a 20MB internet connection, with 200Ghz of processing power and 10 Terabytes of storage.
    The big question of course is where will the applications come from, and I trust that Sun will continue to avoid competing with their partners in the application space.
    So my specific question are:
    When will I be able to logon to Network.com, and click to create my truly integrated team development environment based on the Sun Stack?
    When will I be able to click again to deploy all of my development artefacts into the test system, where I verify that my solution runs and scales against the Sun reference environment?
    When will the partnerships be in place, so I have a choice of network providers, offering me competitive prices that enable me to click another button on network.com that deploys my production environment to my preferred network provider?
    I know all of this is going to take years to go mainstream, but it would be so great if you could just get the Java Petstore up there in the meantime, just to show us how it all works and where it’s going. And it’d let some of us get started on creating and migrating our applications to run on it!
    Greg Coburn

  16. Bill_W

    Yesterday it was Go Packer’s(ugh), today it’s go Sun!! ( 4 divided into 15.92= 3.98).

  17. Synergies mean nothing...

    …revenue and profit mean something. I still don’t see either increasing for Sun as a result of this deal. Is MySQL really going to make a profit of $150-200 million a year, every year? Not "synergies" but actual cash coming in. ’cause that’s what you’ll need to justify spending $1 billion for it.

  18. Sam Johson

    Great you are spending 1 billion of share holder equity. How is it going to help the BOTTOM LINE? How much more $$s do you expect company to add to revenue, profit over next 1 year, 2 , 3, 5 years? Sounds like another nerdy deal by Sun while HP, IBM take away sun’s business.

  19. roland says :" Is SUN going to change any of MySQL milestone or team? I am really concern about the changes that SUN might bring to MySQL. "
    i dont think so, MySql milestone or team i think very important for SUN.

  20. How will the acquisition of MySQL affect Sun’s relationship with Oracle?

  21. Shelon Padmore

    Apart from all the Open Source goodness, there is considerable value potential in this deal for all parties involved, sure execution remains to be seen, but its potential should not be underestimated.
    – Shelon Padmore

  22. Open Source taketh over the world. Keep on rocking in the free world, sang Neil Young. Generation Open Source with Sun leading the way. Congratulations, Jonathan, and here’s to a bright future for all involved.

  23. @Fredy Ganga: heh, what do I think of Pentaho😉
    I think it’s great! My personal view is that there are 2 serious open source BI stacks – Jasper and Pentaho, and they are both java based. Now, let’s take a look at two crucial components of any BI stack – ETL and OLAP Services. Well:
    – Jasper’s ETL is actually a rebranded Talend, which is basically a PERL generator inside a Eclipse RCP design tool. Pentaho otoh owns kettle which is a model-based (as opposed to code generator), pure java application.
    – Jasper’s OLAP is actually Mondrian, which has been acquired by pentaho for quite a while.
    Now fair’s fair – Jasper’s been traditionally strong in reporting, or to be specific, embedded reporting. However, I would argue that although Pentaho’s reporting (JFreeReport) might be perceived as less mature (or to be specific, less old) as compared to jasper reports, I would argue that the recent addition of ad-hoc reporting to Pentaho is actually a much better fit in a true (Human interaction driven) BI stack (as opposed to embedded special purpose reporting).
    DISCLAIMER: I am completely biased in favor of Pentaho. I have illustrated a few reasons why above. Of course, I may be wrong and I am open to be corrected should I have wrongly analysed/contrasted Pentaho vs Jasper and Kettle vs Talend.

  24. One company I would REALLY like to see Sun acquire/buy out/ join forces with is IBM. They’re kind of the original rivals of Microsoft. With the upcoming Project Indiana, IBM would have a chance to integrate some stupendous code into it. (Speaking of which, does PI have an official OS name yet?)
    But yeah, Sun and IBM have been rivals for years. Both have amazing products for web management, server technology, office suites. It’d be great to see some sort of offering come from it. However, IBM’s tech would go great integrated with Sun’s offerings. Imagine, Sun getting backed with office technology/reputation from IBM to make it one heck of a business company. I dunno, just a thought.

  25. Sunshine

    As to BI solution speculation there is not only pentaho. Actuate and Alfresco might be candidates too. Alfresco would actually be a killer.

