In truth there was no real need to ask the question, as Whitehurst’s comments made it pretty clear that Red Hat is interested in the database market, and specifically the NoSQL database market.

“When I say I don’t want to be a database company, I’m saying that I don’t want to be a SQL database company,” Whitehurst said.

In case the implications of that statement were not entirely clear, he later added:

“But we would be very interested in a NoSQL type database or Hadoop type thing,” Whitehurst said. “Those are interesting as they represent net new.”

The article adds that Whitehurst would not specifically state whether Red Hat will or will not actually acquire anyone, as is to be expected, but the comments are the clearest indication yet that Red Hat sees value in a potential NoSQL acquisition.

This is something that we have seen for some time, pointing out in May 2010 that “We have consistently noted that the database remains a missing layer in Red Hat’s software stack… and would see advantages in adding an open source NoSQL database to its portfolio to target MySQL users.”

We are by no means the only people to have highlighted the database-shaped hole in Red Hat’s portfolio, but while Red hat has previously shied away from speculation linking it with a relational database vendor (seemingly in order to avoid disrupting its relationship with Oracle) as Jim points out, NoSQL and Hadoop are far more attractive given their growth is based on new projects, rather than the much tougher proposition of competing for incumbent database projects.

So what emerging open source projects might be of interest to Red Hat? Its OpenShift PaaS launched with support for 10gen’s MongoDB and later added support for Couchbase’s Membase, which makes them obvious contenders. We suspect that avoiding overlap and delivering compatibility with Red Hat’s JBoss Enterprise Data Grid technology would be a key part of the decision-making process.

As for Hadoop – Cloudera is the obvious choice but we imagine that any move would be likely to start a bidding war from which Red Hat might not emerge victorious. Hortonworks has only just emerged from Yahoo, of course, but might be an option for a more services-led approach.

Then there is DataStax, which could give Red Hat the opportunity to kill two birds with one stone with its Brisk Hadoop distribution and Apache Cassandra-related software and services.

The report is particularly relevant given speculation that private equity firms might be about to acquire the company and break it up, and takes a look at the importance of open source to Novell beyond well-known initiatives such as openSUSE and SUSE Linux Enterprise.

The recent reorganisation of Novell’s assets placed the focus on Intelligent Workload Management (IWM), and brought the Identity and Security, Systems and Resource Management, and Open Platform Solutions divisions together into the Security, Management and Operating Platforms business unit.

While the company is placing less emphasis on the Linux and open source technologies that represented the bulk of the former Open Platform Solutions business unit, open source is no less important to Novell.

In the parlance of The 451 Group’s open source strategy assessment, Novell is expanding on an Open Complement model (using open source to drive interest in its complementary products and services) to add an Open Inside model (building proprietary software products around open source software projects).

The latter is evident in Cloud Manager and Pulse: two new products due for release later this year. Cloud Manager draws on a number of open source projects, such as the OpenESB service bus project, Hibernate for database abstraction, and the Enunciate Web services engine.

Similarly the Pulse real-time collaboration product is based on a combination of closed and open technologies, including Google Wave and Google’s Operational Transformation algorithm, as well as the open source Apache Hadoop data processing framework and Apache Lucene and Solr.

There’s a lot more detail in the report itself, which examines Novell’s Linux-based revenue, the role of Linux within IWM, the company’s community development engagements, and provides more detail on Novell’s Open Complement and Open Inside approaches to OSS, as well as comparison with competitors.

The report is available to existing clients now, while non-clients are, as always, able to apply for trial access via the same link.

Those with an interest in Novell may also be interested in our recent Target IQ report, which examines potential strategic buyers for the company.

The webinar will contain analysis of venture funding in open-source-related vendors in 2009 based on The 451 Group’s database of more than 450 funding deals, beginning with the investment in Cygnus Systems from Greylock Partners and August Capital in 1997.

We will also include the results of a snapshot survey of private investors, designed to complement our previous survey of the sentiment of private investors toward open source, and the likely impact of economic conditions on investment in open-source-related vendors.

The webinar will also take in analysis of venture-backed mergers and acquisitions in 2009 involving OSS-related vendors, an overview of the potential impact of current economic conditions on OSS adoption and investment in OSS-related vendors, and analysis of the vendors we believe are most likely to be considering further funding in the next two years.

We hope you can make the session. Registration is now open.

As you can see, VC funding for OSS-related vendors was down considerably in 2009, as predicted. However, the decline was not actually as steep as I or others had predicted, and figures from the National Venture Capital Association and PricewaterhouseCoopers indicate OSS-related vendors fared better in terms of investment compared to software as a whole.

As well as an overview of the statistics from 2009, the reports also includes an update on the trends seen in investment for open source-related vendors since the investment in Cygnus Systems from Greylock Partners and August Capital in 1997.

There’s much more to the report than statistics, of course. It also includes comparison with funding levels from 1997 to 2008, analysis of venture-backed mergers and acquisitions in 2009 involving OSS-related vendors, as well as analysis of the ten largest OSS-related exits to date and the investors that have profited from them.

Also included is an overview of the potential impact of current economic conditions on OSS adoption and investment in OSS-related vendors, and a list of the 74 vendors we believe are most likely to be considering further funding in the next two years.

The report concludes with a look at the current prospects for OSS-related IPOs and (more likely) M&A in 2010, as well as a preview of venture investments in OSS-related vendors in the first quarter of 2010 (look out for a follow-up post about that in the coming days). Stay tuned also for details of the forthcoming webinar.

The latest CAOS report, Open to Investment, 2010 is available here. 451 Group clients with an interest in OSS and venture capital may also be interested in our recent Sector IQ report: Open source M&A in 2010: Will scarcity of later-stage funding lead to more scrap sales?

To be clear, I was not suggesting that SAP is, or should be considered, an open source company, but based on our understanding of SAP’s changing strategy with regards to open source software it represents a good case study on how proprietary companies have learned that it is in their best interests to contribute to open source software projects.

Jay and I had the opportunity yesterday to speak to Claus von Riegen, SAP director of technology standards and open source, and Erwin Tenhumberg, SAP open source program manager. Our formal assessment of the company’s strategy with regards to open source will be published in due course (it is now here), but given the disbelief expressed about SAP’s strategy, I thought it was worth publishing some edited highlights.

• The company’s strategy is not perfect, and it has made mistakes in the past, not least Shai Agassi’s dismissal of open source as an innovative development model, and the initial release of the SAP DB code under the GNU GPL (as we documented in our November 2008 report – clients only – the company has admitted that it did not properly understand the governance required to create a successful open source project and manage community contributions with that effort).

• Due to those mistakes, perhaps, SAP has been slow to embrace open source, despite becoming a founding member of the Eclipse Foundation in 2004. That move was motivated by a realization that open source software provided an opportunity to reduce development costs for non-differentiating features and in 2005 the company began documenting the formal processes required for the use of open source software within its internal development projects.

• That documentation effort is representative of the cautious approach SAP has taken to open source but it has arguably paid off – the processes for the use of open source have subsequently become baked-in to the company’s overall software development and productization process.

• Another reason that SAP’s progress has been slow is that until 2006 every proposal to make use of open source software had to be approved by the company’s executive board. Clearly that system was unworkable and it has subsequently been replaced by delegation to executives that lead the company’s individual business units.

• In 2007 SAP began formally contributing to Eclipse projects with the company having realized that it did not make economic sense to maintain its own code patches and modifications and that it stood to gain by proactively contributing to projects. That decision prompted the company to start work on the policies and processes that would be required to enable greater contribution to open source software projects.

• The processes for expanded contribution were accepted by the executive board in December 2008 and are also now part of the productization process. The impact has been a significant increase in the number of projects that SAP contributes to has jumped from three in late 2008 to more than 25 today.

• Alongside the Eclipse Web Tools Platform (WTP), Data Tools Platform (DTP) and Memory Analyzer projects, SAP is now also contributing to the Eclipse Modeling Project and the Eclipse Equinox OSGi implementation, for example, while it has also initiated Eclipse projects, or proposals, such as the Pave Framework, the EGit provider for the Git version control system, and the Graphiti graphics framework.

• June 2009 saw the company increase its Eclipse membership level from strategic consumer to strategic developer in line with the company’s enhanced contributions. As a result of this increased activity SAP was the third-largest corporate contributor to Eclipse in 2009 in terms of lines of code, with 1.8 million.

• In October 2009 SAP announced that it was also joining a number of Apache Software Foundation projects, including the Chemistry implementation of the CMIS implementation as well as Maven, VXQuery, Tomcat, OpenEJB and ActiveMQ.

• Other projects that SAP have contributed to include Ruby on Rails and JRuby, primarily motivated by its use of these technologies in its Business Objects business intelligence software.

• The company is now routinely seeing product units request open source use and contribution approval at the same time, indicating that the benefits of contribution have been widely accepted.

There is a lot more to SAP’s open source story than that – see our formal report for details on the due diligence checks performed by SAP on its code use, as well as plans to encourage more open source development from the members of its SAP Developer Network for example (I’ll add the link when the report is available) – but there is a clear journey that SAP has been on that continues to drive it towards even greater use of, and contribution to, open source software. Progress has arguably been slow, but the previous barriers to contribution have been lowered and the diligence that SAP has shown in putting processes and policies in place have put it in a good position to be able to benefit from greater involvement with open source projects.

Software patents

Of course some issues remain. On a related issue, one of the most significant for free and open source advocates is the company’s attitude towards software patents. A good explanation as to why this is the case is provided by Glyn Moody.

I asked Claus and Erwin for their perspective on SAP’s stance on software patents and how that impacted the perception of SAP. Part of the response was the expected position that as SAP exists in a world where there are software patents it has no choice but to engage in patenting software itself if it is to retain a strong position against competitors. The other, with specific reference to open source, was as follows:

“SAP actually is a big proponent of strong and concise IPR licensing regimes for all standards and open source initiatives we participate in. Whatever claims of patents and patent applications that essentially need to be infringed to implement a standard or use an open source component should always be licensed in a reasonable and non-discriminatory manner by the individuals and organizations that have contributed to the project (obviously, in open source projects RAND means royalty-free). SAP does participate in open source projects particularly in order to drive adoption of a certain technology. There may be SAP patents in that very domain and they may be essential, but we require ourselves to freely license those patents to everybody. But we expect the same from any other project participant. And that’s actually why we prefer governance models like the one from the Eclipse Foundation (that also comprises contribution analyses in order to minimize unintentional copyright infringements).”

UPDATE – Glyn Moody has predictably and helpfully obliged with his analysis of that statement, here.

They are probably less aware of the open source coverage that The 451 Group provides on a day-to-day and week-to-week basis, however, and I thought it would be worthwhile to provide some examples of The 451 Group’s ongoing open source coverage by highlighting a few recent reports.

The company’s core services are 451 Market Insight Service, which delivers daily insight into emerging enterprise IT markets, and 451 TechDealmaker, a forward-looking weekly analysis service focused on M&A activity within the enterprise IT business.

Here’s some examples of how our coverage fits in to those two services. Needless to say, these reports are only available to clients, although you can apply for trial access. Vendors – open source or otherwise – do not have to be clients in order to be covered by our analysts.

451 Market Insight Service
The 451′s CAOS analysts – Jay and I – are responsible for much of the coverage of open source specialist vendors. Recent examples include:

• Novell lessens Linux push for Intelligent Workload Management strategy

• OpenLogic offers code scanning and compliance, community Linux support

• DotNetNuke rides the explosion of open source on .NET for app development, WCM

Meanwhile The 451 Group’s team of analysts also cover open source related vendors in their respective coverage areas, often in conjunction with CAOS analysts. For example:

• Google’s online channel for smartphones changes little in terms of market dynamics

• JasperSoft eyes the enterprise with latest commercial open source BI suite

• xTuple’s open source ERP attracts more manufacturers, strikes chord with distributors

• Gluster targets virtualization, unstructured data with new clustered storage platform

• eZ Systems gears up for growth with new funding and new CEO

Additionally, we also provide reports assessing the strategies of proprietary/mixed source vendors towards open source. Examples include:

• JetBrains has an open-source IDEA that could expand its profile

• Day Software aims to become the patron saint of open source Web content management

• Microsoft’s new position reflects changing attitude toward open source

• Putting Oracle’s open source moves in perspective

• SAP is learning to give and take with open source

In addition to our vendor-centric MIS output, open source also regularly makes an appearance in our reports assessing wider industry trends. For example:

• Open source users voice concerns over Oracle’s acquisition of MySQL

• ‘Vendor wars’ push challenges, opportunity to HPC and its enterprise outlook

• Unpaid community Linux serving as foundation for provider and private clouds

• Open source and cloud computing – a match made in heaven?
  

451 TechDealmaker
451 Group analysts follow open source-related M&A in their coverage areas, again often working with the CAOS analsyst. Examples include:

• VMware grows cloud stack, sends message with Zimbra buy

• Terracotta acquires Quartz, adding job scheduling to Java-caching lineup

• Pentaho snags LucidEra assets in bid to give analytics mainstream appeal

While we also provide reports assessing the prospects of potential acquirers and targets alike. For example:

• EC concerns over Oracle-Sun deal center on MySQL

• Will Red Hat have to buy to meet aggressive growth targets?

• Further acquisitions could boost Novell’s Linux business, indirectly

And again, open source makes an appearance in our reports assessing wider industry trends. For example:

• Could an open source project survive a hostile acquisition?

• How will recent moves by Intel and Google shake up the embedded OS space?

• Opportunities for open source M&A in 2009

• Will code scanning and analysis get large vendors shopping?

For those with an interest in M&A it is also worth mentioning is 451 M&A KnowledgeBase – the company’s merger and acquisition database, which contains details of all M&A deals tracked by The 451 Group, and offers the ability to filter search results to contain deals that are themed “open source”.

This is an issue that crops up occasionally. Usually when a major acquisition has been announced, and the current questioning seems to be driven by the ongoing saga of Oracle-Sun-MySQL, as well as the rumoured purchase of Zimbra by VMware.

While fear of the unknown is understandable, to my mind the concern about open source specialists being acquired by proprietary vendors is driven by parochialism and misplaced assumptions about the rate of acquisitions and the acquiring company’s intentions.

For a start the statistics suggest that acquisitions involving open source vendors have declined in recent years (contrary to our expectations to be honest). According to our preliminary figures there were 24 M&A deals involving open source vendors in 2009, compared to 29 in 2008 and 35 in 2007. Dave Rosenberg makes the case that we have seen less open source M&A than we might have expected.

There is always the fear, however, that a proprietary vendor could acquire an open source rival in order to shut it down. This is a theory we at The 451 Group investigated last year via a TechDealMaker service report asking “Could an open source project survive a hostile acquisition?” (451 clients can access the report here).

Looking at the history of M&A involving open source vendors we were unable to identify a single example of a proprietary vendor acquiring an open source project in order to kill it off.

Another significant fear involving open source acquisitions is that the acquiring company will suddenly change the licensing and/or pricing in order to generate revenue from users open source of the open source project.

To me this is a fear based on a false assumption that the only way to monetize open source is directly. If we look at the strategies used by proprietary vendors to generate revenue from open source (as we did oin our Market Insight Service report “How third parties generate revenue from open source“, which was itself adapted from our Open Source is Not a Business Model CAOS report) we find that they are more likely to do so indirectly via complementary products and services.

In contrast open source specialist vendors have no choice but to attempt to monetize the open source software directly, either through support or proprietary licensed add-ons, and we have observed that this creates an inherent tension.

There is also a false assumption that open source specialist vendors are more committed to an open source “philosophy”. Some are, to be sure, but some simply see open source as a means to an end – treating it as a license tactic that disrupts competitors and expends potential adoption. There is nothing inherently wrong with that, but it does mean that for a great many open source “projects” the idea of the development community is a myth.

As previously discussed, Matt Asay noted last year that “vendors that have proprietary selling points elsewhere don’t need to control open-source code.”

In fact, I would suggest that vendors with proprietary selling points elsewhere have more to gain from releasing control of an open source project. Dirk Reihle explained the financial benefits this week with his Economic Case for Open Source Foundations, including sharing development expenses, increasing profits per sale, increases sales, and expanding the addressable market.

The fact that proprietary vendors have proprietary selling points elsewhere means that they are also in a better financial position to trade control for community via a foundational approach, in contrast to open source specialists.

There may well be situations where the acquisition of open source specialists by proprietary vendors might give cause for concern, but I believe it is wrong to assume that the impact will be negative. While many open source specialists might have something to fear regarding increased M&A activity, in the broader context open source software has more potentially to gain from the increased involvement of proprietary vendors than it has to lose.

In order to try and bring some order to the conversation, we have brought together some of the most referenced blog posts and news stories in chronological order.

Part one took us from the announcement of the EC’s in-depth investigation up to the eve of the communication of the EC’s Statement of Objections.

Part two took us from there to the eve of the announcement of Oracle’s concessions.

We will continue to update part three, below, until either the acquisition or the EC’s investigation closes.

