In the future, he asserted, Microsoft would be all but irrelevant by the Linux trend. The crowd nodded and smiled at his screed. This, you could almost hear them thinking, was Larry at his best.
But then someone in the audience took the flipside to his thesis, asking Ellison: If Linux, in all of its open-source glory, would irreparably harm Microsoft's proprietary approach, could he not see the threat of open-source database vendors to his company? Ellison said no, and then enumerated Oracle's market strength, brand, track record and high level of security as reasons for Oracle's staying power.
But while commercial database vendors remain locked in a lunge and parry fight for customers, in the background is a small movement in which providers are open-sourcing their database as a less expensive alternative to the established vendors. This open-source movement, which some experts predict will follow a similar arc to Linux, is led by a Swedish firm that has been quietly building momentum as an alternative in the market for small business, departmental or commodity use: MySQL.
Industry opinion is divided as to whether MySQL or another of its ilk might challenge Oracle, Microsoft or IBM at the low end of the database market, where fewer specialty features are needed.
IDC analyst Carl Olofson summed up open-source databases technology: "Open source relational database management system (RDBMS) software is a disruptive technology. As such, it is used, not to address the high end requirements of those who demand the latest and greatest, but to address the needs of application and tools developers and vendors who are looking for just enough database technology to provide an affordable solution."
This is certainly comparable to Linux, which has enjoyed growth propelled by many major vendors, such as IBM and Oracle, as well as myriad Linux providers like Red Hat and SCO. These firms have pumped many dollars and resources into the movement to provide an alternative to proprietary systems such as Unix and Microsoft's Windows operating system. Isn't it imaginable, therefore, that open-source databases might follow the same path? After all, Linux started as a small movement, too.
MySQL's value proposition (contrary to Oracle, Microsoft or IBM) is to provide the code for its MySQL database for free, under the free software/open source GNU General Public License (GPL) or a non-GPL commercial license, which they make money from through service fees. And it's working.
In the spirit of "If you build it, they will come," MySQL has been building and users have been coming: MySQL has seen an estimated 4 million installations and over 30,000 downloads per day for its flagship product. The company counts Yahoo!, Lucent Technologies and Sony Pictures Digital Entertainment among its customers. At a time when investor dollars are scant, the firm this month landed $19.5 million in funding, led by Benchmark Capital, and appointed Benchmark general partner Kevin Harvey to its board.
MySQL versus the big three
Impressive credentials and support? Perhaps. But why go to an open-source database when Oracle 9i, Microsoft SQL Server and IBM DB2 are held in such high regard? In short, for the same reason why businesses are moving to Linux platforms: to save on total-cost-of-ownership, among other areas. The importance of this cannot be understated in this weak economy. Gone are the days when CEOs were looking to pad the top line; here are the days where the CEOS scrutinize how much cash they can shave off the bottom line.
So, consider a few options from Oracle, Microsoft and IBM. Oracle offers two main packages, an enterprise edition geared for high-end use at $40,000 per processor and a standard edition for $15,000 per processor, which is targeted for small- and medium-sized businesses (SMBs). Similarly, Microsoft has a standard edition of SQL server for $4,999 per processor, and an enterprise-class offering for $19,999 per processor. IBM's DB2 portfolio features an enterprise edition for $25,000 per processors, and a workgroup edition for $7,500 per processor (comparable to Oracle and Microsoft's standard editions).
By contrast, MySQL offers its database on a much lower scale and cost to the casual user. MySQL CEO Marten Mickos discussed his company's value proposition and licensing model in a recent interview.
"We are what we call a 'second wave open source' company, meaning we have a functioning business model that is in harmony with our free software principles," Mickos said. "Our dual licensing allows us to offer our software free of charge under the GNU General Public License (GPL) while at the same time selling the same product under a regular commercial license. We can do this because we own our software and have the freedom to license it any way we wish."
Olofson explained where open-source database technologies, such as those provided by MySQL, and two of its brethren, PostgreSQL and Firebird, fit into the market.
"Although the huge majority of MySQL usage today derives from free open source downloads, MySQL hopes to move from the geek community to the business community through the embedded database model, and they are counting on this channel as a key to future revenue growth," Olofson said.
Mickos, who said the company's goal is to "make superior database technology available and affordable to all," said commercial licenses account for nearly two-thirds of its revenues. The remainder of the company's earnings come from support and services. MySQL charges a flat fee of $440 per server and customers can have as many users and as many CPUs as they want.