  26. @Sean I AM Project Indiana. Haha, just kidding. But, I am a Hoosier. Nothing personal against IBM, but we know who we are, and who we’re not. We are Sun. Powered by Sun. Sun 4 Life. "Nuff said.🙂

  27. Martin N.

    Congratulations on your recent MySQL acquisiton. You seem to have your hand on the pulse of the software industry quite well! The OpenJDK was, IMHO, long overdue, but kudos for that too.
    I don’t know if Sun’s management has been noticing, but virtualization has become a big deal as of late (e.g. VMWare acquired Thinstall). I’ve been a Java deveoper for the last 7 out of 11 years, and today I can freely say that I’m in love with the JVM (not so much Java as a language, which is starting to show its age, in comparison to things like Scala, Ruby or even Clojure which is a really nice Lisp rip for the JVM) – so why isn’t Sun taking the JVM directly to the hardware level? Matter of fact, why aren’t you developing a JVM-backed OS? Are you going to let Microsoft’s Singularity steel your thunder?
    Java, or the JVM to be exact, has taken on such a momentum, that implementing the JVM as a hardware appliance is starting to make a lot of sense (to me, at least). JNode has begun to make some inroads into this area, but what’s a team of 7 talented and dedicated developers versus a paid team of N Sun developers (just as talented and dedicated)?
    I’m not a marketing person (am a software engineer) so I haven’t the faintest clue whether the demand for these is there yet, but from a technological perspective, this is exactly where OS’s are headed (well, possibly micro-kernel based ones too, with the JVM plugged in as a service, e.g. L4 or Hurd with a JVM service? The possibilities are limitless).
    Today’s PC’s are powerul enough to handle such an OS – so can you spare a blog entry or two on this?
    Thank you.
    Martin

  28. Thomas Underhill

    As a Sun customer for many years, I have a lot of concerns about Sun’s buying frenzy that (I believe) has diluted the effectiveness of the Sun support organization. I am very frustrated with the poor service that my organization has been receiving from the Sun support organizations and I believe the problems stem from a lack of resources and infrastructure to properly manage support calls. I work for a major public university and have exhausted all of the normal support escalation channels but have not been able to get a resolution to the underlying issues in the support system. There is a serious business process breakdown in the support organization and it has caused my organization to seriously reconsider our partnership with Sun. Two days ago I indicated to my Sun VAR that I am going to start looking at alternatives to Sun because the support that we are receiving is horrible and I believe that we can do better elsewhere.
    I fear that the purchase of mySQL is simply going to dilute the existing support system further and ruin an otherwise good database product. Since the normal support escalation channels seem unable to rectify the situation, I am forced to post a comment here (although I doubt that it will do any good).

  29. James Oakes

    MySQL is a great acquisition, but I still think Sun are going to have to work hard for the value of the transaction to be reflected in their share price.
    My personal view on Sun is that they make good buys and investments, but fall down significantly in marketing their (acquisition) value to customers and the industry.
    Sun’s history of successfully integrating acquisitions is not great, given the list of names…StorageTek, SeeBeyond and Cray Business Systems Division just to name a few key. Granted, from Cray came the superb E10K (and Sun benefited greatly), but I still think there is room for Sun to exploit these acquisitions much more cleverly.
    So, how can this be achieved?
    Simply by keeping key brands independent, but strategically aligned. When Sun acquire “big names”, such as MySQL, Cray, StorageTek, SeeBeyond, etc, rather than re-brand (or integrate), keep the name and the organisation independent and work to align the business strategies between groups.
    There are a number of reasons for doing this in my opinion, including most importantly maintaining brand awareness. People automatically think of supercomputers when you mention Cray, Storage arrays (and tape libraries) when you mention StorageTek, application integration when you mention SeeBeyond etc etc. With strong branding you advertise the fact you work in a niche space and by doing so excel and are at the top of your game…
    However, for me the main reason is choice.
    Customers love to make “choices”, and the key thing is making them feel like they have made a choice and giving them strong brands to choose from should only widen the revenue streams for Sun, and hopefully bolster the share price …
    In the meantime, I would be going back after the Cray brand; remember, its not always about the technology, although if you can get both even better!