December 14: Oracle – Oracle Makes Commitments to Customers, Developers and Users of MySQL
“Oracle has engaged in constructive discussions with the European Commission regarding the concerns expressed by the Commission about the Oracle/Sun Microsystems transaction, and in particular the maintenance of MySQL as a competitive force in the database market. In order further to reassure the Commission, Oracle hereby publicly commits to the following…”

December 14: Commission welcomes Oracle’s MySQL announcement
“Today’s announcement by Oracle of a series of undertakings to customers, developers and users of MySQL is an important new element to be taken into account in the ongoing proceedings. In particular, Oracle’s binding contractual undertakings to storage engine vendors regarding copyright non-assertion and the extension over a period of up to 5 years of the terms and conditions of existing commercial licenses are significant new facts. In this context, Competition Commissioner Neelie Kroes recalls and confirms her statement of 9 December 2009 that she is optimistic that the case will have a satisfactory outcome.”

December 14: Jeremy Zawodny – Trust Oracle? Why?
“Back a few years ago when Oracle dismissing MySQL in public while working hard against it in private, I realized that they were simply trying everything they could to protect their crowned jewels: public denials and classic FUD paired with hush-hugh backroom deals. Nobody has managed to explain, in even a mildly convincing way, what has changed since then. Why should we suddenly trust Oracle? Their crowned jewels are still threatened by MySQL.”

December 14: BusinessWeek – How Oracle Disarmed EU Critics
“The most influential provision in assuaging regulators’ concerns about the proposed acquisition may be one of the least noticed. Amid Oracle’s commitments was a pledge to let other technology vendors continue licensing MySQL for use in their products for another five years.”

December 14: Paul McCullogh – Monty’s appeal is selfless!
“If Oracle slows and closes up development, rejects community contributions and creates a commercial version of MySQL, then Monty Program’s MariaDB fork will become very popular, very quickly. Which would translate into income for Monty Program Ab as customers come to his company for additions, features and bug fixes that they need to secure there own production. What Monty is concerned about is the commercial vendors of MySQL (one of which Monty Program is not).”

December 15: Henrik Ingo – We scared Oracle a little, but their promises for MySQL are mostly an insult to the Commission
“5 years, or any amount of years, as a limit to such assurances is not satisfactory and customers and partners would immediately loose interest in MySQL with this promise. The only workable solution has to be perpetual and irrevocable promises.”

December 15: Stephen O’Grady – Oracle, MySQL and the EU: The Endgame Q&A
“Remember June of 2008? Oracle hiked its prices by 15-20% with no detectible impact to its volume. If MySQL was a real, substantial alternative, wouldn’t we have seen wholesale migrations away from Oracle to MySQL? That we didn’t, and continue not to, tells me they’re two different markets.”

December 16: Sheeri Cabral – A MySQL Community Member Opinion of Oracle Buying Sun
“The FUD about Oracle slowing development MySQL are not valid, and not true. The motivations behind those spreading this FUD are monetary and selfish. As a community member, I have seen Oracle put plenty of time, money and effort into developing InnoDB. I look forward to even more of Oracle’s resources being used to develop MySQL further.”

December 16: Monty Widenius – Oracle gives only empty promises for MySQL
“Oracle is trying to win the case through press releases and public pressure instead of really eliminating the European Commission’s concerns. They show no respect for the European authorities or how we do things here. Oracle just want to dictate their own terms and expect us to accept them on face value.”

December 17: AP – Oracle expects EU to approve Sun deal next month
“Oracle’s president, Safra Catz, said in a statement Thursday that the company now expects that European regulators will “unconditionally” approve the Sun acquisition in January.”

December 28: Monty Widenius – Help keep the Internet free
Monty Widenius launches his petition to help save MySQL by claiming (amongst other things) that “It’s not in the Internet users interest that one key piece of the net would be owned by an entity that has more to gain by severely limiting and in the long run even killing it as an open source product than by keeping it alive.”

December 29: Mark Callaghan – Save MySQL, save the world
“MPAB continues to drive away potential supporters with the tone of their messages, the inclusion of pointless assertions, and the complete lack of references.”

December 29: Sheeri Cabral – Save MySQL by letting Oracle keep it GPL
“I cannot say whether or not Oracle would kill MySQL. However, I have already stated I believe Oracle will not kill MySQL. This is based on the fact that Oracle has had the chance to kill MySQL for several years, by making InnoDB proprietary, and has not.”

January 3: David Nielsen – Why “helping MySQL” reflects poorly on us all
“This has nothing to do with the software’s freedom status and given the FSF’s behavior as well as argumentation throughout recent years, the entirety of the inherent freedoms remain intact even when forking the existing codebase, meaning that this is entirely about the right to make money from proprietary use cases of the code.”

January 4: Reuters – MySQL founder mobilizes 14,000 against Oracle-Sun
“Michael Widenius, the creator of the MySQL database and a potential stumbling block for Oracle in its takeover of Sun, handed 14,000 signatures opposing the deal to regulators in Europe, China and Russia.”

January 11: CAOS Theory – Save MySQL would not spare open source M&A
“I believe that separating out open source components, parts, projects and subsidiaries from vendors could certainly serve to dull the shine of open source software assets and vendors amid M&A valuations, prospects and strategy.”

January 15: CBR – MySQL co-founder doubts Oracle support
“David Axmark has told CBR that he believes there is ‘no real reason’ for Oracle to support the open source database application… Axmark added, however, that it is unlikely Oracle will kill off the database and that current MySQL customers should not be too badly affected by the takeover… Axmark also believes that aiming MySQL at a market where Oracle’s existing database applications do not operate will mean that the two can coexist.”

January 17: Marc Fleury – Save MySQL?
“This is making OSS acquisitions look very dangerous and dicey. JBoss is finally making a ton of money for Red Hat (>100MUSD/yr) but after 3 years, a few false starts and fumbles. It was a steep learning curve on both sides. But, so far the MySQL situation is a disgrace and just looks like a huge mistake. Hopefully the VMWare crew does a better and more discreet job of successfully integrating an OSS company.”

January 17: MySQL founder turns to China, Russia to halt Oracle
“Michael Widenius, the creator of the MySQL database, said he is turning his vocal campaign against Oracle’s planned takeover of Sun Microsystems to China and Russia because the European Commission appears set to clear the deal.”

January 20: Oracle – Larry Ellison to Unveil Oracle + Sun Strategy at Company Event on January 27th
“Oracle CEO Larry Ellison, along with executives from Oracle and Sun, will outline the strategy for the combined companies, product roadmaps, and how customers will benefit from having all components – hardware, operating system, database, middleware, and applications – engineered to work together.”

January 21: European Commission – Commission clears Oracle’s proposed acquisition of Sun Microsystems
“Competition Commissioner Neelie Kroes said: “I am now satisfied that competition and innovation will be preserved on all the markets concerned. Oracle’s acquisition of Sun has the potential to revitalise important assets and create new and innovative products.”"

The EC has until January 27, 2010, to reach a final decision however it appears that significant progress has been made following hearings in Brussels last week where Oracle made its case for approving the acquisition and opponents including SAP, Microsoft and Monty Program AB argued against the proposed acquisition.

Oracle has published a list of ten commitments that it is prepared to make to assuage the EC’s concerns over the future of MySQL, which were quickly and enthusiastically welcomed by the European Commission.

Oracle’s commitments

Oracle’s list of ten commitments related to the future licensing and commercial arrangements for MySQL, with a specific focus on the developers of storage engines that plug in to the core MySQL database enabling it to be used for specific application purposes, such as data warehousing, transactional applications, and clustered environments. Oracle stated that the commitments would continue for five years after the completion of the acquisition.

Oracle committed to the ongoing availability of storage engine application programming interfaces (APIs) as well as a promise to change Sun’s current copyright policy to ensure that storage engine providers would not require a commercial license to implement the APIs and would not be required to release their storage engines under the GNU General Public License. Oracle also promised that storage engine providers that currently have an OEM license with Sun to use MySQL alongside proprietary storage engines would be able to extend those agreements on the same terms until December 10, 2014.

With regards to open source licensing, Oracle also committed to continue releasing future versions of the MySQL Community Edition under the GNU GPL, and that new releases of the Community Edition would coincide with new releases of the Enterprise Edition product, for which proprietary licenses and subscription support are available.

Oracle also promised that customers will not be required to purchase support subscriptions from Oracle in order to obtain a proprietary license and that users that do opt to pay for support will have a choice of annual or muti-year support subscriptions

Oracle also repeated its promise to increase research and development spending on MySQL, detailing that in each of the next three years it will spend more that the $24m Sun spent on developing MySQL in its most recent financial year.

The company also stated that it would create two advisory boards – one representing end users and another representing storage engine vendors – to provide guidance on development priorities and other issues. Both will be created within 18 months of the acquisition closing. Finally Oracle committed to maintaining and updating the MySQL Reference Manual at no charge.

Commission’s response

The European competition commission welcomed the commitments, noting that the promises regarding copyright non-assertion and the extension of existing commercial licenses are significant new facts to be taken into consideration.

In the context of the commitments Competition Commissioner Neelie Kroes repeated her previous statement indicating optimism that an agreement could be reached that would allow the acquisition to proceed in a manner that would not have an adverse impact on competition in the European database market.

Last-minute intervention?

Although the commission responded warmly to Oracle’s commitments, the same cannot be said for Oracle’s opponents, especially Monty Program AB, the company set up by MySQL creator Monty Widenius to provide development and support for the MariaDB fork of the MySQL code base. Widenius has initiated a last-minute campaign to highlight user concerns over the future of MySQL, encouraging users to email the commission detailing their their about Oracle’s potential to raise prices and discourage MySQL developments that would enable it to better compete with the Oracle Database.

According to a recent survey of open source users conducted by The 451 Group, 14.4% of current MySQL users are less likely to use the open source database if it is acquired by Oracle, compared to 5.6% who are more likely to use MySQL if it is acquired by Oracle. The majority of users, 63.9%, will continue to use MySQL. That survey, and Widenius’s call to arms, came before the publication of Oracle’s commitments, however.

The 451 take

We did not expect Oracle to offer any concessions that would see it having to divest MySQL. The commitments that Oracle has made appear to strike a balance that protects the current business interests of MySQL storage engine providers and licensees without forcing Oracle to give up any rights to the database product. The EC’s swift and enthusiastic response indicates that the commitments settle many of its concerns about the future of MySQL. Oracle’s acquisition of Sun is not quite a done deal – we suspect there may still be room for negotiation regarding timescales – but it would appear that a major regulatory hurdle has just been lowered significantly. We now expect the proposed acquisition to be approved sooner rather than later. Oracle can be expected to invest in MySQL and position it as an alternative to Microsoft’s SQL Server at the low-end of the database market and for desktop and web applications while continuing to use its Oracle Database product to compete with SQL Server for high end enterprise applications. Do not expect Microsoft to take that competitive threat lying down. Even assuming that the EC’s investigation is near to completion, the controversy surrounding MySQL is likely to be far from over.

• I previously noted that the Widenius/Mueller case against Oracle owning Sun/MySQL is entirely dependent on the theory that Oracle will not invest in the ongoing development of MySQL, which is something it has publicly committed to doing.

• The case against Oracle owning Sun is also based on the theory that the only way for a fork of MySQL to generate revenue is via dual licensing. This is clearly not the case. It might be true that the only way for a fork of MySQL to generate the level of revenue required by Monty Program is through dual licensing, but that is not the same thing.
  .
  It might also be true to say that the only way for a fork of MySQL to generate the level of revenue required to be self-sustaining is though dual licensing, but that statement is dependent on the theory that Oracle will not invest in the ongoing development of MySQL, which is something it has publicly committed to doing.

  The launch of Amazon’s Relational Database Service clearly proved that it is possible to generate revenue from MySQL as a third party without dual licensing. RDS was dismissed by Florian Mueller, in an “information kit” sent to analysts/journalists as being “not a real ‘fork’”. This may be true, but it does not prove that RDS is not a viable way for a third party to generate revenue from MySQL, it just proves that it is not the way Monty Program chooses to generate revenue from MySQL.

• The case against Oracle owning MySQL is also dependent on the theory that MySQL has progressed to the point where it is a viable “option to replace an existing Oracle installation”. This is wishful thinking at best, and deliberately misleading at worst.
  .
  Ask someone who uses both Oracle and MySQL – Mark Callaghan for example – and they will tell you that despite the advances made by MySQL the two are not directly comparable. MySQL has undeniably been deployed to replace Oracle Database installations, but invariably this is due to the fact that the Oracle Database was not the right tool for the job in the first place.
  .
  Too often IT users use a sledgehammer when a hammer will do, and the growth of MySQL was driven by the fact that it was the right tool for web-facing PHP applications. As we previously noted, Oracle executives once dismissed MySQL as a Toyota compared to its 747. It was a comparison that MySQL used to its advantage. Maybe today MySQL has grown some wings, but it is still more suitable for short-haul than trans-Atlantic flights.

  Perhaps this is missing the point, though. Perhaps without Oracle’s ownership MySQL could become a true competitor to Oracle. The “Project Peter” presentation suggests that Sun thought it could. I am not convinced this was anything other than an internal exercise.

  The only time MySQL executives ever made any statements about competing directly with Oracle, to my knowledge, was during the announcement that MySQL was being acquired by Sun, and senior executives later admitted that was the result of getting carried away. MySQL is fundamentally not designed to to do what Oracle Database is designed to do. If you wanted to create a database to compete directly with Oracle you’d be better off starting afresh than building on top of MySQL.

• The case against Oracle owning MySQL is also reliant on the idea that “the only proposed remedy through which Oracle could ensure that MySQL continues to be a significant competitive force in the database would be a commitment to divest all MySQL assets to a suitable third party” (again from Mueller’s information kit). However, as Groklaw has pointed out, Monty et al previously suggested to the EU Commission in a questionnaire that the license on MySQL should be changed to the Apache License (Mueller has subsequently denied ever suggesting a license change, prompting this response from Groklaw).
  .
  Additionally, our recent survey of open source users demonstrates that there would be limited market acceptance for the forced divestiture of MySQL to another vendor. Just 4.3% of all respondents and 3.9% of MySQL users thought that Oracle should be forced to sell it to another vendor. This is not about user interests, it is about the interests of Monty Program AB.

• Last, but by no means least, the case against Oracle owning MySQL is flawed in its reliance on FUD and ad hominem attacks. As Groklaw points out, the case was laid out by alleging that the GPL has the potential to infect proprietary software.
  .
  Things went from bad to worse with the response to Eben Moglen’s view on the case. Mueller wrote that “Compared to Richard Stallman [Moglen is} very unimportant in a GPL context”. Not only that but that when Mueller met Moglen in 2004 Moglen “was primarily interested in obtaining funding (at the time from MySQL, on whose behalf I met with him) for some initiatives of his (at the time “patent busting”, a pretty pointless approach that never got anywhere but some lawyers made some money with it)”.

  Mueller recently wrote (in another email to analysts/journalists) that “lobbying is typically what companies do when they can’t win on the substance of a case”. I hate to think what position you have to be in to decide that bad-mouthing one of the most respected lawyers in free and open source software is going to get you somewhere.

  It would be bad enough if it were only Mueller. Recent Henrik Ingo of the Open Database Alliance stated that Mogen “is working for Oracle here” and “is arguing Oracle’s case best he can”.

  This is at best misleading and at worst (taken in consideration alongside Florian Mueller’s statement about Moglen) a slur on Moglen’s integrity. Moglen’s opinion paper clearly states that it was submitted “at the invitation of Oracle’s counsel, but I am not receiving any compensation, fee or reward for so doing.”

• UPDATE: Finally, we have Monty Widenius’s plea to his fellow MySQL users/developers in which he criticizes Oracle for involving customers in a competition hearing (and there I was thinking it was all about customers) and takes Oracle to task for not promising a number of things. Many of these he has a point about, but then when did MySQL AB or Sun make promises about the following?
  .
  - To keep (all of) MySQL under an open source license
  - Not to add closed source parts, modules or required tools.
  - To not raise MySQL license or MySQL support prices
  - To release new MySQL versions in a regular and timely manner.
  - To continue with dual licensing and always provide affordable commercial licenses to MySQL to those who needs them (to storage vendors and application vendors) or provide MySQL under a more permissive license
  - To develop MySQL as an Open Source project
  - To actively work with the community
  - Apply submitted patches in a timely manner

• AND ANOTHER THING: The case also relies on the theory that MySQL acts as a price constraint on Oracle Database. However, as Stephen O’Grady points out: “Remember June of 2008? Oracle hiked its prices by 15-20% with no detectible impact to its volume. If MySQL was a real, substantial alternative, wouldn’t we have seen wholesale migrations away from Oracle to MySQL? That we didn’t, and continue not to, tells me they’re two different markets.” Good point well made.

We asked the members of the “CAOS user community”* to tell what they thought of the proposed deal, as well as share some details on current database usage. The results have been published in the form of a 451 Group report (subscribers only) but here’s some of the headline figures:

• The use of MySQL is expected to decline from 82.1% of the 347 respondents today as 78.7% expect to be using it in 2011, declining to 72.3% 2014.

• The proposed acquisition of MySQL by Oracle has a part to play in that decline. 15% of all open source users and 14.4% of current MySQL users responded that they would be less likely to use MySQL if it is acquired by Oracle.

