Oracle’s Evil Genius in MySQL Play

We knew before that Larry Ellison and Oracle intend to keep MySQL. Now we know precisely why they want to keep it. What we don’t know is how the European Commission, which is involved in an extended review of Oracle’s pending $7.4-billion acquisition of MySQL’s owner Sun Microsystems, will respond to Oracle’s position.

Oracle has indicated that it sees MySQL primarily as a database for small- to mid-size enterprises (SMEs) and for developing markets. That’s how it intends to position and sell MySQL.

Interestingly, those are the same markets where Microsoft SQL Server enjoys its greatest success. In that regard, Oracle isn’t being coy. In fact, it wants to keep MySQL for the express purpose of competing against Microsoft.

A recent study by Evans Data suggests what’s at stake. According to the study, Microsoft SQL Server is the most popular database in the emerging markets of China, India, Eastern Europe, and Latin America, but MySQL isn’t far behind. Evans says more than 50 percent of developers in the emerging market countries said they are using Microsoft’s SQL Server, but 46 percent said they are using MySQL. Microsoft’s SQL Server leads in China and Latin America, and MySQL is slightly stronger in India and Latin America.

Emerging markets, such as those above, aren’t nearly as receptive to Oracle’s database products. A relatively high percentage of database buyers in emerging markets are sensitive to price, and they get toxic sticker shock dealing with Oracle sales representatives. That means Oracle is failing to capture critical share in some of the fastest-growing IT markets in the world. Meanwhile, Oracle’s arch-nemesis from the days of yore, Microsoft, is taking a market-leading position.

MySQL gives Ellison a cudgel with which to beat Microsoft. It also gives Oracle an opportunity to win business and generate revenue from accounts it would have lost otherwise.

One can see now that MySQL, far from being something Oracle didn’t want, might actually have been a critical draw in Oracle’s attraction to Sun.

With this in mind, let’s get back to the European Commission and its antitrust review of Oracle’s Sun acquisition. The EC held up the acquisition because of concerns about reduced competition in the database market. The European regulators were worried that Oracle might discontinue or otherwise sabotage MySQL to eliminate a competitor from the market.

Oracle has signaled that it has no intention of killing MySQL. Instead, it wishes to target MySQL at smaller enterprises and developing markets, where it will compete directly against Microsoft SQL Server.

Moreover, Oracle is claiming that MySQL never was a meaningful rival to its own database products. As such, Oracle is saying that there is no possibility of reduced competition in the database market. In fact, Oracle seems to suggest that competition will intensify because it will be in a stronger position than Sun to market and sell MySQL effectively against Microsoft.

Strictly speaking, Oracle isn’t lying, but it is leaving out a large part of the story.

Before Oracle made its move to buy Sun, the latter had been committing resources to bolster and scale MySQL so that it could compete for high-end enterprise accounts against databases from Oracle, IBM, and Microsoft. I have no doubt Oracle noticed those efforts before it made the Sun takeover bid.

Actually, this is the sort of shrewd, if somewhat malevolent, brilliance that has made Oracle the software colossus it is today. By gaining possession of MySQL, Oracle both preemptively eliminates an incipient enterprise competitor while gaining new products that can go up against Microsoft in burgeoning emerging markets. That’s evil-genius stuff, killing two birds with one huge, multibillion-dollar stone.

I don’t expect the EC to figure it out, though. The wait might be uncomfortable for Oracle, but I suspect it will receive clearance to proceed with the Sun acquisition on or before the EC’s self-imposed deadline of January 19.

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