Open Sources | Rodrigues & Urlocker » MySQL: The database maverick on the rise

June 26, 2006 | Comments: (0)

MySQL: The database maverick on the rise

TAGS: Open Source

Jason Maynard of Credit Suisse First Boston, enfant terrible of the software analyst community (well, if you're a proprietary vendor, anyway), is at it again. He's got a great "Mavericks vs. Microsoft" series going, with a June 23, 2006 report coming from a call with Marten Mickos, CEO of MySQL. He makes some interesting points, including:

1. Currently a private company, MySQL is...the world's most popular open source database with more than 8 million active installations.

2. The primary revenue stream for the company comes from the conversion of free downloads of its database product into support contracts. So far, the conversion rate to paying customers runs about 1 for every 1,000 downloads. MySQL’s database has been downloaded close to 100M times since it was released. To date, only about 100,000 downloads have resulted in a paying service and support contract, leaving a relatively large potential opportunity for the company. We think the company can achieve a better download to paying customer ratio as the functionality and support offerings improve over time. In addition to the revenue stream coming from support contracts, the company sells an embedded license to those customers who embed the MySQL database in its own products. This second revenue stream is much smaller than subscription revenues. [Asay note: This is surprising, as I had heard (I thought from the company itself) that OEM revenues were close to 60% of total revenues. Need to check on this.]

3. MySQL has grown sales over 100% a year for the last 5 years.

4. The company is not focusing on competing directly with vendors like Oracle and IBM. Instead, MySQL is deriving growth from the rapidly expanding number of Web applications and Web 2.0 online businesses. The company centers its development and sales efforts on these emerging segments because they are more cost sensitive and have unique requirements around ease of use and simplicity.

5. According to Gartner and IDC, the database market...totaled about $14B in 2005. The market is dominated by the three primary infrastructure vendors, Oracle with about 48% market share, Microsoft with 15% share for its SQL Server product, and IBM’s DB2 with 22% share. Over the last year Linux database servers and Microsoft’s SQL Server had the strongest momentum, according to Gartner. The three largest vendors, Oracle, Microsoft, and IBM, have a substantial installed base in existing ERP applications and transactional business applications from which they derive a significant amount of maintenance and support revenue. In our opinion, Oracle is gaining share at the high end of the market from IBM while Microsoft and upstarts like MySQL are fighting it out in a number of lower end segments.

6. MySQL’s emergence as a new player in the database market is significant because its focus, ease of use, and business model has enabled it to tap into an underserved market. We think MySQL, and the LAMP stack in general, are building a presence as a viable solution for rapid deployment, and as a result are emerging as a roadblock to Microsoft’s enterprise ambitions.

It's great to see the company doing so well. Marten and team recognize that they have to fight a different war - on its terms. Smells to me like they're winning it. Go get 'em, Marten!

Posted by Matt Asay on June 26, 2006 01:35 PM

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