• MariaDB usage is expected to rise from zero usage today to 3.5% of all users in 2011 and 3.7% in 2014

• The majority – 57.9% of all users and 63.9% of MySQL users – indicated that they would continue to use MySQL where appropriate, however.

• The negative attitude towards Oracle is specific to concerns over its future plans for MySQL, however. Oracle Database usage is expected to rise from 19.3% today to 19.6% in 2011 and 21.6% in 2014.

• PostgreSQL usage is also expected to grow, from 27.1% of all users today to 30.5% in 2011, remaining at the same level in 2014.

• 6.3% of all open source users and 5.6% of MySQL users are more likely to use MySQL if it is acquired by Oracle.

• 17.6% of all respondents and 16.8% of MySQL users stated that they thought that Oracle should be allowed to keep MySQL.

• 32.6% of all respondents and 34.0% of MySQL users stated that Oracle should hand the database to an independent foundation to continue its development.

• Just 4.3% of all respondents and 3.9% of MySQL users thought that Oracle should be forced to sell it to another vendor, which is the preferred option of the most vocal opponents to Oracle’s impending ownership of MySQL

• In comparison 13.8% of all respondents and 12.3% of MySQL users said they did not care either what happened to MySQL.

Further survey results, analysis and details on the respondents are available in the 451 Group’s report.

*The survey was completed by 347 open source software users who are among the 1,000-plus members of the “CAOS open source user community”. It includes open source software users from every geography, industry and business size. Just below 16% of the CAOS open source user community claim to be nonpaying open source users, as opposed to customers of open source support services and related products. Users do not have to be 451 Group customers to be part of the community.

We know they revolve around the open source MySQL database, the European Commission has said that much. But the Statement of Objections weighs in at 155 pages, and even those that have read it admit to being confused by it. Meanwhile some of the most vocal parties in the public debate have vested interests in encouraging opinions for or against the deal.

Without knowing precisely what the European Commission wants to achieve it is impossible to come to any conclusions about the investigation. However, here are a few statements and observations:

• Anyone who claims to completely understand the European Competition Commission’s concerns with regards to Oracle-Sun either works for the European Competition Commission or is lying.

• The EC is evidently concerned about the ongoing availability of the GPL-licensed MySQL code.

• However, there are also concerns about the contracts related to non-GPL licenses used to make the code available to software vendors for use with proprietary software.

• The public debate about the Oracle-Sun deal has focused disproportionately on the impact of the deal on forks of the open source MySQL code base.

• The impact of the proposed deal on competition is just as likely to revolve around the proprietary contracts.

• Statements from MontyWidenius/Florian Mueller objecting to the proposed merger and the European Commission’s Statement of Objections against the merger are *not* the same thing.

• The Widenius/Mueller case against Oracle owning Sun/MySQL is entirely dependent on the theory that Oracle will not invest in the ongoing development of MySQL, which is something it has publicly committed to doing.

• There are forces at work that are not immediately obvious. You can probably guess what they are though.

A formal report covering the latest twists and turns in the proposed acquisition is available to 451 Group clients.

In order to try and bring some order to the conversation, we have brought together some of the most referenced blog posts and news stories in chronological order.

Part one took us from the announcement of the EC’s in-depth investigation up to the eve of the communication of the EC’s Statement of Objections.

Part two, below, takes us from there to the eve of the announcement of Oracle’s concessions.

We will continue to update part three until either the acquisition or the EC’s investigation closes.

November 9: Statement from Sun on EC’s Statement of Objections
“The Statement of Objections sets out the Commission’s preliminary assessment regarding, and is limited to, the combination of Sun’s open source MySQL database product with Oracle’s enterprise database products and its potential negative effects on competition in the market for database products.”

November 9: Statement from Oracle on EC’s Statement of Objections
“The Commission’s Statement of Objections reveals a profound misunderstanding of both database competition and open source dynamics… Oracle plans to vigorously oppose the Commission’s Statement of Objections as the evidence against the Commission’s position is overwhelming. Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction.”

November 9: Statement from the US DoJ on EC’s Statement of Objections
“After conducting a careful investigation of the proposed transaction between Oracle and Sun, the Department’s Antitrust Division concluded that the merger is unlikely to be anticompetitive… At this point in its process, it appears that the EC holds a different view. We remain hopeful that the parties and the EC will reach a speedy resolution that benefits consumers in the Commission’s jurisdiction.”

November 10: BusinessWeek quotes EC spokesperson on Statement of Objections
[EU spokesman Jonathan] “Todd said Tuesday that Oracle would become the exclusive holder of the copyright and trademark for MySQL code “which means that despite the fact that MySQL is open source, it could be very difficult for a competitor using MySQL code to sufficiently replace the competitive constraint” that MySQL places on database rivals. The commission is concerned that Oracle could refuse to license MySQL to some companies or for some uses in order to favor its own software. “Just because MySQL is open source, does not mean that if you want to apply it in the commercial context, that you can do what you like with it,” Todd said.”

November 10: All Things D – Morgan Stanley to EU: Whatever Larry Wants, Larry Gets, and Sun Is No Exception
“Based on our diligence, we believe the EC is likely to approve the deal with no remedies or remedies pertaining to MySQL’s licensing,” the research house said in a note to clients today. “It is highly unlikely that Oracle restructures the deal (e.g. spins MySQL) or walks away.”

November 11: eWeek – EC Schedules Sun Oracle Hearing For 25 November
“The EC and Competition Commissioner Neelie Kroes scheduled the hearing for Nov. 25 at the EC offices in Brussels, a source with knowledge of the transaction revealed.”

November 11: IOUG Supports Oracle Acquisition of Sun
“We anticipate that Oracle will continue to foster innovation and openness with MySQL following the acquisition and not hinder competition. Oracle has acquired numerous other companies in the past and has built on the strength of each to foster its growth. Oracle has previously acquired databases and has continued to support and enhance them, while providing critical business support.”

November 11: MySQL paying customer Osma Ahvenlampi – MySQL – could we please move on already?
“I’m a customer of MySQL, and I don’t really savor the idea of becoming a customer of Oracle. Even so, I’d much rather see Oracle own it, than leave it straggling, let alone see this process drag on and on. This is helping no one.”

November 11: MySQL and Wikipedia developer Domas Mituzas objects to the Statement of Objections.
“In my opinion, if you are right now in the camp of supporting objections, it is not because you’re seeing a lot now, it is mostly because you didn’t see anything before.”

November 11: ComputerWorld – SAP: Outreach to Oracle about Java, not help with Sun deal
“SAP AG said today it contacted Oracle and its CEO, Larry Ellison, in recent months over concerns about the future of the Java programming language and competition in the database market, not to offer help facilitating Oracle’s purchase of Sun Microsystems, which is being held up by a European antitrust review.”

November 12: Bloomberg – EU’s Kroes is ‘optimistic’ about Oracle settlement
“Let’s be optimistic, and let’s find out if they could take us to a point that we say, ‘OK, here we can take the result as a satisfying result for fair competition,’ ” Kroes told journalists in Brussels when asked whether a sale of MySQL would resolve competition concerns.”

November 12: Neil McAllister – Who is trying to sabotage the Oracle/Sun merger?
“If… you mistrust Oracle so much that you honestly believe it would kill the proverbial golden goose just out of spite, so be it. But when you root against Oracle, make sure you know just what — and who — you’re rooting for. Open source isn’t the whole story.”

November 12: The Economist – Merger interruptus
“It is hard to find anyone in the technology business who is prepared to argue that MySQL and Oracle really compete—or ever will. The commission is on firmer ground when it argues that the way MySQL is licensed would allow Oracle some control over commercial use of the program. Although MySQL and its underlying recipe are available free, any added code built around the open-source product must also be made open source. Most firms that develop products on top of MySQL prefer to buy a commercial licence that does not come with this obligation. This they obtain from the copyright holder, which would be Oracle. Because of the success of this “dual-licensing” set-up, a strong alternative to MySQL is unlikely to emerge.”

November 13: Internetnews.com – Should Oracle Dump Europe Before MySQL?
“When a regulator says to a company ‘prove to me that you are not hurting competition’ when there is virtually no concrete evidence to prove they are, then this no longer feels like an evidence-based proceeding, it feels like a conclusion-based proceeding.”

November 20: Reuters – EU extends review of Oracle plan to buy Sun
“”Oracle requested the extension in order to have the opportunity to further develop its arguments in response to the Commission’s concerns,” the Commission said. The Commission… pushed back its deadline to Jan. 27 from Jan. 19.”

November 23: Bloomberg – Oracle Purchase of Sun’s MySQL May Remove Competitor, EU Says
““Oracle has strong incentives to adopt a commercial and technology strategy for MySQL which prevents it from cannibalizing Oracle’s significant revenues from proprietary offerings,” the Brussels-based commission said in the so-called statement of objections.”

November 24: InformationWeek – Senators Urge EU To Finish Oracle Sun Probe
“Sun Microsystems’ financial position has become more precarious and the commission’s inquiry has continued.”

November 25: Reuters – EU hearing on Oracle, Sun deal on Dec 10
“Oracle will present to European Union regulators on Dec. 10 its case for buying computer maker Sun Microsystems, two people with knowledge of the matter said.”

November 29: Brian Gentile – Stop the Delay of Oracle’s Acquisition of Sun
“Done properly, Oracle’s acquisition of Sun should serve the market, community and customers even better. The company will be put in a position where it can play an important leadership role in helping its global peers more surely understand the open source model.”

December 1: Fabrizio Capobianco – Competition in Free/Libre Open Source software
“We believe the evidence shows that Oracle’s stewardship of MySQL will enhance the marketplace and offer greater choice and more effective competition for established proprietary database providers.”

December 2: Mark Callaghan – Oracle RDBMS != MySQL RDBMS.
“The Oracle and MySQL RDBMS are very different products. This makes me happy. I used to work on the Oracle RDBMS. It has a lot of features that do amazing things. Unfortunately, this also makes it extremely hard to modify. MySQL doesn’t have as many features. This makes it easier to modify.”

December 3: Reuters – Activist lawyer sees flaw in Oracle-Sun report
“Eben Moglen said that he has found errors in a document from EU regulators that outlines their concerns about clearing the deal… “The issues raised (by the commission) concerning the GPLv2
status of the MySQL code base do not warrant a conclusion that this transaction threatens significant anti-competitive consequences,” Moglen told EU regulators.”

December 4: New York Post – Oracle leader blinks
“Ellison is now willing to create a separate entity within a combined Oracle-Sun that houses Sun’s MySQL open database software business in order to get the deal completed before a hearing Thursday.”

December 4: Reuters – Oracle says NY Post report on Sun is false
“”The New York Post article is completely untrue,” said Oracle spokeswoman Deborah Hellinger.”

December 4: 451 COS Theory – 451 Group survey highlights user concerns over Oracle’s proposed ownership of MySQL
“Everyone seems to have an opinion about whether Oracle should be allowed to acquire the MySQL database along with Sun Microsystems. What do open source software users think? We asked the members of the “CAOS user community”* to tell what they thought of the proposed deal, as well as share some details on current database usage.”

December 8: Wall Street Journal – Oracle/Sun Merger Opponents To Speak At EU Hearing
“Microsoft and SAP compete with Oracle and have already told antitrust regulators they oppose the merger. Both have been confirmed as speaking at a hearing Thursday and Friday in Brussels… Swedish network equipment vendor L.M. Ericsson Telephone Co… is attending the hearing to support Oracle… Other people scheduled to speak during the hearing include Michael Widenius from Monty Program Ab who created the MySQL database, as well as open source advocates the Software Freedom Law Center.”

December 8: The Associated Press – EU Antitrust Chief Slams Senators on Oracle Deal
“The European Union’s antitrust chief said Tuesday that U.S. senators who pressed her to approve Oracle Corp.’s takeover of Sun Microsystems Inc. should stop interfering in Europe’s affairs and prioritize U.S. health care reform.”

December 9: Fluendo Group Concerned over EC threat to open-source investment
“The Fluendo Group believes that the Commission should abandon its view that any open source software product represents a price constraint on proprietary vendors, regardless of actual competition. If this precedent is established a vital source of funding for OSS vendors will dry up.”

December 9: The Financial Times – Rival dismisses antitrust issues in Oracle/Sun deal
“Oracle’s proposed acquisition of Sun Microsystems did not raise any significant antitrust issues and was likely to close soon in spite of objections raised in Brussels, according to Steve Mills, head of IBM’s software division and one of Oracle’s biggest rivals.”

December 9: Matt Asay – MySQL and a tale of two biases
“The license works, as its co-author, Eben Moglen, recently articulated. That is, it works to preserve software freedom. It says nothing about Widenius’ freedom to make money from MySQL, nor should it. That’s a business model question for him to overcome, not a political question for him to lobby.”

December 10: 451 CAOS Theory – The case against the case against Oracle-MySQL
“Matt Asay is right, in my opinion, to point out the inherent bias in the case Monty Widenius et al have made against Oracle’s potential ownership of MySQL. I would go further, however, in stating that the case being made against Oracle is flawed by the fact that it is so self-serving.”

December 10: Financial Times – Oracle summons support for EU hearing
“According to a person familiar with the schedule for the hearing, users that would lend their support to Oracle’s case include Ericsson, Vodafone, Sabre and BBVA, as well as the UK Atomic Weapons Agency and National Health Service.”

December 10: Financial Times – Oracle accuses Brussels over Sun evidence
“Oracle claims “many if not most” of the two dozen customers cited in the Commission’s statement of objections “do not support the Commission’s theory of harm”. The US group also argues that the views of some of the biggest-name customers have been “simply ignored” by Commission officials – including the likes of General Electric, Fujitsu, Siemens and Nasdaq.”

December 11: Wall Street Journal – Oracle Fights EU Objections to Its Sun Bid
“Oracle contends that the EU’s executive arm, the European Commission, misrepresented the opinions of database users and gave a “distorted view” of the market by “selectively” quoting from surveys as it put together its case.”

December 12: Monty Widenius – Help saving MySQL
“Without your immediate help Oracle might get to own MySQL any day now. By writing to the European Commission (EC) you can support this cause and help secure the future development of the product MySQL as an Open Source project.”

December 12: Josh Berkus – Snoracle, MySQL and the Death of Dual-Licensing
“The fact is that MySQL AB chose to pursue dual-licensing rather than other business models, and painted itself into a corner with it.”

December 13: Lukas Kahwe Smith – Come on Monty
“If you want to keep control over the copyright of your own code, do not go sell it to VC’s.”

December 13: Björn Schotte – MySQL: from midrange to the enterprise market
“There are many areas where MySQL does not compete with an Oracle, but due to this transition to the web there are also many many situations where MySQL could become a great choice for an Enterprise customer.”

December 14 Eben Moglen – The European Commission and Oracle-Sun
“This is why their argument has nothing to do, in the end, with competition law. Any holder of MySQL, be it for-profit company or non-profit trustee, that didn’t agree to commute the GPL for money would be equally unsuitable from their point of view. Whether Oracle is or is not “competitively constrained” by MySQL is irrelevant to the reasons for their concern.”

December 14: Kirk Wylie – My Open Letter to the European Competition Commissioner
“Delaying this merger over the matter of MySQL would result in far greater anticompetitive results to European consumers of computing technology than even the worst case arguments of biased, self-interested advocates in this matter.”

In our previous discussions about business strategies we have noted that there are four elements that shape a business strategy around open source software: the open source software license; the development strategy; the end user license strategy; and the revenue trigger.

As can be seen from the slide above, I have added a fifth element: copyright control. Copyright was previously considered in our research around business strategies but was seen more as an underlying influence than a distinct strategy element.

I have recently come to the realisation that copyright control is not just a part of each of the four elements, and not just a fifth additional element, but should perhaps be considered the central element which profoundly influences the other four.

Copyright control has a symbiotic relationship with both the open source software license (I’ll leave the copyright/left discussion for another day) and the development strategy, and is influential in determining both the end user license strategy and therefore the choice of revenue trigger.

This has become abundantly clear thanks to the discussion surrounding Oracle’s acquisition of Sun and MySQL.

Back in September I speculated that it was copyright, and not licensing or market share, that was at the centre of the European Commission’s concern about Oracle’s future ownership of MySQL:

“I would argue, that Oracle’s potential control over MySQL is not about licensing, but copyright… copyright ownership does not just impact the ability to license code, it also provides control over potential commercial uses of that code. This is where it could be argued that the EC could be right to have anti-competitive concerns over Oracle’s future ownership of MySQL.”

This week’s comments from EC spokesperson Jonathan Todd confirmed my suspicions:

Todd said Tuesday that Oracle would become the exclusive holder of the copyright and trademark for MySQL code “which means that despite the fact that MySQL is open source, it could be very difficult for a competitor using MySQL code to sufficiently replace the competitive constraint” that MySQL places on database rivals. The commission is concerned that Oracle could refuse to license MySQL to some companies or for some uses in order to favor its own software. “Just because MySQL is open source, does not mean that if you want to apply it in the commercial context, that you can do what you like with it,” Todd said.