"Put this in context of the pricing of other DBMSs [database management systems] and you can understand why we sell so much," Mickos said.
Now, given the price comparisons between MySQL and the other, strictly commercial vendors, why isn't MySQL grabbing up market share by the fistful? Does MySQL not threaten the three giants? No, and Mickos and his firm don't claim to. There are many, many reasons for this, some of which Ellison alluded to last April. MySQL is new, much smaller than the database behemoths, and does not offer much of the special functionality of large database vendors, something that they say the high-end, more specialized customers require.
"We focus on the commoditized part of the market - the one in which performance, reliability, convenience and price are the determining factors," Mickos said. As such, Mickos said he and his outfit feel they are complementary to say, Oracle, or IBM, who offer some highly specialized features, as opposed to competitive. In practical terms, while Oracle may power the high-performance needs of a search firm, certain departments might use MySQL as a simple alternative.
What the commercial vendors say
It's tough to find members of the commercial side of things that would argue with Mickos. Jeff Jones, director of strategy data management at IBM, praised MySQL and its brethren, noted that they are commanded by smart people with some great ideas. But he still sees the pros of the commercial side.
"I think you can argue there is a focus and a clarity of requirement to the commercial side," Jones said. "IBM has been working with databases since the '70s and things are done differently. There is a different degree of ability, of relational theory, for what we do. We have to bring scalability optimization, we have to understand how to extend relational theory to handle things like XML, to extend search technology, integrate more analytic capability, federate integrated business intelligence."
Interestingly, IBM has a small database offering that can slide into the low-end slot alongside MySQL, in the recently released DB2 Express. Geared for the low-end market, or a handful of seats, DB2 Express is priced at $499 per server, or $99 per user.
Ken Jacobs, vice president of product strategy at Oracle, shares Jones' feelings about the main differences between the open-source database players and commercial vendors of today. But, like Ellison, he suggested that it is Microsoft that has the most to lose from open-source, arguing that the evolution of open-source databases like MySQL could chomp away at Microsoft's low-end market share.
"Microsoft may be the real target or victim here," he said. "When people make decisions to purchase a database one of the deciding factors to go with open-source is that it is cheap." Admitting that Oracle and IBM's products are not as cheap because they target customers with more specialized needs, Jacobs said any cannibalization from low-end products is likely to be in Microsoft's camp. Jacobs said Oracle does not feel threatened by MySQL, and, like Mickos, said he sees it as a complementary product. "These DBs are interesting and can serve a niche. In fact, I'd argue that MySQL customers are also Oracle customers who have outgrown SQL Server."
Sheryl Tullis, product manager for SQL server at Microsoft, begs to differ. First, she disputed the notion that that SQL server's success is tied to SMBs, as many people suggest. "In the recent Gartner figures, SQL server grew 16.8 percent, Oracle declined 20.5. That shows customers are seeing value in SQL Server."
"We think [open source databases] are a different segment than who we sell to," Tullis said. We see MySQL as being primarily for hobbyist technologies, or departmental use. We see it as something a developer might use if they do not want to go through IT procurement."
Tullis said if Microsoft's customers do need a lightweight database, Microsoft offers MSDE, or Microsoft SQL Desktop Edition, and embeddable engine developers or ISVs can use as a datastore. And it's free. Moreover, she argued that Microsoft has actually learned, through MySQL, how to create a "database community that is interesting and passionate."
One of the knocks on open-source databases is they don't have some of the features large-scale servers do, and are therefore not attractive to customers. Meta Group analyst Charlie Garry has heard the arguments about MySQL and its brethren not having the special functionality or scalability of a DB2 or a 9i. He has a counter argument.
"There is a line of thinking that Oracle overshot the market by having too much feature functionality," Garry said. "One is XML databases. There is not a whole lot of people who are storing data in XML format."
"Now, there's an interesting feature I would guarantee, most people have never even heard of it or knew it was in 9i," Garry said. Then there are things like a partitioning option. More than 60 percent of enterprises are running on 4 processors or less and 50 percent of the resources are unused. A lot of people don't need partitioning, or 64-bit indexing that are offered by commercial vendors, so these are not necessarily things that people want to pay for."
"The beauty of open-source databases is that that we often see a cycle among commercial vendors, where they to continue to add feature functions to trump that other guy," Garry said. "Open-source databases are forcing users to think what is important to me, and think about right-sizing. When you're a tech leader like Oracle, you run into this rut where you have to drive revenues, listen to investors who tell you need these esoteric features."
Page 2: Analysts and open-source advocates weigh in