But this should have little impact on Oracle’s intentions for MySQL.
After finishing my post about Marten & Monty’s differing views on the Oracle acquisition of MySQL via Sun, I read that Richard Stallman (RMS) had published an open letter on the topic. Matt Asay tweeted:
“Has anyone read this RMS/KEI/ORG ltr? It’s living in dreamland. ORCL buying MySQL to prevent “erosion” of its core DB biz? What erosion???”
Since Matt and I agree on much more today than 2 years ago, I began reading the open letter with less than an open mind. However, since I haven’t really followed Oracle’s database business, I decided to look into Oracle’s financial reports to confirm or reject the “erosion” claim. I have to say, RMS may not have a black belt in pragmatism, but he’s right. Note however, I don’t think this fact changes Oracle’s likelihood of shepherding MySQL appropriately. More on this point later in this post.
I’ve plotted two revenue growth lines for Oracle over the past two years and a quarter. The blue line represents Oracle’s total revenue growth for fiscal year 2008, 2009 and for the first quarter of fiscal 2010. Oracle had a great fiscal 2008, with nearly 25 percent year to year revenue growth. More recently, Oracle’s total revenue declined by 5.2 percent in the first quarter ended August 31, 2009. Not a shocking story considering the economy and Oracle’s $20 billion plus yearly revenue base.
The red line however is where it gets interesting. Oracle reports database and middleware revenue together. This category is largely made up of Oracle’s database products and Oracle middleware products resulting from the BEA acquisition. However, even before the BEA acquisition, IDC estimated Oracle’s database revenue to be nearly 9 times larger than BEA’s middleware revenue. So, for our purposes, we can assume that Oracle’s “database and middleware” segment is extremely sensitive to Oracle’s database sales. The red line represents new license sales of database and middleware revenue reported by Oracle. New license revenue is closely watched because it shows the vendor’s ability to attract new customers and new business. As the red line shows, Oracle’s core database and middleware business is facing significant challenges in attracting new business. A 0.5 percent decline in fiscal year 2009 could be considered an aberration, but following it up with a 22 percent decline in the first quarter of fiscal 2010 is alarming. Erosion is clearly demonstrated by the red line below.
As I previously mentioned, the erosion in core database revenue is not reason enough to think that Oracle will try to systematically damage MySQL’s technology, future or user base. The free-to-low cost and easy to use database genie is out of the bottle. If MySQL were to become less viable after an Oracle acquisition, another database would take its place. It may take years, but it’ll happen. Even if MySQL were to disappear tomorrow, the competition from open source and free closed source databases would continue to target Oracle’s new license database and middleware revenue. Should the acquisition be approved, it’s in Oracle’s interest to ensure that MySQL users remain MySQL users that Oracle can sell other parts of the Oracle portfolio into.
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PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”