Which is not to say that I agree that there is enough competitive threat to block the deal. But it has highlighted the importance of copyright control in terms of business strategies around open source. As John Mark Walker noted recently:

“The remarkable thing about the Oracle – MySQL case is that it forces us to put up or shut up in a realistic, fact-based way not clad in ideological robes. Whatever your opinions, you now have a test case against which to apply them.”

In order to try and bring some order to the conversation, we have brought together some of the most referenced blog posts and news stories in chronological order.

Part one, below, takes us from the announcement of the EC’s in-depth investigation up to the eve of the communication of the EC’s Statement of Objections.

Part two, takes us from there to the eve of the announcement of Oracle’s concessions.

We will continue to update part three until either the acquisition or the EC’s investigation closes.

September 3: The European Commission announces that it has opened in-depth investigation into proposed takeover of Sun Microsystems by Oracle with a focus on MySQL.
“The Commission’s investigation has also shown that the open source nature of Sun’s MySQL might not eliminate fully the potential for anti-competitive effects. In its in-depth investigation, the Commission will therefore address a number of issues, including Oracle’s incentive to further develop MySQL as an open source database.”

September 4: 451 CAOS Theory – The EC is mostly, but not entirely, wrong about Oracle/MySQL.
“Copyright ownership does not just impact the ability to license code, it also provides control over potential commercial uses of that code. This is where it could be argued that the EC could be right to have anti-competitive concerns over Oracle’s future ownership of MySQL.”

September 4: Monty Program Ab Chief Community and Communications Officer Kurt von Finck tells Ars Technica that that copyright and dual licensing is a significant concern.
“If Oracle were to release MySQL under a different license, say the Apache license, this issue would be mitigated to an extent. But for now, Oracle has many more avenues of [MySQL-related] business and revenue than do others.”

September 15 451 CAOS Theory – Oracle *could* kill off MySQL as a commercial product, but probably won’t
“It is impossible to create a fork that can be integrated with non-GPL code (or at least it appears to be.)”

September 17: Bill Schneider – Would MySQL survive without Oracle?
“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.”

September 22: Oracle CEO Larry Ellison reportedly says Oracle will not spin off MySQL.
“Ellison asserted that Oracle and MySQL do not compete – and he said Oracle has no intention of spinning off MySQL.”

September 30: The Wall Street Journal reported that documents indicate that Oracle intends to use MySQL to compete with Microsoft SQL Server.
“Oracle’s position is that in the market for small to medium-sized business databases, Sun’s MySQL database product, enables the company to compete against Microsoft.”

October 1: Matt Asay reiterates that MySQL’s value to Oracle is about competing with Microsoft.
“Open source is simply a means to an end, and in the case of MySQL, a means to denting Microsoft’s rising strength in emerging markets where Oracle’s expensive database technology doesn’t resonate.”

October 1: Carlo Piana explains why he is assisting Oracle’s legal team to get the acquisition approved.
“It must be passed through as soon as possible, or the company will die. And with it, some of the good development teams that have considerably contributed to the success of Free Software.”

October 8: Former MySQL CEO Marten Mickos urges the EC to approve Oracle’s acquisition of Sun.
“I believe that Oracle’s acquisition of Sun (and MySQL) will increase competition in the database market. And I also believe that if, on the other hand, it becomes difficult or impossible for large companies to acquire open-source assets, then venture investments in open-source companies will slow down, harming the evolution of and innovation in open source, which would result in decreased competition.”

October 11: Oracle CEO Larry Ellison reportedly says Oracle will invest in MySQL.
“He added a new line to the previously four-point list, this one promising MySQL would also receive more money for development and research.”

October 19: MySQL creator and Monty Program CEO Monty Widenius urged Oracle to give up on MySQL in order to land Sun.
“MySQL needs a different home than Oracle, a home where there will be no conflicts of interest concerning how, or if, MySQL should be developed further.”

October 19: Richard Stallman, Knowledge Ecology International (KEI) and the Open Rights Group sent a letter to the EC urging it to block Oracle’s acquisition of MySQL.
“If Oracle is allowed to acquire MySQL, it will predictably limit the development of the functionality and performance of the MySQL software platform, leading to profound harm to those who use MySQL software to power applications.”

October 19: Matt Asay argued that EU’s MySQL inquiry may backfire for open source.
“Why should commercial entities bother fostering community–the very community that makes them less susceptible to hostile takeover and anticompetitive forces–if doing so simply ends up ruining financial returns?”

October 20: Matt Asay and Simon Phipps note Stallman’s apparent admission that the GPL alone doesn’t guarantee software freedom.
“The GPL, which is supposed to be the ultimate guarantor of software freedom, may deliver the opposite.”

October 20: Sun Microsystems announced that it will lay off up to 3,000 people.
“The Board of Directors of Sun Microsystems, Inc. (the “Company”), in light of the delay in the closing of the acquisition of the Company, approved a plan to better align the Company’s resources with its strategic business objectives.”

October 20: 451 CAOS Theory – Closing Oracle out of open source?
“Although it might not be tasteful to all supporters of free and open source software, their very mantras and doctrines dictate their software and communities are open to all equally. Anything less is a contradiction of the core ideology of free and open source software.”

October 20: Carlo Piana – Apache what?
“I don’t see any suitable prospect investor which would be able both to pay the bill for this and to safeguard MySQL as Free Software more than Oracle is.”

October 21: 451 CAOS Theory – What about Woman’s Hour? Free speech, free markets and the future of MySQL
“The only possible argument in favour of the EC blocking Oracle’s acquisition of MySQL is that it is damaging to competition, not that it is damaging to MySQL itself. Otherwise we are asking the EC to rule on whether Oracle is open source-friendly enough to own MySQL, and that is neither something that an organisation like the EC is equipped to answer nor something that it should be asked to decide.”

October 21: Groklaw – Reasons I Believe the Community Should Support the Oracle-Sun Deal
“The most important reason is that opponents are trashing the GPL and calling it a source of “infection” in their FUD submission to the EU Commission.”

October 21: Kirk Wylie – Monty, Stallman, MySQL, Oracle, and Sun: Open Letter Wars
“Unfortunately, saying that you personally dislike something doesn’t provide a valid reason to block an acquisition on competition grounds. Saying that you don’t trust Oracle doesn’t alter the marketplace in a way that disadvantages customers as a whole. Saying that nobody else could make money by selling commercial licenses for MySQL doesn’t mean someone else must be allowed to.”

October 21: An EC spokesperson told The BBC that Oracle has not produced any evidence to ease its concerns.
“Oracle had failed to produce, despite repeated requests, either hard evidence that there were no competition problems or, alternatively, proposals for a remedy to the competition problems identified by the Commission.”

October 21: Tim Bray – The EU and MySQL
“If, in a merger or acquisition, partial control over a financially-insignificant Open-Source project can now be expected to result in many months of anti-trust review, that’s going to have a massive negative effect on the viability of M&A transactions all over the technology landscape.”

October 21: Jeremy Zawodny – Oracle and MySQL
“I haven’t yet seen anyone explain what motivation Oracle has for pouring resources into MySQL, especially if it eats away at their DBMS business on the low end.”

October 22: Ed Burnette – Stallman admits GPL flawed, proprietary licensing needed to pay for MySQL development
“Even if MySQL were owned by Oracle because of its purchase of Sun, the database would still be Free Software. Anyone could use the source code, build their own version, and distribute it to others. But finally Stallman has recognized that may not be good enough because somebody has to pay for this stuff.”

October 22: Brian “Krow” Aker – RMS, GPL, The Peculiar Institution of Dual Licensing
“Dual licensing forces any developer who wishes to contribute into a position of either giving up their rights and allowing their work to end up in commercial software, or creating a fork of the software with their changes. In essence it creates monopolies which can only be broken via forking the software.”

October 22: New York Times – Weak Points of Sun Deal Come Out in Europe
“The Sun/Oracle acquisition agreement includes no requirement that Oracle make any asset sales or agreements on its business to assuage regulators… Oracle is not required to complete the transaction unless it specifically obtains the European Union’s antitrust approval.”

October 23: Stephen O’Grady – Oracle, MySQL and the EU: The Q&A
“Given that Oracle has a negligible presence in the markets that Microsoft has been successful in, then, I think they’ll be the primary target. Meaning that competition shouldn’t be much of an issue.”

October 23: Karsten Garloff – The case for independence – Oracle, Sun and what to do with MySQL
“The present danger for MySQL shows how dependence on a single company (brought about by a dual-licensing strategy) puts even the most successful projects at risk.”

October 24: Monty Widenius – The importance of the license model of MySQL or Can MySQL be killed?
“It’s possible to create companies doing support for MySQL, but without the economics, there will not be enough money and incentive to pay enough for the development of MySQL to satisfy the requirement of all the MySQL users.”

October 24: JavaWorld – Who Should Oracle Sell MySQL To?
“It’s easy to suggest that Oracle should sell to a “suitable third party?” That’s just talk. The potentially significantly more difficult thing might be to actually find a buyer that meets the definition of “suitable” to all involved.”

October 25: Sacha Labourey – SUN vs./and ORCL: the failure of the dual licensing model?
“Some of the ex-MySQL co-founders who now ask for ORCL to let MySQL go are responsible for the current situation: their choice of a dual license business model years ago is what led to the current situation … but also what led MySQL to a 1B valuation. You cannot have it both ways I guess.”

October 25: Brian Aker asks Richard Stallman about MySQL and the GPL at foss.my 2009

October 26: eWeek – EU Strategist Claims an Oracle-owned MySQL Cannot Be Competitive
“It is legally possible but not viable [for Oracle] to be an innovative competitive force [by owning MySQL].”

October 28: Kirk Wylie – Monty’s Almost Certainly Looking for Investment
“I think… Florian is attempting to drum up a capital raise to acquire the MySQL IP to make the problem go away for Oracle, and to convince Oracle and Sun shareholders that Monty and Florian will do whatever it takes to block the acquisition so that they’ll tell Larry to let go.”

October 28: Carlo Piana – Send the GNU GPL to the Amazonia
“Amazon [Relational Database Service] gives us the best evidence that MySQL can be “monetized” by offering it in a Software As a Service setting. This can happen with GNU GPL licensed software and without receiving any special permission from the copyright holder, contradicting all claims that there is no viable way to fund development of a Free Software project without a dual license.”

October 29: Oracle updated its its Sun acquisition FAQ to include plans for Glassfish, Netbeans, MySQL and Openoffice.org
“Oracle plans to spend more money developing MySQL than Sun does now. Oracle expects to continue to develop and provide the open source MySQL database after the transaction closes. Oracle plans to add MySQL to Oracle’s existing suite of database products, which already includes Berkeley DB, an open source database. Oracle also currently offers InnoDB, an open source transactional storage engine and the most important and popular transaction engine under MySQL. Oracle already distributes MySQL as part of our Enterprise Linux offering.”

November 2: MySQL rival was Oracle not Microsoft-Widenius
“The largest and the most common rival was Oracle. In every deal we were competing against Oracle… there is very little money to be made on the Windows side for MySQL. They are not going to make a profit there. The big money is on the Linux side where MySQL already successfully competes with Oracle, and where MySQL has put all their efforts during the last 10 years.”

November 4: Financial Times – Oracle braced for EU objection on Sun deal
“The US software company has refused to offer any concessions to European regulators to meet their concerns about the deal, according to one person close to the process. That has left Brussels close to issuing an official statement of objections, the first step on the path to blocking it, this person added… Some suggest that Oracle has little to lose by waiting to see Brussels’ precise concerns. It would then still have time to offer concessions or try to mount a legal fight.”

November 4: Matt Asay – Amazon’s move mocks EU’s fear of Oracle
“Amazon’s RDS proves that strong, viable competitors to MySQL can arise from within the MySQL community, which disproves the EC’s argument that Oracle’s control of MySQL will somehow crush competition.”

November 4: Forbes – What If Larry Leaves Sun At The Altar?
“The main deal protection for Sun shareholders is a breakup fee of $260 million, plus up to $45 million in expenses. By way of comparison, that’s about how much Oracle earns every 20 days.”

November 5: John Mark Walker – Open Source: More than a License
“The remarkable thing about the Oracle – MySQL case is that it forces us to put up or shut up in a realistic, fact-based way not clad in ideological robes. Whatever your opinions, you now have a test case against which to apply them. In the past, I decried the software freedom debate as much ado about nothing – the 21st century equivalent of how many angels can dance on the head of a pin. But now we see it in real-world terms where something tangible is at stake.”

November 5: New York Times – E.U. Faces Tricky Decision on Oracle Deal
“The dilemma has prompted speculation that the best outcome for Ms. Kroes would be for Oracle to drop its interest in buying Sun, relieving the regulators of the need to make a choice.”

November 5: Wall Street Journal – SAP’s ‘Invitation’ to Oracle
“On September 15, less than two weeks after the Commission launched its extended probe, SAP CEO Leo Apotheker wrote a letter to Oracle’s Larry Ellison. The letter, which we have seen and hasn’t previously been reported on, reads in full: “As you know, we have significant concerns about Oracle’s proposed takeover of Sun. We renew our invitation to meet to attempt to resolve our concerns and other open issues between our companies. Please let us know if and when you would like to meet.”"

November 6: eWeek – Former CEO: MySQL’s Installed Base Will Keep it Independent
“”MySQL most certainly competes with Oracle,” Mickos said. “And successfully so. But what must be remembered in terms of dollars in that competition, it is not significant enough to warrant an antitrust consideration… “I don’t specifically have an opinion on where it should be,” Mickos told eWEEK. “I’m just saying that there’s no rational argument for not letting the company who’s buying Sun, have all of Sun.”"

Continue to part two.

Critics fear that the move will legitimise the BNP’s far-right views, while the BBC has defended the invitation on the grounds that its role as a politically neutral public service broadcaster would be undermined if it excluded the BNP – which won its first European Parliament seats this year with an estimated million votes.

To me it is clear that no matter how abhorrent the BNP’s policies on certain issues may be the BBC has a duty to invite it to participate as it is a legitimately recognised political party. We live in a society that protects and promotes free speech with the only limit being when the speech in question goes beyond what is deemed to be legally acceptable.

Many would argue that the BNP’s policies have already overstepped that mark, and I personally have a lot of sympathy for that view, but the illogical nature of the argument against the BNP appearing on Question Time is that campaigners are not seeking to prevent the BNP appearing on the BBC at all, but only from appearing on Question Time.

MP for Neath Peter Hain has stated that the BBC’s “obligation to respect the right of a minority who have voted for the BNP… is already adequately upheld in BNP party election broadcasts, and when they are interviewed on political programmes such as Today or Newsnight.”

On Monday night Hain appeared on Newsnight (UK residents only) to attempt to explain to an incredulous Jeremy Paxman why it was okay for the BNP to appear on some BBC programmes but not others, prompting Paxman to ask facetiously; “what about Woman’s Hour?”

I was reminded of this discussion while reading the open letter to the European Competition Commission by Richard Stallman, Knowledge Ecology International (KEI) and the Open Rights Group arguing that the EC should block Oracle’s acquisition of MySQL via Sun. It followed shortly behind the press release sent out by Monty Widenius which explained why he believes Oracle should sell off MySQL to ensure that it is in a position to acquire Sun.

The overall tone of both documents imply that it would be okay for some vendors to acquire MySQL but not others, and that Oracle is not a suitable candidate. The Stallman/KEI/ORG letter explicitly states: “MySQL was acquired by Sun in February 2008, in a transaction welcomed by many users because of Sun’s good reputation among advocates of FLOSS software, and a belief that Sun would position MySQL as a strong competitor.”

Meanwhile Monty Widenius’ press release states: “Oracle should resolve antitrust concerns over its US$7.4 billion acquisition of Sun by committing to sell MySQL to a suitable third party.”

So it was okay for MySQL to be acquired by Sun and it would be okay for MySQL to be acquired by a “suitable third party” but it is not okay for MySQL to be acquired by Oracle.

The “What about Women’s Hour?” response to this letter is “What about IBM?” Would Big Blue be considered friendly enough to FOSS to be allowed to acquire Sun and MySQL had it gone ahead with its plans? What about SAP? Or EMC? Or HP? While we’re asking questions, where were these campaigners when Yahoo was buying Zimbra? Or Citrix was buying XenSource? Or VMware was buying SpringSource?

The answer, of course, is that those acquisitions were not seen to be potentially anti-competitive. We live in a society that protects and promotes free markets with the only limit being when the impact on competition goes beyond what is deemed to be legally acceptable.

It would be understandable if the complaints focused on the negative impact on competition. However, the Stallman/KEI/ORG letter only mentions competitiveness in passing, and Monty Widenius’s press release doesn’t refer to it at all.

Instead they have resorted to spreading what can only be described as fear, uncertainty and doubt.

“If Oracle is allowed to acquire MySQL, it will predictably limit the development of the functionality and performance of the MySQL software platform,” begins the Stallman/KEI/ORG letter.

Florian Mueller, quoted in Monty Widenius’s press release, took things a step further: “every day that passes without Oracle excluding MySQL from the deal is further evidence that Oracle just wants to get rid of its open source challenger.”

It is a claim that borders on the absurd. Could it not be that every day that passes without Oracle excluding MySQL from the deal is further evidence that Oracle just wants to keep MySQL and use it to its advantage? Not least since Larry Ellison said Oracle has no intention of spinning off MySQL and further promised that MySQL will receive more money for research and development.

