Will Sun-MySQL ignite a database price war? |
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By Mark Brunelli, News Editor
17 Jan 2008 | SearchOracle.com |
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Sun Microsystems' $1 billion MySQL acquisition could ignite a price war among Oracle, Microsoft and IBM, according to one IT industry analyst.
MySQL's free, open source database-management system (DBMS) lacks many of the frills associated with Oracle and other proprietary database technologies, but it's also far less expensive over time, according to Noel Yuhanna, a database market analyst with Cambridge, Mass.-based Forrester Research Inc. And now that it's backed by data center veteran Sun, he said, MySQL's relatively new technology is more likely to be seen as a viable option by large enterprises interested in cheaper alternatives.
MySQL users are typically small and medium-sized businesses (SMBs), but if the company starts to attract larger enterprises away from Oracle, IBM and Microsoft, it's a safe bet that the big three will respond with new pricing options and less expensive database management packages, Yuhanna says.
"This could really trigger some lower prices of databases, because database [technology] is certainly one of the more expensive kinds of investments that enterprises have to make," he said. "It's going to impact database vendors [because] 80% to 90% of applications don't need sophisticated, complex databases. You just need a basic database platform."
Sun officials on Wednesday announced plans to purchase Sweden-based MySQL. The company says it expects to profit from the acquisition by providing support for open source technology users and up-selling them on other Sun products.
Oracle made headlines in late 2005 when it purchased Innobase, the Finnish developer of InnoDB, a discrete open source transactional database technology that shipped with MySQL. At the time, many in the IT industry speculated that the acquisition was a ploy designed to help Oracle thwart a growing threat from MySQL.
Sun, which built its business around server hardware and a high-end, proprietary Unix operating system (OS) called Solaris, saw business decline in recent years as the open source Linux OS began to take hold in the data center. Sun responded by trying to reinvent itself as an open source company and has since released an open source version of Solaris.
"For Sun, [the deal] makes sense because they are an open source player," Yuhanna said. "This really fills the gap in their portfolio."
A combined Sun and MySQL could pose a serious threat to the likes of Oracle over the long term, even if the potential price war never happens, according to Tony Iams, a vice president and senior analyst at Ideas International, of Port Chester, N.Y.
MySQL is currently popular with SMBs, Iams said, but small companies often become big companies over time.
"MySQL appeals to a specific set of customers that might not have a lot of demands, but as the demands of those customers increase, the product [could] gradually get more sophisticated and break into the [high-end] market that way," Iams explained. "MySQL is a disrupter that Oracle might not have to worry about now, but 10 to 15 years down the road, I think that it could be a different picture."
MySQL should have no trouble hanging onto its SMB customer base even as those companies grow, Iams said, mainly because migrating off any database technology is usually a highly expensive undertaking.
"If you have a viable database business, it's a great business to be in because there are very few businesses in which the lock on the customer is stronger," he said. "The more dependent you become on a database, the more risky it becomes to switch."
A prime example of this phenomenon occurred a few years ago, Iams said, when a major Wall Street firm considered migrating off IBM's Information Management System (IMS).
"IMS is a 1960s-era database, and they thought it would be a good idea to move to something more modern," he said. "But when they commissioned a study to determine the total cost of switching, the price tag was more than a billion dollars."
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