Will Sun rise higher after MySQL deal?

Sun Microsystems hopes its purchase of the MySQL open-source database will be a key step towards positioning it as the pivotal infrastructure player in a burgeoning online world.

Sun Microsystems hopes its purchase of the MySQL open-source database will be a key step towards positioning it as the pivotal infrastructure player in a burgeoning online world.

But analysts believe the supplier still has many obstacles to clear if it is to re-establish itself as the dot in dotcom - as Sun was known during the first internet boom at the end of the last millennium. Those obstacles include a number of big players, such as IBM and Microsoft, who are also jockeying for supremacy in a field that is currently wide open.

Sun chief executive Jonathan Schwartz laid out the company's grand plan at its Emerging Markets Summit last August. In his view, the more that consumers use the internet to access information, goods and services, the more that they - rather than traditional IT decision-makers - start to influence technology change.

His rationale is that the more time people spend online, the more providers spend on technology as they try to meet customers' changing requirements. So Sun's aim, says Schwartz, is to "drive the adoption of technology into the hands of consumers and developers, and to monetise this by selling infrastructure to global businesses".

Therefore, everything Sun is doing in terms of technology, branding and the like, is designed to "enable us to bring as many people online as possible in the most cost-effective way possible because, at some time in the future, they will open a bank account and, as soon as they do, that creates an economic opportunity for us", says Schwartz.

To help this process as well as boost brand awareness and achieve its aim of becoming a thought influencer, Sun is also forging relationships with academia, governments - particularly in developing countries such as China and India - and non-governmental organisations.

"We are trying to focus in on the next wave of developers, the next wave of students [future technology purchasers], the next wave of research and the next wave of economic development, so we can best position Sun for growth in the next decade, not necessarily the next quarter or the next few weeks," adds Schwartz.

He likens the company's business model to that of mobile carriers who give handsets away free to make money on services, or to Google, which provides search capabilities at no charge but "monetises advertising". Just as the most popular handsets and search services are free, Schwartz believes that "the most popular software, over time, will also be free in terms of pricetag and the licence used to convey the intellectual property".

Therefore, Sun's own promotional device to seed the infrastructure market is open-source software. Schwartz explains, "The move to free software, I would argue, is the single largest transformation that the internet is delivering today and the delivery of free services leveraging free software is defining how consumers experience the internet."

If he is right, logic dictates that Sun needs a full suite of open-source middleware, including development tools, an application server and, of course, a database, that can be "leveraged" by in-house developers and a third-party channel to create the necessary applications to deliver free services.

All being well, these packages will act as a Trojan horse for Sun to sell its infrastructure-based systems and related services to end-users - an important consideration for a company that still generates most of its revenue from hardware.

The fact that margins for even high-end RISC-based systems are starting to dwindle as the market moves towards lower-cost commodity machines suggests it is imperative for Sun to transition its business model and create new engines for growth - and one of the levers for this transition is software.

Jon Tutcher, head of developer marketing for Europe, the Middle East and Africa, describes this as "hugely important" strategically for Sun, not least as a "way of getting to talk to customers".

And this is where the MySQL acquisition comes in. It is viewed as a crucial piece in the overall jigsaw because, with 50,000 to 60,000 downloads a day, it "provides us with a very ready access point to a new customer set", says Tutcher.

And that, says Andy Butler, a vice-president at analyst Gartner, is something the supplier needs if it is to start growing its revenue again. Butler points out that three or four years ago, there was real doubt over whether Sun would even survive, but Schwartz has since turned the company around and brought it back to profitability.

"The installed base is now much more willing to continue doing business with Sun and at least consider it when moving to new and next-generation products," says Butler. "But up until now, it has not done much to appeal to new customers, who were probably more likely to go to Hewlett-Packard or IBM."

Schwartz says he is "now confident that the ship will keep floating" and can start looking at other strategies. As a result, he says, Sun is "now moving into an era where it really wants to start taking on new business" beyond its traditional financial services and telco base.

To this end, it is taking a leaf out of IBM's book by exploring alternative delivery models, such as subscription-based hosted infrastructure services and software as a service.

Butler adds, "It is trying to get away from the 'we flog you a box, you come back in five years and we sell you another one' model, which is the old Sun." But to successfully move to an annuity-based model, it also realises that hardware will not be enough.

"At the very least, it needs strong services to sell with its hardware and to basically lock people into it by using its software tools and utilities in a utility model by which they rent," says Butler.