The Stallman/KEI/ORG letter further describes Ellison’s statement that MySQL does not compete directly with the Oracle Database as “outlandish” despite the fact that it reinforces the competitive history of MySQL, as confirmed recently by former MySQL CEO Marten Mickos.

We have previously noted that Oracle could kill off MySQL as a commercial product if it wanted to, but probably won’t, but that the acquisition does pose a potential threat to the the competition.

The only possible argument in favour of the EC blocking Oracle’s acquisition of MySQL is that it is damaging to competition, not that it is damaging to MySQL itself. Otherwise we are asking the EC to rule on whether Oracle is open source-friendly enough to own MySQL, and that is neither something that an organisation like the EC is equipped to answer nor something that it should be asked to decide.

That said there has been some interesting discussion on Twitter this week in response to the European Commission’s investigation of Oracle-Sun about whether Oracle could – in theory – kill off MySQL. Here’s a Q+A explaining my view as to how Oracle could kill MySQL but probably won’t, and why MySQL AB’s choice of dual licensing and the GPL has come back to haunt Monty Widenius.

Q. Oracle can’t kill MySQL even if it wants to, because its open source. Right?

A. Not really. The existing code will always be under the GPL but Oracle is under no obligation to release future developments under the GPL. It could theoretically continue to develop MySQL as a proprietary product, leaving the GPL version behind. Other developers and vendors could take the GPL code and continue its development, but they would be limited in their commercial exploitation of it.

Q. How so?

A. As Monty Program AB Chief Community and Communications Officer Kurt von Finck explained to Ars Technica, “MySQL’s licensing model gives the copyright holder a higher level of control than the rest of the community and the exclusive ability to provide certain kinds of products and services that third-party vendors cannot.” As the sole owner of the MySQL copyright Oracle would have the ability to decide who could license the code commercially for integration with non-GPL code, for example.

Q. Who does that impact?

A. As previously discussed, Oracle would theoretically have the ability to impact products that enable MySQL to better compete with Oracle’s database products, such as ScaleDB, Tokutek, Infobright and Kickfire.

Q. But that is a commercial contract issue isn’t it? What does it have to do with open source?

A. True, this is not really an open source issue but a copyright issue. However, the combination of GPL and copyright ownership also impacts the ability to fork – one of the apparent benefits of open source. Monty Program is free to build a business around MySQL but its commercial opportunities are limited. As Von Finck told Are Technica: “Anything we do will have to be GPLed. Oracle does not have this constraint.”

Q. That’s a bit tough on Monty Program isn’t it?

A. Not really, since its founder also created MySQL and was a member of MySQL AB, the company that decided to use the GPL and dual licensing to enjoy the benefits of the open source distribution model while restricting the ability of would-be forkers to compete. Oracle would simply being enjoying the same benefits of copyright ownership as MySQL AB.

Q. So it’s impossible to create a fork of MySQL then?

A. No, but it is impossible to create a fork that can be integrated with non-GPL code (or at least it appears to be – ScaleDB’s Mike Hogan has argued that it can be done via an open source intermediary layer, Monty Widenius believes vendors would need a commercial MySQL license). A company would be able to fork MySQL without the commercial opportunities however – Monty Program already has.

Q. So commercial licensing isn’t necessary to create a business around MySQL?

A. Not necessarily no. Non-GPL licensing drove the bulk of MySQL AB’s early revenue but, according to the company’s former CEO, Marten Mickos, in later years more money came from support subscriptions. A company like Red Hat, for example, could therefore take the code and create a pure open source subscription business – but it would have to invest in hiring the best MySQL developers and support engineers to differentiate it from the other MySQL support providers, and it wouldn’t be able to use the MySQL brand.

Q. Why?

A. Because Oracle owns the MySQL trademark. Hence Monty Program’s version of MySQL is MariaDB. This is also an impediment to the ability to fork, although not as significant as copyright in my opinion. MariaDB already has a significant profile.

Q. What about Drizzle, that’s under the BSD license isn’t it? And copyright for contributions are owned by the contributors.

A. That is true of community contributions, according to the FAQ. But according to the discussion in this thread, the copyright for the majority of the code is owned by Sun and only Sun can sell non-GPL licenses for it. When Oracle acquires Sun, it will assume that ownership. Arguably, if the Drizzle developers wanted to prevent Sun/Oracle from selling non-GPL licenses, they should have used the GPL for community contributions along with distributed copyright ownership.

Q. How so?

Because then Sun/Oracle would have to get the permission of the copyright owners to offer it under a non-GPL license. It has no such requirements for BSD code.

Q. How has this happened? I thought the right to fork was a key benefit of open source.

A. It is, unless the license is GPL and the copyright for the code is wholly owned by a single vendor or individual, in which case the vendor or individual has rights that are not available to would-be forkers.

Q. So is this situation unique to MySQL?

A. So far. At least in terms of the fact that the project is about to be acquired by a rival, and the creator of the original project is trying to create his own fork – and would apparently like to have the same commercial opportunities as the copyright owner. But this could theoretically happen to any project licensed under the GPL where the copyright for the code is wholly owned by a single vendor.

Q. So could Oracle kill off MySQL or not?

A. The community project, no. The commercial product, yes – if it wanted to.

Q. And does it want to?

A. As stated above, our view is that Oracle is well aware that it has little to gain from killing off MySQL and that we expect MySQL to become the scale-out database for non-transactional web applications and to compete with SQL Server in departmental deployments.

Q. But?

A. If Oracle is planning to invest in the long-term future of MySQL it could put an end to this speculation by at least hinting at what it plans to do with it, as it has with its advert regarding Sun’s hardware and operating system.

Q. Assuming Oracle did want to kill MySQL as a commercial product – can an open source community project survive a hostile acquisition?

A. We considered this question in a recent 451 Group report (clients only). One of the problems with testing this theory is that there have been very few, if any, hostile mergers or acquisitions of open source software vendors to learn from. There are some clues from looking at the history of commercial open source vendors that have ceased trading, leaving the open source projects to live on via SourceForge.

Q. And?

A. When Mindquarry, shut down the firm’s founders were all hired by Day Software, and stated that as long as there was an active community, they intended to continue their commitment to the software. SourceForge statistics for the project indicate that it has been inactive since the day it was registered. Similarly, the Ringside Social Application Server software may have outlived its corporate sponsor, which closed its doors in October 2008, but it has not been updated since July 2008, according to SourceForge statistics. On the other hand, openQRM continues to be an active project with more than 35 developers led by maintainer Matt Rechenburg, despite the closure of Qlusters in July 2008.

Q. What differentiates openQRM from Mindquarry and Ringside?

A. A committed project leader and an active community of developers. We would expect MySQL (or MariaDB) to enjoy both, and at a scale that dwarfs that of openQRM.

Q. This is all very theoretical.

A. Yes it is, but it highlights the importance of thinking through the long-term implications of licensing and copyright assignment. If you don’t want to end up in the situation faced by Monty Program, don’t go GPL with full copyright assignment.

In it, Matt makes a couple of statements, one I agree with: “Oracle… likely will prove to be a better manager of this asset than Sun was”; and one that I have real doubts about: “MySQL’s… doing just fine, thank you”.

MySQL might well be doing fine. Unfortunately Sun’s financial results don’t actually provide any evidence either way.

Billings for the MySQL/Infrastructure were up 51% to $313m in FY09, according to information presented with Sun’s financial results, with revenue hitting $100m (up 10%) in Sun’s fourth quarter.

That sounds pretty good, but it is unclear how much of that was attributable to MySQL, and how much to “Infrastructure”. What we do know, based on Sun’s prior financial information, is that whatever Infrastructure is, it delivered revenue of $198m in FY07, the last full year without the contribution of MySQL.

(It was unclear to me at first whether revenue from MySQL had been back-dated into these figures, so I checked with Sun earlier this year – it hadn’t).

Earlier this year Roy Hann speculated that the net contribution to billings by MySQL was roughly $63M during its first four quarters under Sun, “assuming the billings for ‘infrastructure’ didn’t take a massive tumble”.

It is possible that they did, of course. The first quarter (3Q08) that MySQL was added to Sun saw MySQL/Infrastructure revenue plunge 20% YoY to $40m, which would imply that Infrastructure took a nosedive, at least in that quarter. My point is, we just don’t know.

Zack Urlocker recently claimed that MySQL sales inquiries were growing nicely (although I can’t find the original Tweet) but those outside Sun don’t know what from and what to. Mind you, those outside MySQL/Sun never knew what MySQL’s revenue was in the first place.

And we haven’t even mentioned the state of health of he MySQL’s development/sales teams.

The new has prompted a lot of criticism of the EC, much of it suggesting that the delay will do considerable harm to Sun (and therefore Oracle). This argument is valid – Sun’s already declining revenue has been in freefall since the deal was announced and one wonders how far it will fall in another 90 days of stasis.

Other criticism, (such as this from Matt Asay) focuses on the suggestion that the delay will do little to help MySQL or its users, and that the EC fails to understand open source.

This also has some validity. The EC talks about “Oracle’s incentive to further develop MySQL as an open source database” but as Matt points out “even Oracle can’t put the open-source genie back in the bottle once it has been released, as MySQL has, under the GNU General Public License.”

This is true. although I would argue, that Oracle’s potential control over MySQL is not about licensing, but copyright. The FT states that Oracle “doesn’t control the IP, since the software is available under the GPL”. That is not entirely true. The existing code will always be under the GPL but as the copyright for that code would be fully-owned by Oracle it is under no obligation to release future developments under the GPL.

I do not expect that to happen, but copyright ownership does not just impact the ability to license code, it also provides control over potential commercial uses of that code. This is where it could be argued that the EC could be right to have anti-competitive concerns over Oracle’s future ownership of MySQL (even if it doesn’t understand why, or hasn’t articulated that it does).

Criticism of the EC has also suggested that it is disproportionately focusing on a products with a tiny market share. There are various suggestions as to quite how small MySQL’s market share is, with the WSJ citing 0.2%, but also 1.5%, AHN 0.04%, the FT “around half a percentage point”.

What all these reports overlook is that MySQL’s influence is much greater than its market share, not only in terms of more widespread unpaid usage, but also in terms of the ecosystem of vendors that are building products based on MySQL to tap into its widespread adoption.

Examples include Kickfire, Infobright and Calpont in data warehousing, ScaleDB in shared-disk clustering, Tokutek in Web-application querying, and Schooner Information Technology and Virident Systems in caching appliances.

All of these products enable mySQL to better compete with Oracle’s database products, and many of these have commercial relationships with Sun that enable them to use MySQL in proprietary products (while Infobright is itself open source, it also has a relationship with Sun).

Calpont also plans to offer an open source data warehouse based on MySQL but has put is plans on hold while it waits to see what Oracle will do with the MySQL database. Calpont’s concern is that Oracle will choose not to promote commercial relationships that use MySQL to compete more directly with Oracle’s Database business.

The MariaDB fork provides a potential alternative for these vendors, but as we previously discussed on this blog there are questions as to whether closed-source MySQL storage engines are compatible with MariaDB.

As noted in that post, ScaleDB’s Mike Hogan has argued that it can be done via an open source intermediary layer (and given that ScaleDB does not have a commercial arrangement with Sun, the company will be hoping that its analysis is correct), but MariaDB and MySQL creator Monty Widenius is not convinced: “This can only be done by buying MySQL licenses from Sun for each copy of MariaDB that is distributed.”

If Monty is correct then Oracle’s impending ownership of MySQL could theoretically have a significant impact on the emerging market for commercial products based on MySQL and their ability to compete with the Oracle Database.

As we noted in a report on the wider implications of Oracle’s impending ownership of MySQL (451 subscribers only) “For the commercial arrangements between these vendors and Oracle to survive, they will have to show that they can provide value to MySQL without impacting Oracle.”

Is that anti-competitive? Perhaps. I would argue that it certainly warrants further investigation.

UPDATE
I’ve just been asked a question on this that has highlighted something else I was thinking about this morning: BusinessWeek reports that “Oracle could spin off or sell the business to satisfy regulators if necessary”.

I do not think that Oracle would be prepared to do that – we previously argued that MySQL represents a more significant business opportunity for Oracle alive than dead – nor do I think it would need to do so if the issue was Oracle’s relationship with the ecosystem of commercial vendors using MySQL to compete with the Oracle Database.

Oracle could get around that without needing to sell MySQL by contributing the code and the copyright to an independent foundation, which would also have the side benefit of increasing developer involvement in the project following the departure of many MySQL developers from Sun. Oracle would of course retain the support and service expertise.

Just a thought.
UPDATE

2ND UPDATE
Monty Program AB, which has been bending the ears of regulators about Oracle-Sun as well as creating MariaDB, suggests to Ars Technica that copyright and dual licensing is a significant concern.

“Monty Program Ab Chief Community and Communications Officer Kurt von Finck… points out that MySQL’s licensing model gives the copyright holder a higher level of control than the rest of the community and the exclusive ability to provide certain kinds of products and services that third-party vendors cannot. This means that Oracle’s acquisition of Sun would still have significant implications for competition in the database market.”

Of course this comment comes from the company set up by the creator of MySQL, Monty Widenius, who no doubt trousered a significant share of $1bn based on MySQL AB’s successful exploitation of the dual licensing model and copyright ownership.

As Kirk Wylie has said: “Look At The Balls On That Guy”!
2ND UPDATE

Follow 451 CAOS Links live @caostheory

I’ve just met a fork named Maria
MySQL founder Monty Widenius and Percona CEO Peter Zaitsev announced the launch of the Open Database Alliance – “a collection of companies working together to provide the software, support and services for MariaDB, an enterprise-grade, community-developed branch of MySQL.”

Continuent and Open Query quickly announced their membership, while Monty later clarified that the Alliance will also “include companies and people working on all other open source database”. In a Q&A with Redmonk’s Stephen O’Grady, Monty also noted that he would not be surprised the Alliance had more than 10 companies by the end of the month.

Meanwhile James Dixon offered a couple of related posts, one pleading for calm in the face of Oracle’s impending ownership of Sun/MySQL and the other examining different kinds of open source forks.

Best of the rest
# Oracle finally confirmed its long-rumoured Oracle Virtual Iron acquisition.

# Larry Dignan: Is an IBM purchase of Red Hat inevitable?

# AccesStream released version 1.0 of its enterprise open source identity access management solution.

# MuleSource announced a Mule ESB transport for FIX, a community contribution from MuleSource partner Ricston.

# Microsoft announced that it is funding the development of PHP SDK for Windows Azure.

When examining the open source vendor landscape it is tempting to imagine that the combined total could be bigger than the sum of its parts – that a combination of many open source product specialists could mount a challenge to Red Hat and Sun to claim the title of biggest open source software vendor.

Benchmark and Accel are among the most prolific investors in open source vendors (ranking second and joint-third according to the data in our recent CAOS report into investment in open source vendors).

Between them they could assemble a pretty formidable open source software player. Not only are they both investors in SpringSource/Hyperic but they are also currently invested in:

Terracotta – Both
Aptana – Accel
Alfresco – Accel
Cloudera – Accel
Coverity – Benchmark
CollabNet – Benchmark
Eucalyptus Systems – Benchmark
Engine Yard – Benchmark
Pentaho – Benchmark
New Relic – Benchmark
OpenX – Accel

Not all of these would complement SpringSource but with some others it is very easy to see how they would add value to the company’s development and management capabilities. While we are playing fantasy M&A, consider the vendor that could have been assembled with these former investments:

XenSource – Accel
JBoss – Accel
Red Hat – Benchmark
MySQL- Benchmark
Zimbra – Both

Sure, there are technical and cultural reasons that an acquisition and merging of the comnpanies makes sense. Both use primarily GPL-licensed open source software at the center of their offerings. Both offer a variety of proprietary extensions and enhancements in an open core model. Both started around the same time and are at similar places in their evolution along with the commercial adoption of open source. However, as we’ve seen in other cases when open source matters more on an underlying level, open source software is somewhat of an aside in the SpringSource-Hyperic acquisition.

That is not to say, however, that this deal reflects a lack of momentum for open source software, whether we’re talking enterprise Java and SpringSource or applications monitoring and management via Hyperic. Some are arguing that this acquisition represents SpringSource protecting its own viability by saving Hyperic, which is embedded in SpringSource’s products and business. However, given the growth we’ve seen at both companies and the continued acquisition strategy from SpringSource, that does not seem to be the case. As far as the contention enterprise and midmarket organizations are turning away from open source amid difficult economic conditions, we are seeing the exact opposite. The risk/benefit question on open source software is now falling down on the side of trying it out, and open source seems to be passing the test. Those who continue to forbid or resist open source are sounding more unreasonable, particularly when there are most likely parts of all organizations that already know the benefits, including cost-savings.

We believe the main drivers of the SpringSource-Hyperic acquisition and the main value here is not open source software, but rather where open source software has allowed both of these vendors to go: enterprise Java applications, virtualized and cloud computing environments in particular. The fact that these vendors are joining up in the latest virtualized and cloud environments indicates they have the right offering at the right time, and we expect the combined company will leverage this even more now.

