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Sun Buys MySQL for $1B and Wall Street Mourns

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Sun Microsystems said today it would pay $1 billion to buy privately held open-source database maker MySQL, a move that strengthens Sun’s ability to offer an alternative to proprietary software. The purchase, while smaller than the $8.5 billion Oracle-BEA deal that was also unveiled today, is notable because MySQL was a highly anticipated IPO candidate, and had long rebuffed suitors interested in buying it.

For other technology firms planning IPOs, the deal may be as welcome as a kick in the head. While 58 technology firms went public in the last 12 months, the market began to soften in the final quarter, with companies such as and Applied Precision pulling their plans for public offerings and only strong contenders, such as NetSuite, managing to make it out the door. Indeed, Peter Falvey, a managing director with tech investment bank Revolution Partners, says 2008 isn’t looking good for the tech IPO market.

“Volatile markets are lousy for high-growth tech IPOs, and I think the markets are going to be choppy for some time,” Falvey told me this morning. “The tech stocks have gotten hammered, and I think public company investors will be looking to be more conservative in 2008. Companies will continue to file and be ready in case the window opens, but I think [the] first half of 2008 is going to be soft.”

Sun (JAVA) has agreed to pay $800 million in cash and assume $200 million in options for MySQL, which had raised $38.5 million from venture and strategic investors including Benchmark Capital, Index Ventures, SAP, Intel Capital and Red Hat. Sun CEO Jonathan Schwartz explains in his blog that the deal gives Sun a product in the $15 billion-a-year database market; it’s also the final piece needed for Sun’s open-source operating system for the Internet.

So why is this important for the internet? Until now, no platform vendor has assembled all the core elements of a completely open source operating system for the internet. No company has been able to deliver a comprehensive alternative to the leading proprietary OS. With this acquisition, we will have done just that – positioned Sun at the center of the web, as the definitive provider of high performance platforms for the web economy. For startups and web 2.0 companies, to government agencies and traditional enterprises. This creates enormous potential for Sun, for the global free software community, and for our partners and customers across the globe. There’s opportunity everywhere.

MySQL and its development community are behind the deal. MySQL Chairman (and venture backer) Kevin Harvey said it gives MySQL customers “one-stop shopping for all of their Web 2.0 infrastructure.”

MySQL is the database for many of the new economy’s hottest companies, including Google and Facebook. For Sun, it not only closes a gap in the company’s open-source software plans, but offers a way to sell Sun hardware to the current generation of startups.

15 Responses to “Sun Buys MySQL for $1B and Wall Street Mourns”

  1. Sun have already shown themselves to be pretty into the Open Source thing. In the last couple of years they have Open Sourced Java and Solaris. Two of their biggest software platforms. I recall Jonathan Schwartz saying how, after giving away the software for free they made more money from it… That makes perfect sense to me, but it doesn’t seem to work for Microsoft yet.

    Parul – Web 2.0 Blog

  2. In the long run it has the potential to become big !! MySQL is one of the most popular databases especially for the Internet Apps and Sun does have the power to give it an enterprise reach as well !!

    I, for one, really wish for this deal to work !! MySQL deserves all this and more for what they have done !!

  3. I have mixed feelings on this deal . on one hand its a good news for open source based business . it validate OSS dev as an viable business . but on the other hand i forsee all these big guys ( Facebook,Google,Yahoo) starting their own tweak /branch to MySql and they will do it inhouse to reduce the dependency on a competitor. who have “other interest ” . its very unlikely that sun will leave MySql on its own device . they would try to cross sell .for a strategic thing like back end database you need a neutral vendor . at least operationally neutral .

    this deal can potentially be a death nail to My Sql if you see that AMZ has recently launched EasyDB on SAAS model .