Why Monty thinks IBM could acquire MySQL

A quick review of the Save MySQL online petition stats today shows that the results are still in line with the results I reported previously.  Over 90 percent of petition signees would require Oracle to divest MySQL to a “suitable third party”.  I noticed that Michael “Monty” Widenius’ post explaining the petition provided several options for a “suitable third party”.  First off, Monty makes it clear that his company is not interested in acquiring MySQL.  Monty’s list of potential buyers includes IBM, Fujitsu, any of the major Linux distribution vendors or a private equity firm that would take MySQL public.

As an IBMer I was interested to hear more about Monty’s thoughts on IBM.  Note that I do not work in the division where IBM’s database, DB2, is managed.  Nor do I have any information about IBM’s interest, or lack thereof, in MySQL.

I asked Monty this question via email:

Q] Would you require that IBM add the linking exception or have to re-license MySQL under the ASL 2.0 in order to acquire MySQL?

The linking exception or having to re-license MySQL are two of the options that Monty & Florian Mueller would like to see Oracle select before being allowed to acquire MySQL.

Monty replied:

“Personally I don’t consider IBM a direct competitor to MySQL and thus there would not be a need for a licensing remedy…With MySQL, IBM would have a vehicle to become a market leader in databases. IBM could only do this if they keep MySQL free to ensure it keeps it dominant position in units…IBM has more to gain by keeping MySQL Open Source and available to all than they could get by killing it.  With Oracle this is not the case.”

At first I bristled at this reply.  Why should Oracle accept a set of restrictions that IBM, another competitor in the database market, would not face?  However, the difference lies in the market position of the acquiring vendor.  Oracle is the revenue leader in the relational database market with over 40 percent share according to Gartner and IDC.  I don’t have the Gartner data handy, but IDC data suggests that Oracle had approximately a 2 to 1 lead versus IBM and Microsoft individually.  Considering Oracle’s market position versus IBM and Microsoft, it’s understandable that regulators would treat an Oracle acquisition of MySQL differently than, for example a Microsoft or IBM acquisition of MySQL.

One thing that does surprise me, pleasantly, is that Monty doesn’t see a “need for a licensing remedy” should IBM (Fujitsu or any of the major Linux distribution vendors) acquire MySQL.  Many have questioned Monty’s motives for blocking the MySQL acquisition.  Monty’s company competes with MySQL, but, unlike MySQL, Monty’s company cannot provide a commercial license to business partners or enterprises.  That’s why the linking exception or having to re-license MySQL under the Apache Software License 2.0 is seen as a boon to third party providers of MySQL products and services.  Had Monty replied that he would like any potential acquirer of MySQL accept a licensing remedy, one could draw a connection back to his current business interests.

Readers can make up their own mind as to Monty’s or Oracle’s motives.  But like most things in life, the story isn’t cut and dry.  And while I personally believe there is more for Oracle to gain by nurturing MySQL than not, but Larry Ellison won’t return my calls.

Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

 

Save MySQL petition kicks off 2010

Florian Mueller begins 2010 by demonstrating why he was named EU Campaigner of the Year by the Economist five years ago. While most of us were prepping for New Year’s Eve celebrations or contemplating New Year’s resolutions, Monty and Mueller spent December 28th launching an online Save MySQL petition against the Oracle acquisition of MySQL via Sun. Mueller reports via email:

“www.helpmysql.org campaign delivers first 14,000 signatures against Oracle’s proposed acquisition of MySQL to European, Chinese and Russian competition authorities.

In less than one week, during the Holiday Season, we gathered 50 times more customer support than Oracle claimed three weeks ago.”

You can read the full press release here.

The campaign is displaying stats from petition signees.  This post is based on the first 16,306 signees as of 9am EST on Monday, January 4th.  If the results change markedly with new signees, I’ll post an update.