“We’re both in the transportation business. We have a 747, and they have a Toyota.”

The comparison of Oracle’s database and MySQL, made by Oracle president Charles Phillips at the 2004 Vortex Conference was undoubtedly meant as a criticism, but it so graphically demonstrated the differing business strategies and selling-points of the two products that MySQL executives began citing it themselves.

It is also a comparison that explains how the two products could potentially co-exist within a single company, as they seem likely to do following the announcement that Sun has agreed to be acquired by Oracle.

Much of the MySQL-related coverage of the impending acquisition has focused on the likelihood of Oracle killing-off the development the open source database. While that is a possibility, my opinion is that it gives neither Oracle nor MySQL enough credit.

As MySQL creator Monty Widenius indicates, Oracle has (at least) three options:

“They are going to kill MySQL (either directly or by not developing/supporting it fully)

MySQL will get sold of to another entity, either because Oracle doesn’t want it or becasue of anti-trust laws.

They will embrace MySQL and Open Source and put their technical expertise on it to ensure that MySQL continues to be the most popular advanced Open Source database.”

Monty is putting his hopes on the third option, which is also the one I see as more likely.

Oracle and Larry Ellison didn’t get where they are today by ignoring a business opportunity and MySQL represents a more significant business opportunity for Oracle alive than dead.

MySQL’s strategy of avoiding direct competition with Oracle and IBM enabled it to establish a substantial business under the noses of the database giants by targeting a market (web applications) that they were not particularly interested in.

That was then, this is now, and the web-based applications market is a lucrative market opportunity that Oracle, IBM and Microsoft cannot afford to ignore. However, they are also well aware that MySQL was successful in this market because it offered something different from the established database choices.

For that reason Oracle will be well aware that it has little to gain from killing off MySQL. Were it to do so MySQL users would be far more likely to run away from Oracle than adopt the Oracle Database. By keeping MySQL alive, Oracle has the potential to up-sell MySQL users to other Oracle products and services, while also using MySQL as a weapon to attack Microsoft’s installed base at the low-end.

Additionally, promoting MySQL gives Oracle access to a new breed of developers. As former MySQL CEO Marten Mickos told Forbes: “They can kill the business. But I don’t think they will. Larry Ellison is smart. MySQL was getting around 70,000 downloads a day when I left. It’s an amazing grip on young developers. Having MySQL makes business sense for Oracle.”

The focus when Sun acquired MySQL in 2008 was all about extending the open source database for adoption in new markets for web-based transactional applications. In comparison, the focus for MySQL under Oracle will likely be on what MySQL does best.

Like Matt Asay I expect Oracle to position MySQL as a web database, and potentially continue the back to basics approach taken by the Drizzle project.

Oracle already has a scale-up database for enterprise transactional applications. Expect MySQL to become the scale-out database for non-transactional web applications.

Of course, maintaining two database products within a company like Oracle is going to be far from easy. In order to do so Oracle would need to keep the two sales teams apart. As Marten explained, one way to mess up the opportunity would be “by slipping it into the database division. Then you’ll see turf wars.”

Then there is the fact that MySQL is currently in something of a state of disarray within Sun, although as Kaj Arno points out, it is in the process of correcting its past mistakes with regards to the community and software engineering. Oracle would be advised to focus on those efforts, as well as managing the sales teams.

In addition, Oracle will also have to work hard to ensure it retains what remains of the MySQL staff. As Monty says, “The biggest threat to MySQL future is not Oracle per se, but that the MySQL talent at Sun will spread like the wind and go to a lot of different companies which will set the MySQL development and support back years.”

So I think it is unlikely that Oracle will stick a knife in MySQL. The likelihood of someone sticking a fork in it is another matter, however (see what I did there?).

The acquisition of Innobase by Oracle in 2005 created a significant business opportunity for vendors to develop products that complement the MySQL database by providing storage engines suitable for different usage scenarios.

Just this month we saw Infobright update its data warehousing software, which turns MySQL into a data warehouse capable of supporting 30TB+, while Kickfire officially launched its MySQL-based analytic appliance (PDF). Meanwhile Calpont repositioned as an MPP data warehousing engine for MySQL, while ScaleDB launched the beta of its ScaleDB Cluster shared-disk clustering for MySQL (PDF), Tokutek delivered its Fractal Tree Indexing-based engine, (PDF) and Schooner Information Technology and Virident both launched MySQL-based appliances.

Oracle’s acquisition of Sun could have a more significant impact on the business models of these vendors than it has on the MySQL database or MySQL users. While Oracle will be happy for an Oracle-owned MySQL to cannibalise its business, the same is unlikely to be true of third-party vendors making use of MySQL to target Oracle.

With the MySQL and InnoBD development teams united under Oracle it seems likely that the company would focus all its attention on InnoDB and MySQL’s in-house storage engines rather than providing a business opportunity to potential rivals, and I would be surprised if we saw commercial relationships renewed with all or any of the vendors listed above (although few would have predicted that Oracle would have renewed relations with MySQL following the acquisition of Innobase, so you never know).

These vendors would appear to have three options:

Turn to another open source database project.

Suppport their own MySQL fork.

Migrate to an official unofficial fork of MySQL.

The first option is probably the easiest given the existence of PostgreSQL and Ingres. However, the reason that these companies chose MySQL in the first place was because the opportunity was to target the MySQL installed base. That opportunity does not simply transfer to PostgreSQL just because Oracle acquired MySQL.

Meanwhile, maintaining a fork of MySQL undermines the point of building a business around a standard, open source project. For that reason it seems likely that these vendors will gravitate towards an “official unofficial” fork of MySQL.

OurDelta provides an opportunity for this, as does Drizzle (although I would think that its self-imposed restrictions makes it incompatible for many use cases). Monty Widenius’ MariaDB would appear to be the most likely candidate, not least since it is run by the creator of MySQL, who has also declared himself willing to take on the role.

“I am prepared to hire or find a good home (either at Monty Program Ab or close to it) for all core MySQL personnel.

I am looking forward to working closely with Oracle (or whoever in the end gets to own MySQL) to ensure that there always exists a free branch of MySQL that is actively develop[ed] in an open manner and has that trust and support of the MySQL customers, developers and users.”

It remains to be seen precisely what Oracle will do with MySQL. Either way it would appear that rumours of MySQL’s demise have been greatly exaggerated.

The report contains analysis of the history of venture funding in open-source-related firms between 1997 and 2008, based on The 451 Group’s database of more than 370 funding deals.

It also contains results from a survey of investors from private investment firms, assessing their sentiment toward open source and the likely impact of economic conditions on investment in these vendors.

Among the key findings:

• Since the first venture investment in an open source vendor in 1997, $3.2bn has been raised by 163 open source vendors through 378 separate funding deals.

• The report identifies 57 vendors that are most likely to be considering further funding in the next two years based on the length of time since their last funding round and the total raised to date.

• Private investors anticipate that current global financial conditions will accelerate the adoption of open source software in 2009 and 2010 and, given that, they are more inclined to make investments in 2009.

• However, a 100% open source software-licensing strategy is incompatible with the demands and requirements of private investors.

Depending on your perspective that last finding will likely seem blindingly obvious or highly controversial. What we found is that while the investors we spoke to were much more likely to invest in open source-related vendors than proprietary vendors in the current climate, they preferred vendors that take a hybrid approach to software development and licensing.

We also asked investors to choose from between five different licensing strategies for an imaginary startup (hybrid open source/proprietary, hybrid open source/SaaS, hybrid proprietary/SaaS, 100% proprietary, and 100% open source). Not one investor was more likely to invest in a vendor with 100% open source licensing.

The report also covers:

• The likely impact of economic conditions on open source adoption.

• The prospects for M&A involving open source vendors in 2009.

• The seven vendors we think might be best positioned for a run at an IPO in the 12-24 months after the downturn ends.

• A high level view of investment trends between 1997 and 2008.

• The primary benefits of open source, from the perspective of investors.

• The major risks of open source, from the perspective of investors.

• Why private investment isn’t always the answer.

• Detailed analysis of investment in each year between 1997 and 2008.

• Exit strategies: the history of IPOs, M&A and failed businesses.

• The most prolific investors.

• The biggest fundraisers.

The report is expected to form the basis of an annual repeatable service from The 451 Group designed to examine the levels of investment in open source vendors and to identify the changing attitudes among private investors. We will also continue to offer quarterly updates based on preliminary figures on 451 CAOS Theory.

Also look out for details of the a forthcoming webinar, during which we will discuss the findings and research report in more detail.

According to the report the deal on the table is $6.5bn in cash, although it sounds as if negotiations could be faltering: “People familiar with the matter cautioned that, while talks are under way, a transaction might not occur and that the talks could fall apart.” UPDATE – The New York Times reports that the price is nearer $7bn, citing “a person with knowledge of the negotiations” -UPDATE.

As the WSJ notes a deal to acquire Sun would hurt IBM’s profit margins and would be contrary to IBM’s recent strategy of acquiring software and services. There are complementary products in the Sun portfolio of course, but it would also add yet another server and processor architecture, not to mention operating system, to the IBM stable.

The open source implications could be interesting, however, especially if IBM were to consider “foundationalizing” (is that a word? It is now) Sun’s software portfolio. Just a thought.

UPDATE – I notice ComputerWorld has linked here noting that I am “worried” by the prospect of IBM acquiring Sun. Actually I am very positive about the idea, although of course there would be issues to overcome. – UPDATE

At the same time, I would expect any purchase to be tactical and based on acquiring technology/talent rather than revenue or users/customers. As I briefly noted in The 451 Group’s preview of open source in 2009: “A major investment [by Microsoft] in open source is unlikely, but the potential for small tactical acquisitions cannot be dismissed”.

Matt suggests that Zend would be a likely target. Savio Rodrigues is not convinced (to say the least). I agree with Savio that Microsoft can’t buy open source credibility but I do not think that would motivate a purchase and I don’t think that Matt did either. And I’ve already noted that Microsoft wouldn’t do it for the money.

Savio’s arguments about what Microsoft would gain (or not) from owning the PHP technology are more compelling, and I would agree that there would have to be a good technological reason for Microsoft wanting to own an open source project/vendor and lead the development of that technology.

For that reason I would be inclined to look towards the company’s efforts around interoperability as a potential hunting ground. Like Matt I would look for clues at the Port25 blog. The recent post about the Stonehenge project and collaboration with WS02 for example.

I would also look at cross-platform systems management as an area of potential interest for the company – again probably from a technology perspective rather than a product perspective so as to avoid stepping on the toes of partners.

Anyway, those are my thoughts. I’d be interested in any views on who or what Microsoft could or should buy. If we get enough suggestions we can start a sweepstake (in the UK sense of the word).

Intalio’s CEO Ismael Ghalimi has sent an email to partners and users outlining the plan. He writes:

The past 12 months have been especially interesting. We doubled the size of our team, crossed the mark of 500 customers (in 52 countries), signed 36 implementation partners, made our second acquisition (Process Square, Germany), and raised a new round of funding lead by Partech International.

The next 12 months should be even more exciting. Most analysts agree that both BPM and Open Source are counter-cyclical. Being the leading Open Source BPM vendor, we expect our growth to further accelerate. In order to best capture this opportunity, we will raise a new VC round to fund 8 to 10 small acquisitions in the Open Source space.

In a previous email, also posted to his personal website, Ismael noted that “Four weeks ago, we closed a new round of funding that will take us to profitability sometime next year, and gives us ample cash reserves to survive even the steepest drop in revenue”.

It was my understanding that those funds would be raised in the following two quarters so it’s not clear whether Ismael is now talking about a additional funding round or just making use of agreed funds.

Either way the company is planning a number of acquisitions and Ismael has outlined the preliminary set of criteria it is using to judge potential targets:

Do you know a vendor that fits the description> If so you can get in touch with Ismael and see a lits of potential sectors of interest via his post.

The report is a more formal write up of some of thee issues discussed on this blog in November and updated with the latest VC funding figures and more supporting information, not to mention recent thinking on emerging business strategies.

I didn’t want to go over all the arguments again. Here, instead, is a list of the fundamental reasons why I think we’ll see more opportunities for open source M&A in 2009:

For further explanation see the full Sector IQ.

(Some of these I’ve already written about, some of them I’ll write about next year. Apologies for the headache-inducing colours on some of these, they are works in progress and brighter colours are easier to assemble.)

Open source is not a business model

What we talk about when we talk about community

The five ages of vendor-led open source revenue strategies

Open source as a strategic competitive weapon

My view was in stark contrast to those expressed during the M&A panel later that afternoon when the general view was that there would be a significant slowdown in M&A spending during 2009 for the IT sector as a whole.

I thought it would be worth explaining why my view of open source M&A opportunities was different from those of the M&A panel.

Is open source a special case? Yes and no. There are two reasons I expect to see more M&As involving open source vendors, only one of which is specifically-related to the fact that the vendors are open source.

The (Im)maturity issue
Let’s say there are 120 meaningful commercial open source vendors operating right now (that number is a guess). Only a handful are public, and only a handful are in a position to think about going public in the next couple of years.

The majority of open source vendors are at the next tier down – they are looking for latter-stage funding to drive business and revenue expansion with the hope of getting towards an exit three-to-five years from now. That is just the sort of position you don’t want to be in given the current financial situation.

Of course there are also a lot of vendors in the same position who are not open source. My sense is that there is a disproportionate number of open source vendors at this stage, however, due to the relative maturity of commercial open source.

A lot of open source vendors raised funds in the first half of the year, but a significant number didn’t and even though there is money out there if you have the fundamentals right, some of the open source vendors out there are going to struggle to find new funding.

Of those some will fail (which is a good thing – I’ll come back to that another day I think), and others will get acquired – either by fellow open source vendors or by proprietary rivals.

The open source issue
That brings us on to the open source-related aspect to all this, which is that open source vendors are potentially going to become more attractive targets. If we assume that open source is likely to prosper in the downturn (which is arguable but like Jay I believe open source may have an advantage in hard economic times especially as significant project spending is delayed while open source becomes even more attractive for smaller, skunkworks-style projects) then proprietary vendors are going to look more at open source vendors.

We expect to see more community open source software usage – rather than commercial open source adoption – in the short term, so proprietary vendors won’t be looking to open source to cover revenue losses but to provide the necessary momentum to lift them out of the mire by up-selling either to commercial support or proprietary alternatives once people do start spending again.

Also if IT spending on proprietary software does stagnate they will need to be seen to be doing something to provide either long-or short-term growth (which is why I would expect to see SaaS as another target market).

1+1=?
Put those two issues together and I believe we will see a number of open source vendors who are happy to be acquired and a significant number of proprietary vendors looking to acquire open source. The question is what impact will this have on the multiples involved for open source vendors.

I don’t believe we will see a repeat of the high valuations we’ve seen in recent years with open source vendors – particularly as the sort of vendors that would command such a valuation won’t be looking to be acquired and the proprietary vendors won’t be prepared to pay above the odds. There could be some bargains out there.

Anyway, that’s the thought process that went through my head between Raven asking me the question and me opening my mouth to answer it (although not in as much detail, clearly). I’d be interested to hear what other people think.

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“Technically there is no resignation letter. However, I spoke to Monty yesterday, and yes, resignation is an option he considers,” writes Kaj before expanding on some of the reasons that Monty might consider leaving Sun and how the MySQL project would continue without him (or without him as an employee at any rate).

He concludes: “In summary, I can neither confirm nor deny the rumour. But I hope my posting has shed some light on the situation.”

If the rumour is true then as Kaj says it would be a big loss the MySQL development team, but it would seem likely that Monty would continue to be involved in the project.

It would probably be a bigger loss for Sun, and highlights one of the problems that arises when big vendors pay big money for open source smaller vendors and much of that cash goes into the pockets of the founders/key developers of the target (see also Red Hat/JBoss).

We’ll wait for confirmation before commenting further on the potential implications.

It was so obvious that Red Hat announced today that it is to acquire Qumranet for $107m in cash, adding its KVM (Kernel Virtual Machine) platform and SolidICE virtual desktop infrastructure (VDI) offering to the Red Hat portfolio.

The acquisition extends Red Hat’s influence over Windows desktops, as the FAQ explains:

“Red Hat will be able to offer a secure and scalable virtualization platform to Windows desktop customers. Red Hat is focused on providing the best infrastructure upon which to run the complete spectrum of enterprise workloads. This will range from server virtualization to desktop virtualization, which includes Linux servers, Windows servers, Linux desktops, and Windows desktops — all running on and managed by a Red Hat infrastructure..”

KVM has been included in the Linux kernel since version 2.6.20, and while it is included in Fedora, it is not yet in Red Hat Enterprise Linux, which is based on 2.6.18-8. In June the company announced that its forthcoming Embedded Linux Hypervisor would be based on KVM.

However, the company has traditionally sided with the Xen hypervisor and has confirmed that it will continue to support Xen until “at least 2014 (seven years after the release of Red Hat Enterprise Linux 5)” and that “no decision on timing for the transition from Xen to KVM has been made”.