Tutcher confirms Sun's interest in this area, indicating that the aim is to build on the supplier's existing network.com offerings. The grid-based system currently gives organisations access to third-party high-performance computing (HPC) applications, while ISVs and developers can also exploit its resources to build, test and deploy their own at a cost of a 50p per processor per hour.

However, both the pricing model and the fact that the system is based on HPC applications means it is not "hosting in the true sense of the word", he says, which means both approaches will have to be tweaked.

For Sun to become "a bigger, more important player in the Web 2.0 space", says Tutcher, it will need to create "a whole portfolio of offerings" for developers that want to create and/or host their own applications or access hosted infrastructure, if they prefer.

"Part of this thing [Sun's reinvention] will be driven by hosting - the part where Amazon is playing today with EC2 [Elastic Compute Cloud]," says Tutcher. "We are partially there with our network.com offerings, although not properly, but we do expect to offer more."

But the downside for Sun is that it is far from alone in its ambitions. IBM, Microsoft, Salesforce.com, Google and Amazon are all keen to dominate a green-field area that is up for grabs and has no clear leader - a fact that will prove both an advantage and a disadvantage to Sun.

Another benefit of the MySQL acquisition, says Tutcher, is the fact that open-source software gives the company "access to a much bigger developer pool".

Interestingly for a company that has traditionally delighted in antagonising Microsoft, it has not been too proud to co-opt part of its business model. As Neil Ward-Dutton, a partner at analyst firm Macehiter Ward-Dutton explains, Sun is trying to out-Microsoft Microsoft by providing third-party developers with a platform for building volume applications that is not just cheap, but free.

"I don't think it's about taking on Microsoft head to head or becoming an alternative to Microsoft," says Ward-Dutton. "What Sun is actually doing is copying Microsoft's client/server strategy from the 1990s when it created an amazing developer community around Windows NT by giving it great tools that were very cheap to create a volume market - which is how it built its business in the enterprise space."

In the "new platform" area of web applications, it is not necessary for Sun to take on Microsoft because this, too, is a "green-field" area and the software giant is far from being in control so far.

Again, Sun's dominance is far from assured in this sphere, not least because all the big boys from IBM, Microsoft, Salesforce.com and Amazon "are racing to build new, compelling platforms for developers to capture the new generation of people who, 20 years ago, were developing for NT", says Ward-Dutton.

This means that, once again, the field is "wide open" with no obvious leader, which means "there is still all to play for", he adds.

One of the key challenges Sun faces that its rivals do not, however, is born of the very vehicle by which it hopes to make its fortune. The open-source community is notoriously suspicious of commercial companies trying to subvert its aims and will be keeping a close watch for any sign that the supplier is either optimising MySQL for its own software stack to the detriment of other offerings, or going for a hard-sell approach with its other products.

Sun will therefore have a fine line to tread, not least in how it handles existing MySQL customers and rivals, such as open-source distributors Red Hat and Novell, so as not to end up alienating them and encouraging them to adopt alternatives - which would, of course, undermine the premise of its acquisition.

As a result, says Butler, it is crucial that the database division that now houses MySQL maintains its promised autonomy and that there is "rigid control and guidance from the top to ensure that everyone representing Sun, whether they are internal staff or the channel, execute strategy consistently so as not to cause local friction and real resentment". This is imperative, says Butler, because "if it goes wrong, it will be because of local execution".

Butler points out another challenge, however - that although Sun's products are good, "they are not overwhelmingly superior to those of other suppliers" and, apart from MySQL, are not, as a rule, market leaders.

Clive Longbottom, a service director at Quocirca, questions why open-source advocates would go to Sun to buy their software when the LAMP (Linux, Apache, MySQL and Perl) stack "has more cachet around it" than Sun's equivalent.

But Tutcher believes this is beside the point because the aim is not so much to provide a rival SAMP stack - with the S standing for its OpenSolaris Unix operating system - as to offer customers choice.

"As well as OpenSolaris, we also offer Windows and Linux and there has also been a change at the processor level because we now provide Sparc, Intel and AMD," says Tutcher. "So we offer choice at the OS level, choice at the processor level and choice at the middleware level. This means that when we go into a customer account, we can make recommendations to help them solve their problems."

Although it is still early days for Sun's strategy and too soon to say whether it will succeed, in Butler's view it is probably the right one for where the supplier is today - despite the inherent risks.

He concludes, "No one is doubting Sun's ability to survive, but the question now is, will it just keep churning its existing customer base, which many other companies do successfully, or will it succeed in achieving its aim of re-establishing itself as a real innovator?"

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