MySQL Enterprise Usage
Whether MySQL poses a competitive threat to Oracle’s database business has been a point of significant disagreement between Oracle and opponents of the MySQL acquisition including Monty and Mueller.  Oracle says there is little to no overlap.  Monty argues that MySQL has become feature rich and is a suitable replacement for Oracle’s database in several situations. Nearly a quarter of respondents identified themselves as working at a company using MySQL, and not simply an independent or self-employed software or web developer.  Of the respondents working at a company using MySQL, just over 20 percent worked at a company with 1000 or more employees.  This is clearly a customer group where Oracle databases would compete.  These results would seem to support Monty’s claims about MySQL competitiveness against Oracle.  On the other hand, there’s no reason that a large company wouldn’t want to use both MySQL and Oracle databases for small and large projects respectively.  In such a situation, did the MySQL usage displace Oracle usage, or, as Oracle would argue, SQL Server usage?  The former would support Monty’s claim, while the latter would support Oracle’s claim.  A generalized version of this question would have been a helpful addition to the Save MySQL petition.

Signees Would Require Oracle to Sell MySQL
Of the three solutions that Mueller and Monty suggest Oracle agree to before being allowed to complete the Sun acquisition, over 90 percent of signees believe that MySQL must be divested to a suitable third party.  Only 60 percent of signees believe that Oracle should be allowed to acquire MySQL as part of the Sun acquisition.  These signees would require Oracle to either commit to a linking exception for applications that use MySQL or require Oracle to release past and future versions of MySQL under the Apache Software License 2.0.

Go ahead and take a look at the petition here.

Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

 

Florian Mueller responds to Eben Moglen’s Oracle/Sun submission

Last week Eben Moglen, founder and executive director of the Software Freedom Law Center (SFLC), submitted an independent opinion on the Oracle/Sun merger to the European Union (EU). Moglen summarized his submission as follows:

“The GPL was designed specifically to ensure the permanent freedom of software, and the ability of everyone to improve and share their improvements to the program, no matter who acquires the copyrights to the code.  The whole point of GPL as a copyright license is to deal with every contingency that could result in hobbling or destroying the freedom of code shared under it. The drafters of GPL versions 2 and 3 considered scenarios very similar to the ones that the Commission is concerned about now. The design of the license, and the experience we have had using it, show that it can be counted upon to operate as intended in situations like this one.”

Moglen issued the 11 page opinion, pro bono and without the charge, at the request of Oracle’s counsel.  Moglen clarified that Oracle is an ongoing contributor to the SFLC, while Monty Widenius has contributed in the past.  However, neither the contributions from Oracle nor Widenius have exceeded 5 percent of SFLC’s funding since inception.

I found the following paragraph from Moglen’s submission particularly interesting:

“MySQL is now and always has been an atypical GPL software project, because its copyright was highly centralized inside a small commercial firm that considered dual licensing its only commercially attractive strategy for survival. But even MySQL AB’s atypical business model, which was highly unreflective of the mass of GPL’d software development, occurred within the parameters of the GPL’s overall design, which is to ensure the freedom of the software it protects regardless of the commercial motivations or behaviors of the parties distributing the primary upstream version.”

On the other end of the debate, Florian Mueller announced that he has submitted a 31 page rebuttal to Moglen’s position.  Mueller provided a summary of the highlights via email, from which I selected these comments:

“Fundamentally, his paper offers a different prediction as to what would happen post-acquisition. He simply expresses his firm belief that whatever made MySQL successful in the past is not really an indication for the future. In fact he believes MySQL AB had a very suboptimal business model…

If he were right that MySQL AB and all of the companies that succeeded around MySQL didn’t do it right and that a GPL-only approach works best, then actually there would be no point in Sun having acquired MySQL last year nor in Oracle acquiring it now because then the future would at any rate be that someone has to fork it and do a GPL-only project dependent on voluntary contributions. Interestingly, that approach would have been possible during all of those almost 14 years that MySQL has been available and no one, not even Eben Moglen, decided to seize that opportunity.”

