The Danger of blocking the Oracle/Sun deal

[Tony Bain]

Image via Wikipedia

FYI - the thoughts here have been gathered from conversations with several individuals, including an interesting conversation yesterday.* As these conversations were off the record I won’t name names here but thanks to those people.

I love open source software and I am a big supporter of many companies that produce open source offerings.* Here I am not going to debate if Oracle acquiring MySQL will be better for MySQL or not as that has been done to death.* But I do think it is relevant to discuss the dangers of blocking a commercial vendor from acquiring a potentially competitive open source vendor.

Many open source software initiatives are purely community backed and are constructed in an informal, ad-hoc manner.* Many other initiatives are started within large new generation companies to serve their own needs, and then made available for the benefit of the community at large as a side benefit.

This way of building software however limits the audience to users who have the necessary technical capability to build, deploy and support that software internally without a dependency on another supporting body (other than the community of course).* To open the software up as an option to a much wider customer base a more formal structure is required.* Typically a company is formed to develop, document, support, promote and rally the community and allow the software to be used in a much greater capacity.

But without large license sales bootstrapping an open source company is very difficult.* Instead open source companies often use venture finance as a means of resourcing the company, to grow both the company and the software to some form of critical mass.* In the database world off the top of my head I can think of a bunch of open source companies who have taken this approach (MySQL prior to Sun, 10gen, Infobright, EnterpriseDB and so on).*

Venture finance firms invest to help create significant value, and then create an exit.* IPO’s are unlikely in the database industry in general right now, and less likely for open source database companies.* So the most likely exit is through acquisition.* The number of companies who have the size, ability, direction & motivation to acquire a highly succesful venture back database start up (assuming under good exit conditions) I could probably count on my fingers & toes.

As dramatic as it sounds, blocking a commercial vendor from acquiring and open source vendor because of product overlaps could have much future impact.* Start ups seeking funding to build any killer app that overlaps with commercial software (of course, not just DB) may find some resistance from investors due to the potential exit issues.* Of course protecting the consumer from anit-competitive behaviour is a nessecary evil, but we also have to ensure that the system that allows companies like MySQL to come into existence is also protected.






Get More from the original blog...