The financial details of the deal are as follows:

“The acquisition is not expected to contribute materially to revenue in the fiscal year ending February 28, 2009, but should add up to $20 million in revenue in the following year. Red Hat expects Qumranet operating expenses will be approximately $3.5-4.5 million per quarter before non-cash stock-based compensation expense, amortization expense and other charges resulting from the closing of the acquisition. The transaction is expected to be dilutive to FY09 GAAP earnings by $0.05 to $0.06 per diluted share and to FY09 GAAP cash flow from operations by $0.03-$0.04 per diluted share.”

I was reminded of the sketch this morning while reading BusinessWeek’s article on the potential perils facing open source vendors today. It seems to ask all the right questions, but not necessarily in the right way.

The report suggests that while industry giants such as IBM, HP, Oracle and Intel stand to benefit from open source software, investor impatience could spell trouble for open source specialists such as Red Hat, Novell, and other smaller vendors.

Among the interesting questions asked in the report are whether Red Hat might be an acquisition target for VMware, whether Linux vendors can persuade netbook vendors to pay for support, and whether investors will run out of patience given the time it takes open source vendors to mature.

These are all interesting questions. Unfortunately asking them all in one very short report paints a highly negative and unbalanced picture of open source software vendors. In particular the netbook question is only a problem if vendors are relying on it to generate revenue, which few of them are.

The report also relies on an outdated view of how open source specialists generate revenue from open source software.

“What’s ailing open source? Vendors often lack access to a broad array of distribution channels. Their business is typically based on selling tech support rather than offering unique, must-have technology that customers will keep craving even when budgets are tight,” it says.

In reality most open source vendors have some kind of ‘unique, must-have technology’ that is only available via commercial license or subscription, although it is true that many open source specialists are still defining their value add and working to strike the right balance between open and closed.

BusinessWeek also states that Red Hat “has yet to crack $1 billion in sales, despite proffering Linux for well over a decade” and points out that MySQL took 13 years to go from start-up to $1bn acquisition, adding that “many investors won’t wait that long.”

This is definitely a ‘glass-half empty’ look at the world. Although I have previously noted that open source vendors need time to thrive I believe the VCs that understand open source software are well-aware of this and have placed their bets accordingly.

The report also states that “only a handful of open-source acquisitions the last two years have netted investors at least 10 times their money.”

That may well be true, but we have only recently seen serious M&A activity involving open source vendors. That “handful” is actually a decent proportion of the total number of M&A deals done so far, some of which have returned much much more that 10 times the money to investors.

As for VMware as a possible suitor for Red Hat – the report states that “former VMware CEO Diane Greene… had set up meetings with Red Hat in part to position VMware as friendly to open source and possibly as a prelude to a buyout discussion.”

This is an intriguing suggestion although it is hard to imagine what VMware would gain from such a deal, other than a substantial customer base. The lack of explanation on this point is a flaw for the report, as is the mention of SpikeSource without reference to the fact that the company’s model has evolved to address both open and closed source software.

BusinessWeek concludes that “If the open-source movement, now in its second decade, is to realize its promise for vendors and investors, more of its purveyors will need to get the message soon” and realize that a pure services business is not the answer.

The question that most open source vendors face is not how to evolve beyond a services-led model but what balance of open and closed software enable them to maximize the benefits of open source development and distribution and turn widespread interest into paying customers.

The latter seems far more likely, especially in the current economic climate. We have written before about the open source vendors most likely to go public in the next couple of years.

Looking at the list of contenders again it is easy to imagine that they could all be snapped up before they make it public thanks to the fact that 1) open source vendors are very attractive investments 2) it is difficult for open source vendors to build the momentum to do so.

I spoke recently with Bernard Dallé at Index Ventures, which has previously invested in the likes of MySQL and Trolltech.

Bernard made the point that while the open source distribution/subscription model is a great way of reaching potential new customers and generating predictable revenue, revenue is on average three times lower than a traditional licensing approach. The result is that it takes more time to build the momentum required to go public.

I previously wrote that for open source vendors patience is a virtue, noting that it took MySQL 12 years to grow to the a position where it was preparing to go public – and even it couldn’t avoid the lure of Sun’s lucre. The open source vendors that have followed MySQL’s example barely get the chance to build a meaningful revenue stream.

There is also the issue that the pure play open source vendors like Red Hat do not have the financial clout to compete with the likes of IBM and Sun and Oracle when it comes to potential acquisitions. You can read a little more about our view on that here.

In his take Matt writes that “I’m coming around to the idea that everything will be a blend of open source and proprietary software or services, at least for the foreseeable future.”

I can’t go in to too much detail but I’m doing some research on this right now and the fact is that the future is now. There is very little money being made out of open source software that doesn’t involve proprietary software and services.

Which is not to say that open source won’t survive and thrive, but if you’re waiting to see pure play open source vendors replace the current crop of industry giants you’re going to be waiting a long time.

One of the core questions asked in the article is: “have all the good deals been done?” Robin Vasan suggested they might have been, saying “it’ll be the rare new company that will have an interesting opportunity”, while Larry Augustin disagreed, insisting “I see a fair number of early stage businesses out there looking for venture financing around open source” and Mark Radcliffe agrees with him.

We have previously voiced concern about the pipeline for VC funding based on the fact that while the first quarter of 2008 was the most successful quarter in history in terms of open source vendors raising venture capital funding, the percentage of disclosed Seed and Series A funding hit an all time low in the quarter. As can be seen from this chart, the percentage of funding going to Seed/Series A deals has been in decline for the past four years.

Does that tell the full story? Perhaps not. These two charts, which show the number and value of Seed/A deals (in blue) and Series B/later deals (in red) over the last four years, indicate that the number and value of Seed/A deals has remained pretty steady. The fluctuation in the percentage figure above has been caused more by fluctuations in the number and value of Series B/later deals.

So while the number of companies out there raising Seed and Series A deals may not be climbing particularly, it is at least not declining to the extent that the percentage figures would suggest. Our figures show that of the 79 companies that have raised Seed/A funding in the last four years, 40 have not yet gone on to later funding.

Removing those that have been acquired (JBoss, Gluecode, DevZuz) and those that have gone kaput (Mindquarry) gives a list of 36 companies potentially looking to raise further funding. Given the most deals that have ever been done in a year was 51 (in 2006), that’s a pretty healthy pipeline.

The figures, of course, relate only to vendors with disclosed Seed/Series A deals, and do not take into account behind the scenes bootstrapping and friends and family funding (and there’s a lot of that about thanks to open source M&A).

*VCJ cites $200m to $250m invested in 30 deals per year for the past three years, whereas The 451 Group has tracked 47 deals worth $338.57 in 2005, 58 deals worth $546.3 in 2006 and 49 deals worth $318.47 in 2007. VCJ also cited 10 deals worth $112m between January 1 and March 10, whereas we noted 10 deals worth $142.9m in January alone.

There was general agreement that large IT vendors, including software giants such as Google, Oracle and even Microsoft, all see a need for involvement in open source. What also emerged as a common theme during our panel was that no big vendor could afford not to be in open source in some way or another. Basically, it’s been competitive necessity and cost effectiveness that has led vendors to open source, and this helps explain why we see open source all over the place. There was also a recognition that we were not talking about what vendors might be doing or when they might be making moves around open source. We were talking about the things these vendors are doing today and where they are looking next to push the ideas and advantages of open source further.

We also talked about the responsibility of vendors, and the basic theme here was that companies better know what they’re doing with open source. Rule number one seemed to be that participation is not optional. This is particularly so when a large vendor wants to try and leverage that open source code and development for commercial gain that, in most cases, is now stretching into the billions for the big players. Panalists contemplating the IT giants and open source also pointed to the enterprise credibility that large companies can give open source software by providing commercial support. It’s true that one of the biggest inhibitors to open source use by businesses is their wariness of using software without a company and commercial support behind it. The commercial support options for open source continue to grow with SIs, OS companies, application vendors and others all providing support for more open source software. However, CSI’s Cohen contends that there is so much new open source software being created, there are not enough commercial support providers to keep up. This could mean that commercial support for open source will continue to be a challenge, but it also highlights the opportunity in supporting open source.

Another big topic was interoperability, which was my term and was pretty much broken down to mean standards in the view of our panelists. Unfortunately, there was strong agreement that today’s standards procedures and practices (ISO approval of OOXML perhaps still fresh in their minds) are not adequately promoting the kind of transparancy and collaboration needed. There was, however, somewhat of a bright spot in this discussion, and that was the recurring theme of customer demand for interoperability and truly open standards. The market is making vendors, from Red Hat to Microsoft, work harder to support and interoperate with each others’ technologies, both open source and proprietary, through truly open standards.

We discussed open source mergers and acquisitions from the view of the large vendors, and while Cooper called valuations from deals such as Citrix-XenSource ($500m) and Sun-MySQL ($1bn) signs of a bubble, Cohen contended that the value of an open source software operation is actually the same as a traditional one: the customers and relationships. I would argue that the high open source pricetags in recent M&A highlight how significant of a competitive factor these open source projects and vendors can be, forcing larger players to do some bidding and make aggressive moves.

Taking an audience question on how big software companies such as Microsoft and Oracle are viewing competition from open source, IBM’s Huizenga highlighted how all proprietary software companies are seeing more and more of their traditional revenue bases challenged by open source. This competition, highlighted in a recent study, comes with a growing audience of open source users, developers and yes, enterprises that do not pay anyone for any software, support or services, yet extend the reach of open source. Huizenga later highlighted the ongoing opportunity in open source software, referencing how IBM’s investements in Linux, far less than what would be invested in proprietary development, continue to pay off hansomely.

So what is going on at MySQL? To get to the bottom of that you have to weave together a number of posts and comments from a number of sources. First the article behind the Slashdot headline:

“Just announced: MySQL to launch new features only in MySQL Enterprise,” states Jeremy Cole, which is a much more accurate description of the state of affairs. “MySQL will start offering some features (specifically ones related to online backups) only in MySQL Enterprise. This represents a substantive change to their development model — previously they have been developing features in both MySQL Community and MySQL Enterprise.”

Marten Mickos confirmed Jeremy’s post in the comments section, stating: “In 6.0 there will be native backup functionality in the server available for anyone and all (Community, Enterprise) under GPL. Additionally we will develop high-end add-ons (such as encryption, native storage engine-specific drivers) that we will deliver to customers in the MySQL Enterprise product only. We have not yet decided under what licence we will release those add-ons (GPL, some other FOSS licence, and/or commercial).”

So to clarify. Sun (or MySQL) is not going to begin closing the source code of MySQL features, but it is going to introduce new features into the Enterprise Edition that will not be available under an open source license.

To some extent there is nothing new here. The company previously announced that the Standard Edition of the recently introduced MySQL Workbench would include functionality not available in the open source Community Edition, while the MySQL Enterprise Fall 2007 release saw the availability of replication monitoring and advisory functionality only available with the Enterprise subscription.

Before that the company introduced Network Monitoring and Advisory Services with the Enterprise version in October 2006. Additionally, MySQL removed the Enterprise tarballs from its community ftp site in August 2007.

Mickos also responded to the Slashdot post itself; pointing out that “the business decision on this was made by MySQL AB (by me as the then CEO) prior to the acquisition by Sun, so this has nothing to do with Sun” and that “everything we have released under GPL continues to be under GPL”.

In a later comment he added: “If the world were perfect, we would only produce GPL code and we would have a great business that can fund the software development. But we have found that the world is not perfect. We have been experimenting with a variety of business models around FOSS (dual licensing, support only, simple subscriptions, different binaries for community and enterprise, non-open source features) to find the best one. And we will continue to experiment until we are satisfied. We need to find a model that allows us to produce a ton of great code under GPL while having the financial strength to do all this.”

I was reminded of an article Mickos himself wrote in 2006 about the 13 different business models used by open source vendors (the original article appears to have vanished but you can see my response to it and a list of the business models here).

From this list it is clear to see how MySQL is in the process of moving from “3. Software is free but if you embed it in closed source, you better pay a fee (Trolltech, DB4Objects, Funambol, MySQL, etc.)” to “6. Software is free but some enterprise features are not (SugarCRM, Zimbra, JasperSoft)”.

Of course, whether you believe this to be the correct model for MySQL is another matter, and Matt Asay for one would prefer to see MySQL opting for “5. Software is free but on-going maintenance, monitoring and provision of binaries is not (Red Hat)”, which is the direction the company had appeared to be going in.

The fear, as far as the community users is concerned, is that MySQL might end up using “7. Software is free but we built a closed-source product around it (EnterpriseDB, GreenPlum)”. However, given Sun’s business model is “9. Software is free but we sell everything else on the planet, including closed source software (IBM)” there appears to be little chance of that.

As Matt also notes, the problem MySQL has right now is a public relations problem (or a community relations problem). Given that there does not appear to be a vast change in strategy (despite the headlines this is a bend in the road rather than an about turn), this should not pose a long-term problem for the company.

Zack Urlocker has also clarified the situation here.

IBM’s investment in EnterpriseDB is particularly fascinating given how rare it is for the company to make venture capital-style investments and also given the dynamic between IBM, Sun and Oracle. IBM usually chooses to support startups indirectly through its Venture Capital Group, which provides resources and assistance to VCs and their investments.

In fact, looking through Calibre One’s list of US and European VC deals for the last three years I could find only one other example of a direct IBM investment. The omen’s are not good, given what eventually became of Infinite Data Storage, however.

In the meantime, while EnterpriseDB’s Oracle-compatibility features are being downplayed in its new Postgres Plus strategy (they remain a part of the product portfolio, but are now positioned as a value-add feature, rather than the raison d’etre) they provide a clear example of how IBM could use EnterpriseDB as a weapon against its major database rival.

Of course it is also impossible to ignore Sun’s acquisition of MySQL – and it’s support of PostgreSQL – and it could be that IBM thinks it needs an open source database on its side as a direct competitor to MySQL following that deal (arguably of course, Postgres Plus Advanced Server is not direct competition for MySQL, although it’s all a matter of positioning).

IBM hasn’t, yet, explained the rationale behind the investment from its perspective, but I’ll upfate when I have more.

In his article, Lyons references The End of Gay Culture, an essay written by Andrew Sullivan and published in The New Republic in 2005 that argued that the gay rights movement had been so successful that gay culture had been absorbed into mainstream culture. While the success was something to celebrate, it also challenged former definitions of gay culture and identity, according to Sullivan.

The assimilation of any sub- or counter-culture into the mainstream is a divisive moment – signaling as it does both the success of the movement in reaching a wider audience, and the watering-down of its principles by external forces. There are signs that an identity crisis is already impacting the Free- and Open Source Software movements.

[CLARIFICATION - In this post I have tried to be very careful with my use of the terms 'Free Software' and 'Open Source' in order to recognize that they are two separate, but linked, movements. When the term 'FOSS' is used it is used deliberately to refer to both movements collectively (hence the title). Otherwise I have used the phrase 'Free- and Open Source Software movements' to indicate that I am referring to two separate movements at the same time. I have also been careful about my use of the term 'adoption' as opposed to 'assimilation'. I am not for a moment suggesting that increased adoption of FOSS is a problem for Free- and Open Source Software vendors, and have edited those occasions where I am referring to adoption to avoid confusion.]

An example of the assimilation of FOSS into the mainstream was provided by Microsoft’s successful attempt to have two licenses approved by the Open Source Initiative. There are those that see Microsoft’s creeping engagement with open source as pernicious, and some that thought that the OSI should have discriminated against the software giant by blocking its move.

While this is an obvious example of the blurring of the line between open source and the mainstream, a more subtle – but perhaps more significant – example was revealed in the recent Port25 post by Sam Ramji that revealed how open source has influenced Windows Server 2008.

Here is a clear example of how Microsoft has taken lessons from the success of the open source development model and applied them to its own proprietary code development – observing what works for open source and adjusting its development practices accordingly while retaining control over the project.

As Savio Rodrigues noted: “this should scare any OSS proponent. It seems like the folks at Redmond have been busy while the OSS movement has been prematurely readying Microsoft’s eulogy. I hope I’m wrong. But Microsoft simply appears to be meeting the challenge of OSS better than OSS appears to be meeting the challenge of displacing Microsoft.”

And Microsoft is just one example. Everywhere you look in the IT industry there are examples of how proprietary vendors have taken the benefits of open source and applied them to their own products.

“Appistry’s new open distribution program combines the best of open source and commercial software. By making this download available we’re able to let developers experience its benefits immediately, for free, and with no strings attached. Plus, they have the benefit of knowing that the product is commercially supported should they ever need it, and customers like FedEx and GeoEye count on it for mission-critical applications.”
Kevin Haar, Appistry chief executive officer, earlier this week.

I picked that example not only because it is timely but because you could replace the name Appistry with that of any vendor in the IT industry and it would still make sense. How many times have we read variations on this theme in recent years? The trend is set to continue.

Of course, giving software away for free does not make it open source any more than applying a collaborative development methodology within a restricted development team does – so how are the Free- and Open Source Software movements to respond to these developments?

Clearly while there are things FOSS vendors and groups can do to stop the misuse of FOSS code and the term ‘open source‘ there is little that can be done to prevent the benefits of FOSS development and distribution being applied to proprietary products. Indeed, whether you want to do anything about it depends on whether you see the assimilation of open source into the mainstream as a threat or an opportunity.