Both Moglen and Mueller make strong and weak points.

First, Moglen is too quick to dismiss MySQL as an atypical GPL project.  As Mueller points out, whatever you think about MySQL and their business model, you can’t simply conclude that another business model would be more appropriate.  Just because Linux is licensed under the GPL and Linux vendors, namely Red Hat and Novell are closing in on a combined $1B in revenue, does not mean the GPL is the best license for every open source product with commercial aspirations.  The Linux ecosystem is very different than say, application servers or web content management.  Different markets with different ecosystems require different license considerations.

While Moglen appears to be arguing for a “pure GPL” MySQL, departing from the dual-licensed status quo, Groklaw reports that Mueller and Widenius would like to see the MySQL open source license changed from GPLv2 to the Apache Software License.  According to Groklaw, page 19 of an unreleased submission to the EU from Mueller/Widenius stated:

“We would like to draw attention to the fact that some major concerns about the effects of the proposed transaction could be somewhat alleviated by requiring that all versions of MySQL source code previously released under the GPLv2 license …must be released under a more liberal open source license that is usable also by the OEM users and would also create an opportunity for other service vendors to compete with offerings comparable to MySQL Enterprise. A good candidate is the Apache Software License (ASL).”

Something doesn’t feel right about Widenius proposing a license that MySQL could have chosen “over the past 14 years”.  Clearly MySQL decided against this move as the GPL/dual licensing approach led to a competitive advantage that the ASL v2.0 would not provide MySQL.  But I guess that’s why Widenius suggests Oracle should be forced to re-license MySQL under a permissive license such as the ASL v2.0.

We haven’t heard the last from Widenius & Mueller. Enjoy your holiday season ;-)

Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

 

Oracle unveils plans for MySQL, GlassFish, NetBeans and OpenOffice

Oracle updated its frequently asked questions (FAQ) overview of the impending Sun acquisition to address some important questions about the fate of Sun’s software assets beyond Java and Solaris.

To be completely honest, none of Oracle’s plans come as a surprise.  And at the end of the day, the FAQ is not legally binding and is not a commitment to deliver products, code or functionality. Oracle clearly states this at the end of the FAQ.  This too is completely understandable.  Oracle, like any other company with shareholders, will have to evaluate and adjust their plans and intentions on a product by product basis over time.  Oracle has a fiduciary duty to do so.

In the FAQ, potentially released to appease the EU and critics of the deal, Oracle tackles its plans for MySQL as follows:

“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.”

This position makes complete sense as MySQL and the Oracle DB are more complimentary than competitive.  I doubt that this assurance from Oracle will help Monty, Florian, RMS and others opposed to Oracle’s ownership of MySQL get past their fears.

Not unexpectedly, Oracle plans to keep GlassFish around, since it is the reference implementation for Java EE:

“Oracle plans to continue evolving GlassFish Enterprise Server, delivering it as the open source reference implementation (RI) of the Java Enterprise Edition (Java EE) specifications, and actively supporting the large GlassFish community. Additionally, Oracle plans to invest in aligning common infrastructure components and innovations from Oracle WebLogic Server and GlassFish Enterprise Server to benefit both Oracle WebLogic Server and GlassFish Enterprise Server customers.”

The plans for NetBeans are somewhat certain.  You’ll notice that Oracle makes no claims about “investing more than Sun does today” or “continue evolving”.

“As such, NetBeans is expected to provide an additional open source option and complement to the two free tools Oracle already offers for enterprise Java development: Oracle JDeveloper and Oracle Enterprise Pack for Eclipse. While Oracle JDeveloper remains Oracle’s strategic development tool for the broad portfolio of Oracle Fusion Middleware products and for Oracle’s next generation of enterprise applications, developers will be able to use whichever free tool they are most comfortable with for pure Java and Java EE development: JDeveloper, Enterprise Pack for Eclipse, or NetBeans.”