  30. MJ

    Other interesting buys would be MontaVista Software, Ubuntu & EnterpriseDB. MySQL was Bingo

  31. get what you pay for

    Mr. Underhill,
    It wasn’t hard to figure out through google what university you serve.
    I think you should specify details about your support struggles here in Jonathan’s blog, in your own blog, anywhere and everywhere. It’s worked for others. If you are surveyed about a call that went all wrong, give them the gory details. Managers get those reports and are supposed to followup.
    The support organization is evolving into … something, not sure what or maybe it is devolving. There are many people in the trenches at Sun that share your view and need customers to point out the obvious to those not in the trenches. Our management calls this: closing the loop. Perhaps that loop should be around their neck if need be, which would be a definate attention getter. Hopefully.
    P.S. no managers were harmed in the posting of this response : )

  32. Ravi Verma

    Hello Mr.Shwarz,
    Mayself Ravi Verma from Nainital,a beautiful location in India.
    I seen the power of opensource and after hearning these news I read a lot about this. I feel that Sun paying too much. If I say to you that you from it, only take .1% (POINT ONE )of it, means 1 milion $s and convert to Rs., see how much money it is. 1000000 * 40 = 40000000 rs. If you start opensource projects of paying 1 lakh per project in java that becomes 1,00,000 which means 40000000/100000 equals 400 softwares. mysql see is 1 only of this. we have to not make full softwares from start. only pieces we need to assemble and give finishing touches. I am waiting for your answer to this question of mine’s.

  33. The Cray brand just might be available from the company with ticker symbol CRAY,
    for somewhat near the 180M market cap. However, Sun already sells and supports
    massively-parallel AMD-based gear running Linux (witness the Texas Ranger system),
    just like Cray!

  34. Eric Ma

    Does someone still remember NetDynamics, Netscape, and Forte? Those were Sun’s "brilliant" moves at acquiring software vendors.
    Larry Ellison/Charles Phillips cannot be happier! A competitor taken out without spending a penny.

  35. Thomas

    Jonathan,
    I wanted to publicly thank you for responding to my earlier comment and engaging the appropriate resource to work through our support issues. There are not many CEO’s who enable their customers to provide candid feedback through a public forum and even fewer who would personally follow up with the customer to ensure that the appropriate resources are working on the issue.
    I am working with the individual that you put in contact with me and I am hopeful that we’ll be able to resolve the outstanding issues in a timely manner.

  36. nowyouaretalking

    Jon,
    have you ever thought of using Wengophone?
    Also, how about a bit more logistics-enabled "business-ready", "end-to-end" solutions for remotely controlling devices of all kinds.
    I’m talking of control and/or reporting, related to your plain old Jini-enabled home or Jini-enabled SME unit (manufacturing, process control, industry, …, datacenter? )
    So, as a commuting tech engineer (or data center support staff) i get live updates from various information sources or devices on SMS/MMS/… on my smartphone/palm/WinCE/…
    I see a lot of potential for this scenario. YMMV.

  37. Peter

    Nice Move, Thank you for your reassuring comments on Postgres, my favorite free relational database. Perhaps Sun might also consider acquiring db4o, the GPL2 object database written in Java? Why not consider acquiring the VC backed Terracotta for JavaSE JVM clustering? Terracotta currently relies on a proprietary file format for storing cluster coherency state info, so its not fully open, I guess they had to keep something up their sleeve?

  38. The synergy is very clear- absolutely no doubt about that. Anyone talking about where is the revenue/profit aren’t clued into the future trends. The two real questions are to what extent MySQL will cannibalize (1) Postgres (2) Oracle relationship
    MySQL will probably grow in two versions: SME and Enterprise. Sun can do the latter better than anyone (that’s why this deal makes sense).

  39. Hi Mr.Shwarz,
    Other interesting buys would be MontaVista Software, Ubuntu & EnterpriseDB. MySQL was Bingo

  40. As to BI solution speculation there is not only pentaho. Actuate and Alfresco might be candidates too. Alfresco would actually be a killer.But I love Sql

  41. ShareHolderSince2002

    hi Jonathan,
    So far Sun showing profit is mainly through belt tightening. When is the real growth and profit coming up ?
    I wish this MySQL deal will turn out to be a good one.

  42. Sun and MYSQL will be a great marriage………It’s good to know that Sun will maintain it’s commitment towards Open Source software and not give up on PostgreSQL to promote MySQL.

  43. MySql it’s my favorite databases. Just great

  44. Bill W.

    Hey Jon, Is Sun coming out with an iPhone this Spring??

  45. Zoe

    I think that this is a wonderful merger. Any changes can only be for he better. congratulations and I am looking forward to seeing what comes out of this.

  46. Anonymous Coward

    RE: Eric Ma
    I cannot agree with you more. We had Netscape Server in house and loved it as a Mail Server product. When I mention I-Planet, know one knows what I am talking about. Corp Management decided to go with Exchange since it is so well known.
    I really miss those Netscape Mail Servers. 😦

  47. Go have dinner with the CEO of yahoo and zimbra. Buy Zimbra before Microsoft buys Yahoo and save Zimbra from the Devil.

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