Sullivan ultimately saw “The End of Gay Culture” as an opportunity – specifically for the gay movement to define itself on its own terms, rather than as a reaction to exclusion from the mainstream. A major difference with the Free- and Open Source Software movements is that they have already defined themselves on their own terms, either to deliberately exclude the mainstream or to encourage inclusion.

The challenge faced by FOSS is more akin to that faced by the Green movement, which previously defined itself on its own terms but now finds its core message being rewritten by corporate agendas and external forces.

During a recent meeting with open source services firm Sirius it was suggested to me by Tom Callway and Mark Taylor that the Green movement could provide a model of how open source will come to be more widely adopted in the UK despite current ambivalence.

Certainly there are parallels to be drawn between the Green movement and FOSS , with the tendency of some sections of the mainstream press to dismiss Free- and Open Source Software supporters as sandal-wearing and beard-toting troublemakers or romantic idealists, for example. It’s an image that is almost identical to the one applied to environmental activists in the past.

[Aside – It is not beyond the realms of fantasy to see how open source could become more widely adopted in a similar fashion – particularly the way in which the ecological arguments are now being presented hand in hand with economic arguments.

Perhaps in years to come we will see big businesses boasting about lowering their proprietary licensing footprint through the more efficient use of computing resources, just as today they boast about the efficient use of natural resources. Maybe the laggards could pay someone else to adopt open source for them via proprietary offsetting schemes.

While I am being flippant here, it wouldn't seem unreasonable for shareholders to demand that businesses justify their spending on IT resources to ensure that profits are being reinvested efficiently. We've already seen an attempt Oracle to publish an Open Source Social Responsibility Report, although there was a different agenda behind that move.]

The Green movement has been astonishingly successful in recent years at placing environmental issues further up corporate and personal agendas, but now faces the challenge of maintaining its own identity in a world where the very companies once attacked for destroying the world’s natural resources are now positioning themselves as leaders of the ecological agenda.

Where environmental protesters were once dismissed by the mainstream press in the UK as unwashed eco-terrorists, The Daily Mail now runs style guides enabling “middle Britain” to spot the different types of environmental activist in their local health food shop.

The success of the Green movement in moving beyond the beard and sandals stereotype has not been without a degree of compromise.

“Green consumerism is an oxymoronic phrase,” Paul Hawken, author and environmental activist told the New York Times in 2007. The NYT added that “He blamed the news media and marketers for turning environmentalism into fashion and distracting from serious issues.”

As can be seen from the article, one of the implications has been to split the Green movement between those that see eco-consumerism as a step in the right direction and those that see it as watering down the message to the extent that it becomes meaningless.

It appears that the Free- and Open Source Software movements are on the brink of a similar schism between those that see the assimilation of FOSS into the mainstream as an opportunity and those that see it as a threat. Additionally while there have always been philosophical differences between Free- and Open Source Software, they are now being highlighted by external factors.

Examples include DRM, with the Free Software Foundation clearly on one side with its Defective By Design campaign and the likes of Linus Torvalds on the other, shying away from such ‘crusades‘. Then of course there is the issue of patents, where there is a much clearer delineation between the haves and have nots, the related issue of interoperability, and licensing – particularly the use if non-OSI approved ‘open source’ licenses called out by Michael Tiemann.

[UPDATE - To be clear, the relationship between the Free- and Open Source Software movements could be described to date as an uneasy alliance in which the focus, as a means of fulfilling their separate goals, has been on what unites both sides. It is my contention - based on observation - that the external forces referenced above are placing increased pressure on that alliance. The Free Software movement has always defined itself in way that excludes it from assimilation by the mainstream and will naturally resist any dilution of its principles. The Open Source Software movement, on the other hand, was formed specifically to encourage mainstream interest. As many mainstream IT vendors respond not by adopting open source methodologies but by adapting them to fit proprietary models there appears to be increased tension between a Free Software movement exhibiting a strengthened resolve to stand by its principles, and an Open Source Software movement in which individuals have to decide where they draw the line.]

What do you think? Is it time to pick sides, or is there middle ground that will enable the principles of FOSS to flourish despite – or even because of – assimilation into the mainstream?

Further reading:

Thoughts on an (impending) identity crisis for FOSS, Open Source Unleashed

Dear Dan Lyons: Open Source was Never ‘Counter Culture’, There is no Open Source Community

Don’t be Freetarded, The Keene View

If you were to draw up a list of the most successful commercial open source vendors, I believe they would all be based on either the L/GPL or the MPL. Certainly, taking Tim’s central point about M&A valuations for open source vendors as the yard stick, then the largest open source M&As have all involved copyleft licenses (although Ian Skerrett believes this has as much to do with trademarks as it does license, and of course the brand is significant).

With community-led projects, vendors more often that not face a choice of two business models: support services (Covalent) or proprietary extensions (EnterpriseDB). Both models enable commercial businesses to flourish, although neither does so as quickly as the captive model has done via dual-licensing (MySQL) or mandatory subscriptions and copyright control (Red Hat Enterprise Linux).

The dual licensing approach, in particular, gives the open source vendor control over the ‘open market’ for support and services around a captive open source project, and has proved popular for customers concerned about the implications of adopting GPL software. Meanwhile Red Hat’s model is as close as you can get to a dual-licensing approach in a community-led GPL project.

Arguably it is these models, rather than the license itself, that has enabled the vendors to establish dominance in a particular market (although more research is needed into the difference between captive GPL projects created by commercial operations and commercial operations that have emerged from community GPL projects).

Meanwhile, earlier this week I met up for a chat with Gianugo Rabellino, the CEO of Sourcesense, during which he made the point that what is good for the vendor is not necessarily good for the customer. As an ASF member and Apache committer, Gainugo leans towards community- rather than captive-open source software and points out that for every MySQL there will be several open source vendors that don’t make it.

The failure of open source start-ups is an aspect of the industry that open source has not yet had to face up to. There have been isolated incidents of vendors falling by the wayside, and it is likely there will be more, although most investors will look to get some return from their investment, rather than just letting it dwindle away.

So far M&A activity around open source vendors has been driven by the value extant in the open source model (although you could argue about XenSource) but what happens if and when open source vendors are acquired by a vendor in order to kill an open source alternative or to take advantage of dual licensing to take a project proprietary?

It is certainly theoretically possible for the dual licensing approach to be used to remove the freedoms and flexibility that attracted customers to open source software in the fist place. While the original code would remain GPL, unless a community springs up to support it, it is effectively moribund. Of course the BSD license specifically allows this situation to occur, but the fact that projects are community-led rather than captive enables them to survive and thrive while vendors come and go (see PostgreSQL).

According to Gianugo, if an open source vendor shake-out occurs, the potential advantages of community-led projects will come in to play for customers. The community-led project arguably offers a better model for ensuring the long-term availability of code and the creation of a contestable market for support and services. If customers find that the dual license approach isn’t the safety net they thought it was, the argument goes, they could migrate towards community-led projects.

Additional reading:

Wavemaker CEO, Christopher Keene’s The Silverado Rules for Open Source Success points out that license strategy is one of many factors influencing success for VC-backed commercial open source vendors (although he does recommend a dual license strategy based on the GPL).

Ian and Tim continue the discussion in the comments on Ian’s blog.

Open Source Licensing: Obsolete or Of Importance?, Redmonk’s Stephen O’Grady.

Thinking Legal for Open Source Success: Trademarks & Licenses, Mark Radcliffe.

As Dhiren Patel, community relations manager writes: “This in-memory technology, and not Solid’s open source offering, was the key driver behind IBM’s acquisition. As a result, I regret to inform you that, effective immediately, we will not be continuing further development on solidDB for MySQL.”

Given the commercial drivers it is not really surprising to see the end of the project, which started out as a means of Solid extending its reach beyond the communications and embedded database segments and dipping its toe into the open source waters. Clearly IBM does not need the solidDB for MySQL project to fulfill those goals.

While it is easy to link the decision to Sun’s recent acquisition of MySQL, my guess is that is not a driver. After all, IBM’s DB2 can also be used as a storage engine for MySQL on System i. If that relationship turns sour you can start looking towards the grassy knoll.

In the meantime, Patel adds that “solidDB for MySQL will continue to be hosted and available here at SourceForge, and existing releases will continue to be available under the GPL. To ensure a smooth transition, developer forums and bug tracking will also be migrated to SourceForge.”

Whether it will get picked up or not is another matter. I’ve heard good things about the project, but with MySQL’s Falcon on the way and numerous other storage engines available, it is unlikely that solidDB for MySQL survive without a patron.

With that is mind it is interesting to see that the company has hired two key Python developers, Frank Wierzbicki and Ted Leung. As the Infoworld report states, this is similar to the way Sun previously approached support for JRuby and the success of that plan was an important factor for Leung.

“I’ve been very impressed with how Sun has handled the JRuby project,” he wrote. “Sun hired two of the leading JRuby contributors and gave them license to keep doing what they had been doing. The JRuby guys have been well received by the “C” Ruby community and even the CLR/.NET Ruby community.”

Meanwhile, Jython and that the Python Software Foundation will continue to be the steward for Jython’s code with Sun as a member.

Leung also maintained that from his view Sun’s commitment to dynamic languages – beyond JavaScript – is strong. “Sun is (finally?) very serious about this. As part of Sun’s new direction, Sun wants to give developers the ability to use whatever tool sets they want. Ruby, Python, PHP, Java. On or off OpenSolaris. On or off the JVM,” he wrote, while noting the Da Vinci Machine project to extend JVM’s support for languages other than Java.

When Sun acquired MySQL it was quick to boast about owning the M in LAMP – somewhat overlooking the fact that the L, A and P were not part of its portfolio. It is not unthinkable that Sun would now look to complete the jigsaw. By employing Python and Ruby developers Sun has shown that it is not adverse to supporting dynamic languages outside JavaScript. Adding PHP expertise would be another way.

“When it comes to takeovers and valuations, I think the role of GPL as a strategic weapon is often under appreciated. If you’re top vendor dog in a GPL project, other players have a very hard time unseating you. That may sound counter-intuitive given world + dog has the code, but I don’t believe it’s such an advantage for competitors as most assume. Your lesser competitors in the same space have to share their plum developments with you. Sure, the top dog has to share his plums too, but when you’ve got the top plum growers in your own yard (to push a metaphor too far), you get to go to market with the best solutions first. If you can keep your plum growers happy, and can do your business execution right, you’re in a very strong position.

“With BSD projects on the other hand, solution providers tend to go to market with proprietary solutions. You can’t force your competitors to share their plums. You don’t share your own (at least, not till they’re getting a bit old and withered). The competitive maneuvering follows a more traditional proprietary model. Being top dog doesn’t stop the competition accruing some distinct proprietary advantage. Sure, it’s rarely easy winning from behind, but if you’re a second tier vendor and have to give away your best produce to the market leader when you go to market (like with GPL’d projects) surely it’s so much harder again.”

If you look at the history of open source databases, there is an argument that the BSD license not only makes it easier for smaller vendors to challenge incumbents, but also for more difficult for the first-to-market to establish anything near a position that could be considered ‘top dog’. PostgreSQL is a prime example of an open source project that has never been successfully commercialized on a global basis, despite all its good qualities.

While regional support players such as Command Prompt and PostgreSQL Inc in the US, Credativ in Europe and Software Research Associates, Fujitsu and NTT Data in Asia provide support services for PostgreSQL, global players have come and gone. Illustra was subsumed into Informix, and Great Bridge failed to generate enough funding, while Pervasive and Red Hat more or less gave up (although PostgreSQL – Red Hat Edition is still available).

PostgreSQL’s success in the academic and scientific community has had something to do with the lack of global commercialization opportunities, but it does appear that the use of a license that enables proprietarization has actually reduced the opportunities for commercialization.

For more on this see Further thoughts on the impact of licensing choice.

This was before my arrival at The 451 Group, but by happy coincidence I agreed with Raven’s position on this. “The deal sees XenSource distancing itself from Xen in the longterm, as well as Linux,” I wrote at the time. “‘While the engine is open source, the car is the value-add that customers need,’ said [then XenSource CEO, Peter] Levine, referring to XenSource’s value-add virtualization services and management capabilities, which are not open source. This is what Citrix is paying for. That and a close relationship with Microsoft that looks likely to get closer.”

Six months on and Paula Rooney has an interesting update on Citrix’s XenSource strategy that indicates perhaps we weren’t following flawed reasoning after all. “Citrix officials have indicated that they will use the hot XenSource branding, but de-emphasize its identity as a virtualization company. Citrix’s flasgship Presentation Server has been renamed to XenApp Server, a fitting title considering its function as an application delivery platform. But it has no XenSource code,” she writes.

“While Citrix is using the Xen name for its individual products, it is positioning the entire stack — including its NetScaler web accleration platform — as the Citrix Delivery Center. From that, it appears that Citrix is diluting XenSource’s core identity as a virtualization company in order to score points with Microsoft and catapult Microsoft’s forthcoming HyperV hypervisor as VMware’s chief rival.”

I noted at the time of the announcement that Citrix planned to focus its attention not on the open source Xen project, but building closed source virtualization management capabilities for both Xen and Microsoft’s Hyper-V (then known as Viridian). “’We will be building dynamic virtualization services and management tools on top of Viridian,’ Levine added. ‘We will build the same set of products we’ve built on top of Xen for Viridian. We’ve already hired a team to go do that up in Redmond.’”

Then again I also predicted that Citrix would spin off Xen as an independent project, and there’s no sign of that just yet.

“1. Jonathan Schwartz is a brilliant CEO and he has a great team. Who wouldn’t want to work for him?

2. Sun has always had the same focus as MySQL on the networked world. Focus and alignment!

3. Sun has become the world’s strongest proponent of free and open source software. We are happy to be part of that!

4. Sun has changed its strategy to include partnerships with former competitors. Hey, coopetition is what we always did!

5. Sun has never stopped innovating or stopped investing in technology. Impressive!

6. Sun has a huge field operation that can bring MySQL to more customers faster. Thank you!

7. MySQL would be a great complementary fit in Sun’s product portfolio. We like being useful! We love being uniquely useful!

8. Sun’s corporate culture is among the best a startup can ask for. We can work from home! We can innovate. We are thrilled!

9. Sun is a bold and fun disruptor again, and we see a huge upside in its strategy. I am not saying that success is a given, but I am saying that Sun’s new strategy is one of the most exciting this industry has to offer. We are all in!

10. Sun was really eager to get us on board and we were treated with the greatest respect from the start. (And I hope we did the same in return)”

One of the things I like about Marten is that despite his enthusiasm and excitement he is at heart a realist. As he puts it “in a typical Scandinavian contrarian way: Perhaps we will be unable to maintain our passion within Sun. And at the most extreme, perhaps we should not have done this deal. The reality is it will take many years before we can judge this decision to know if it was the right course.”

You just don’t hear US executives talking like this. “But let me also state that there is probably no better place for this ‘dirty dozen’ (or perhaps ‘fanatical four hundred’) of MySQL than inside Sun Microsystems,” he adds, getting back on message.

It’s an interesting article and no doubt answers a few questions people will have been asking about MySQL’s decision. Read it over at AlwaysOn.

Coincidentally, Jonathan Schwartz has gone on record this week about the factors that convinced him that acquiring MySQL was the best user of $1bn of Sun’s money. “Sun was attracted to the open-source database company’s very rapid growth rate and its revenue model,” reported InforWorld following his keynote at SugarCRM’s SugarCon 2008 conference.

The report adds: “‘What was attractive was how profound their distribution was,’ Schwartz said. MySQL offers access to about 11 million deployments around the world, and Sun began to see MySQL delivering real value, innovation, and choice, he said. MySQL sells services and support for its database. Asked if Sun planned to scale the MySQL database to compete with Oracle, Schwartz said Sun will not compete with Oracle but ‘will scale MySQL to extraordinary heights’.”

The official line appears to be business as usual. Scott Dietzen, CTO of the Yahoo Zimbra and VP of engineering at Yahoo, told InformationWeek that “he had convened the Zimbra team on the morning of the offer and all agreed they must stay focused on ‘innovation in ZCS [Zimbra Collaboration Suite], building the Zimbra community and customer base’.”

He added that “the open source grant we made to the world is irrevocable”, suggesting that even if Microsoft were to acquire Yahoo and disband Zimbra as it stands today, the project would live on.

Dietzen may be confident about the future, but Groklaw’s Pamela Jones is not so sure. “I’m worrying about Zimbra, a project I had high hopes for,” she writes, adding that in her view, under the terms of the Yahoo Public License and Zimbra EULA, you cannot sublicense. The issue is that while most of the code is already open source, some of it is proprietary.
Not surprisingly there have already been calls for Yahoo to release all of the Zimbra Collaboration Suite under the GPLv3 as soon as possible in order to ensure its long-term survival.

Of course the situation could change dramatically if Google launches a counter-bid for Yahoo and another suggestion from Groklaw readers sees Yahoo selling Zimbra to Google. My guess would be that if Yahoo doesn’t accept Microsoft’s offer it will do its best to retain everything it has. I also can’t see Microsoft letting a potential Zimbra competitor back into the wild should the deal go through.