Finally, Oracle suggests that OpenOffice.org and a commercial offering will receive investment.

“After the transaction closes, Oracle plans to continue developing and supporting OpenOffice as open source. As before, some of the larger customers will ask for extra assurances, support, and enterprise tools. For these customers we expect to offer a typical commercial license option.”

So there you have it.  Oracle’s plans for Sun, well, based on current thinking and subject to change at Oracle’s sole discretion.  Which again, is perfectly sensible.

Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

 

IBM asks Oracle customers why pay more for less value

The open core business model has its roots in the traditional software business model. Open source vendors have learned what works in the traditional software business model and applied it to the open core business model. This learning has not been a one way street. This is the first in a series of posts discussing how open source and traditional software vendors are, or should be, learning from each other.

A few weeks ago the IBM WebSphere marketing team wanted to launch a competitive marketing campaign to coincide with Oracle OpenWorld. After some discussion we settled on “more for less” or said differently, a focus on value and price as the key message for the campaign.

Simply offering a lower price than Oracle WebLogic Server (WLS) doesn’t tell the customer enough to select WebSphere Application Server (WAS). That’s why the “value” message is important. In this case, the value of additional programming models and standards such as service component architecture (SCA), session initiation protocol (SIP) and communications enabled applications (CEA). Or the value of an integrated web cache and not having to pay for backup servers or unused CPUs on a virtualized server.

I’ve seen too many open source vendors simply beating the “lower cost” drum. At times they also highlight “not proprietary” as if this is a highly valuable feature; compelling enough to choose product X over a proprietary product Y. I don’t see value in “non proprietary” for at least two reasons. First, with open standards, the risk of lock-in is reduced not with the availability of source code, but the availability of multiple implementations of the open standard. Second, since the large majority of open source vendors are adopting an open core model, the product for sale can be just as closed source and proprietary as traditional software.

To reach CIOs hearts and wallets, open source vendors should rethink their messaging to move beyond just cost to talk about the “more” that they are providing for “less”. Note that “more” can actually be less, as in less complex. For instance, MySQL clearly provides a “lower cost for higher value”, in terms of less complex and fewer administrators required, than Oracle DB for certain use cases. This is why Oracle continues to value MySQL as part of the pending Sun acquisition.

There’s also a longer term reason to focus on higher value for lower cost than lower cost alone. The latter paints the vendor into the low cost corner. Going forward it’ll be difficult to increase prices as the vendor increases value delivered to the customer.

“More for less” certainly resonates in today’s market. This is true for IBM as much as any open source vendor.

Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

 

Why no mention of MySQL in Oracle’s WSJ ad?

Matt Asay and Marten Micknos both tweeted about Oracle’s ad targeted at Sun customers that ran in Wednesday’s Wall Street Journal.  It’s also on Oracle’s website:

Source: Oracle

Customers have been leaving Sun and its uncertain future since the Oracle acquisition was announced for the stability of IBM, HP and Dell. The recent EU decision to continue evaluating the Sun acquisition prolongs the uncertainty surrounding Sun. On the surface, this ad is clearly intended to stop, or at least reduce, this unsettling customer trend.

Matt points out that there is no mention of MySQL in the advertisement. I’ll take it one step further and point out that there is no mention of any part of Sun’s software division (save for Solaris with its SPARC linkage). Nothing about Java, GlassFish, MySQL, OpenOffice, Netbeans, etc. R&D investments or sales support.

This is somewhat understandable. Why would Oracle pledge to “spend more money developing Sun xyz” software product when Oracle already has a competitive product in their existing portfolio. In some cases, Oracle *may* spend more developing the Sun product. In other cases, Oracle *may* spend significantly less, or even kill the product. But one would expect a blanket “we’re committed to protecting customer investments in Sun Software” or something like that.

I find the timing of this ad surprising. What better way to placate EU fears that Oracle is going to “hurt MySQL and open source choice” than publishing an ad that completely ignores MySQL or Sun’s software portfolio?

Most have speculated that Oracle was really after Sun’s software assets, and was likely to sell the Sun hardware/systems division after the acquisition was approved.  This advertisement would suggest otherwise. But hey, it’s an Oracle advertisement.  Take it with a grain of salt.

Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

 

VMware plus SpringSource, more hype than substance, today

Let me start with a few disclaimers.  By virtue of working in the IBM WebSphere Application Server team, I compete with SpringSource. I know, and like, several of the key people at SpringSource.  I’m happy that their hard work paid of with such a large exit. While I compete with SpringSource, I’m excited that this acquisition will raise the bar for vendors that I care about, and ultimately, customers will benefit the most.

There has been a lot of analysis about VMware’s acquisition of SpringSource.  By in large, the analysis has taken the vision of Clouds and PaaS laid out in VMware’s press release as a likely outcome.  Let me try a different approach by discussing what VMware really bought.

VMware bought SpringSource because “Spring is everywhere”:
Yes, but sadly for VMware, no.  The Spring Framework is widely used in the enterprise Java market.  From my own experience, many WebSphere customers use the Spring Framework on top of WebSphere.  But many WebSphere customers use the competing EJB open standard in place of the proprietary, but open source, Spring Framework.  The most recent Eclipse user survey results found that of the 436 respondents building server side applications, 47.5% were using the Spring Framework and 38.3% were using EJBs.  This data clearly demonstrates that customers exhibit a need for choice significantly higher than proclamations of Spring’s enterprise Java domination would suggest.

With such a high usage penetration, one could expect a significant revenue base for SpringSource.  Yet, SpringSource is estimated to have driven $20 million in revenue, or maybe bookings, mainly from professional services.  This is a very respectable base for a company with 150 employees.  IDC however estimated the 2008 Application Server market at nearly $3.8 billion.  So, while the Spring Framework is widely used, SpringSource has not been able to extract significant market share as a result.

VMware may believe that adding their brand and sales reach to the SpringSource portfolio will drive higher revenue from the Spring Framework and related Spring products.  Redmonk’s Stephen O’Grady subscribes to this view, using the MySQL acquisition by Sun as a proof point.  I disagree because a framework is different than a database and the other Spring products have nowhere close to the penetration of the Spring Framework, as I discuss below.  Additionally, if a customer has been using the Spring Framework for the past 5 years without a support contract or subscription, why acquire support or a subscription now?  The only reason for doing so will be if VMware and SpringSource disadvantage the open source Spring Framework in favor of the enterprise, commercially licensed, Spring Enterprise. The community uproar the last time SpringSource tried this approach leads me to believe that VMware and SpringSource won’t go down this path again.

VMware bought SpringSource because SpringSource now has a “Build-Run-Manage” story:
Yes, but sadly for VMware, no.  Trying to build a significant business selling support subscriptions to the large number of Spring Framework users proved to be a tough nut to crack.  The key insight for SpringSource was that customers paid for runtimes and integrated administration and management of runtimes, not for frameworks.  SpringSource responded by acquiring Covalent and Hyperic in order to deliver two runtimes, SpringSource tc Server and SpringSource dm Server with administration and management capabilities via Hyperic.  SpringSource has introduced a “build-run-manage” marketing campaign which always makes me chuckle as I recall IBM using Build-Run-Manage back in the early 2000s.  I understand that SpringSource is attempting to educate the market that they are no longer only a framework provider, but rather, now have not one, but two, runtimes that customers can purchase.

It’s arguable that one or both of these products will become the basis for VMware’s beachhead into the middleware market.  So what are the prospects for tc Server and dm Server?

Since tc Server is aimed at Tomcat usage, it’s important to ask what customers running large Tomcat environments used before tc Server came to market?  Well, some used Tomcat without support.  Others used JBoss, Geronimo, GlassFish and WAS Community Edition which deliver Tomcat inside.  Finally, others purchased Tomcat support from Covalent, OpenLogic etc.  For the most part, customers who have not purchased Tomcat support or management for 5+ years are not going to buy a product now.  If the customer was missing some of the management capabilities that tc Server provides, by now, the customer has built this capability in house. I know of several large Tomcat users that fall into this situation.  The customer now has to consider the sunk costs of their custom code versus the cost of acquiring a new product.  Next, customers that have purchased Tomcat support are targets for tc Server.  But these customers are also being targeted by JBoss, Geronimo, GlassFish and WAS Community Edition.  Finally, tc Server can compete against JBoss, Geronimo, GlassFish and WAS Community Edition.  It’s not yet clear that tc Server provides differentiated value that will allow it to win disproportionately against the other products.  The important insight is that very few Tomcat users are using just Tomcat.  They use other parts of a Java Enterprise Edition (JEE) stack, such as JMS messaging or Web Services.  So given the choice of tc Server with just Tomcat runtime features or a JEE product which includes Tomcat and other JEE APIs is not as cut and dry as SpringSource’s marketing would suggest.

In the nearly 10 months since dm Server became generally available, I’ve frankly heard of virtually no customer usage.  But don’t take my word for it.  As your neighborhood Java developer if they’ve heard of dm Server, or if they’ve used dm Server.  The key issue with dm Server is that it’s proprietary.  Developers and their managers were comfortable using the Spring Framework because, while the framework was proprietary, they could easily move their applications across multiple standards-based JEE application servers.  Protection from vendor lock-in was delivered by the runtime application server.  Customers continue to expect this.  If you build a dm Server application, there is exactly one runtime it will run on.   Hence, dm Server fails the vendor lock-in test, and its adoption is a testament to this failure.  This is however a fixable problem for VMware.  dm Server could be evolved to meet the forthcoming JEE 6 Web Profile specification, which Geronimo, GlassFish, JBoss, WebLogic and WebSphere are all expected to support.

VMware is going to find that broad usage of a framework or having a Build-Run-Manage story does not easily translate into customers migrating off their existing Java standards compliant application server runtime to a proprietary runtime.

VMware bought SpringSource because of the Cloud & PaaS angle:
Yes, but we’ll see.  Cloud and PaaS are the two reasons that VMware and SpringSource have claimed as motivations for the acquisition.  I couldn’t say it better than Redmonk’s Stephen O’Grady:

“In time, yes, quite possibly. And there’s little question that SpringSource offers VMware an intriguing opportunity to be what 10gen, Project Caroline, et al have to date failed to be: the EngineYard or Heroku for Java, permitting seamless deployment of Java applications to on or off premise cloud infrastructure. But this is, to me, a longer term revenue opportunity, as VMware’s cloud pieces are still coming together and its hardware and datacenter capabilities are neglible relative to competition such as Amazon, IBM or Microsoft.”

Additionally, whether VMware and/or SpringSource will acknowledge it, customers are already deploying Java applications to a dynamically provisioned and policy-based managed cloud.  This isn’t a two or three years from now capability.  As we speak customers are using IBM WebSphere CloudBurst Appliance with WebSphere Application Server and WebSphere Virtual Enterprise to achieve what VMware CEO claimed is: “something our partners aren’t doing yet” when asked by a financial analyst if this deal would alienate partners.  The point is not to discuss IBM products, but rather to highlight that the VMware and SpringSource future vision is already a reality.  And it’s a reality that is driving significant IBM WebSphere revenue around an on premise cloud environment. Again, this is a today statement.

Lastly, since an application runtime environment is critical to a PaaS or Cloud deployment, I’d go back to the fact that SpringSource’s runtime environments, tc Server and dm Server, are starting from a standstill in an uphill battle for revenue share.  While VMware works to establish tc Server and dm Server penetration, VMware will have to be careful not to alienate their application server partners; the ones whose products are driving virtually all of the application server spending today.  This level of coopetition is doable, but not easy.  But hey, VMware has 420 million reasons for doing difficult, but necessary, things.

VMware bought SpringSource because of Microsoft:
Yes. Larry Dignan’s excellent analysis of the acquisition highlighted some very interesting data from a financial analyst, Pritchard:

“In our view the acquisition highlights the vulnerability VMware has in its exposure to Microsoft. We estimate north of 80% (may be as high as 90%, with the rest being Linux) of VMware virtual machines are running Windows server and an application developed in Microsoft’s .NET environment. This is a key strategic vulnerability as Microsoft has a history of absorbing functionality such as VMW that is essentially a layer in the Microsoft stack. Ultimately SpringSource technology may enable VMW to add enterprise Java workloads to diversify away from Windows.”

Microsoft is clearly going after VMware with HyperV inside of Windows Server 2008 R2:

“We’ve got a great solution. It’s a sixth the cost on average of what we see in the marketplace. Evangelizing the tax that VMware is getting from the product is something we look forward to competing with in this environment. Again, it’s about getting specific. It is about getting aggressive, and that’s where we’re headed.”

In an effort to guard against Microsoft marginalizing VMware’s core virtualization business, the SpringSource acquisition puts VMware at odds with Java runtime vendors who collectively represent the approximately 50% of the enterprise market not associated with .NET.   I don’t see how SpringSource helps VMware versus Microsoft in the estimated 80 percent of VMware environments where the application has been developed on .NET as Pritchard suggests.  If the application is .NET based, and the hypervisor is running on top of a Windows host, then this is Microsoft’s customer to lose to or win back from VMware.  VMware is clearly looking past its current deployments where Windows and .NET dominate, to a new Java-based Cloud and PaaS environment. But we already covered that aspect and the competitive hurdles in the Cloud/PaaS portion of this post.

It’s not just Microsoft that is marginalizing the value of a hypervisor.  As mentioned above, IBM WebSphere CloudBurst Appliance and WebSphere Virtual Enterprise treat the hypervisor as an infrastructure component of equivalent value to the host operating systems.  Said differently, the hypervisor, like the operating system has little impact on the application performance, reliability, availability or TCO.  Those application characteristics are enabled through the runtime application server and the dynamic provisioning and management framework around the application server.  This is how IBM’s Cloud solution is designed.  I’ll wager that Oracle and Red Hat’s offering will push value up the stack, beyond the hypervisor layer itself.

VMware bought SpringSource because of the great people at SpringSource:
Yes.  There is solid talent at SpringSource.  VMware has set aside $60 million in retention funding for the approximately 150 SpringSource employees over the next four years.  This $60 million was discussed on the VMware investor call and is in addition to the acquisition price.  This will clearly help VMware retain SpringSource talent.  SpringSource employees will also want to stick around to bring their vision of world domination to fruition ;-)

Summary:
There is much opportunity and risk for VMware with this acquisition.  If VMware can execute well, they’ll have saved the company from peril at the hands of Microsoft and Hyper-V and application server vendors who are minimizing the value of a hypervisor to the level of the underlying operating system itself.

This acquisition raises the competitive bar for vendors with application server and/or hypervisor offerings.  That’s something customers should be happy about. Fun times ahead!

Follow me on twitter at: SavioRodrigues

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

 

Ellison: We’re keeping Sun’s hardware (pity the Sun ISV)

Oracle has released a Q&A with Ellison surrounding the Sun acquisition.  It’s an interesting read.  The net is that Oracle is going to keep Sun’s hardware business because it wants to sell customers tightly integrated systems & software.

Here’s a snippet that I found interesting (and pretty much sums up the Q&A document):

Reuters: Why does Oracle, a company that prides itself on high margins, want to get into the low-margin hardware business? Are you going to exit the hardware business?

Ellison: No, we are definitely not going to exit the hardware business. While most hardware businesses are low-margin, companies like Apple and Cisco enjoy very high-margins because they do a good job of designing their hardware and software to work together. If a company designs both hardware and software, it can build much better systems than if they only design the software. That’s why Apple’s iPhone is so much better than Microsoft phones.

Did Larry mean to say that ISVs building solutions for Sun’s systems are in for a world of hurt?!?  Considering that the lifeblood or a hardware system are the applications that run on it (through the associated/affiliated operating system), why would ISVs continue to target Solaris on SPARC in light of this news?  Wow, this move will hasten the ISV shift away from Solaris on SPARC to Linux on Intel/AMD/Power/System z.

 

Sun’s 3Q09 raises doubt around Oracle’s profit target

Sun’s Fiscal 3Q09 results raise further questions about Oracle’s lofty $1.5B operating profit target for Sun in year 1.

Sun’s revenue came in at $2.61B, down 20% yty from $3.26B.  Revenue was lower than analysts’ fairly conservative $2.86B consensus for the third quarter.  I suspect there were more than a few deals in the pipeline that stalled as a result of acquisition rumors.  On March 18, just before the quarter end of March 29, the WSJ reported that IBM was in talks to buy Sun.  It’ll be interesting to see what 4Q revenues look like since the Oracle acquisition was announced at the start of Sun’s 4Q.

On a positive note, Sun’s software billings were up 28% yty.  However the growth is based off a comparison to Fiscal 3Q08 during which software billings were down 9% while Sun’s overall revenue was flat.  Had software billings been flat in fiscal 3Q08, the 28% growth in fiscal 3Q09 would have been 19% growth. Even at 19%, this is a huge bright spot for Sun.

Sun reported an operating loss of $169M, up 10-fold from a loss of $16M last year.  Another strike against the $1.5B target.  As a result, unlike others, I simply don’t see Oracle being able to reach its $1.5B operating profit target through cost cutting alone.  Oracle must grow Sun’s top line.

Top line growth will come from generating higher revenue from current customers and attracting net new customers.  With Sun’s current revenue trajectory, it’s difficult to see top line growth driven significantly from customer base growth.  It seems more likely that Oracle will have to raise prices, especially ongoing maintenance costs, in order to generate higher revenue from current customers.  Oracle implemented this strategy with BEA license and subscription prices after the acquisition.  I don’t see a significant price increase flying in this economy.  But if Oracle decides to go this route, it’ll be a boon for competition.  But I’m sure they’ve done the math and can stand to lose X% of customers as a result of a price increase and still generate enough revenue to make it worth their while.  Say what you will about Oracle, they don’t fear tough decisions.

Do you think an Oracle price increase is inevitable?

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Breaking News: Oracle to buy Sun for $7.4B

The AP is reporting that Oracle will buy Sun shares for $9.50/share, $0.10 higher than IBM’s reported offer which fell through.  The deal is expected to close in this summer.

Oracle estimates that Sun will contribute more than $1.5 billion & $2 billion to Oracle’s profits in the first two years respectively.

This will be very interesting.  I guess Oracle didn’t have enough on their hands with integrating BEA’s middleware suite!  It’ll be very interesting to see what Oracle does with Sun’s hardware assets.  I suspect that they’ll sell those assets off.  But I guess time will tell.

A few readers have begun to worry about the fate of MySQL.  This deal will be a test case for the actual freedoms of users when an open source product gets acquired.  Yes, there is an opportunity to fork the code if users aren’t happy with the acquiring vendor’s actions in the user community or with the product in question.  But what’s the customer value of a splintered community?  And up against the resources of an Oracle, can MapleSyrup Inc., the leading providers of support for MySQL in Canada, really stand a chance?  Methinks no.

More to come…