January 30, 2007 | Comments: (0)

MySQL - Disrupting the database business

TAGS: Open Source

MySQL made two major announcements today. One reflects a fundamental change in the database industry. The second is intended to cement that change forever.

First off, MySQL had a banner year. What does this mean? It means that MySQL...

• Added over 2,500 new customers (and, though they don't report this, I know it is doing tens of millions of dollars in revenue - IPO-esque revenue). New customers included 1&1 Internet AG,  Cisco, Dow Jones, Garmin International, Earthlink, Electronic Arts, Hewlett Packard, Juniper Networks, McGraw-Hill, NBC, Nortel Networks, Reuters, The Sage Group, Sprint, The Walt Disney Company, and Zappos.com. Wouldn't you want these customers?;
  
• MySQL powered the Web 2.0 world, including web applications like Google, Yahoo, YouTube, Flickr, Second Life, Wikipedia, Craigslist, Slashdot, Blogger.com, Facebook, LiveJournal, Digg, Del.icio.us, Pricegrabber.com and Weather.com; and
  
• Over 12 million downloads of the product with MySQL being one of the top-500 most visited websites on the planet and significant contributions from the open source community to its technology.One would think that now is the time to rest on its laurels and do more of the same in 2007.

  Nope.

  MySQL today also announced MySQL Enterprise Unlimited. It's all the MySQL Enterprise you could ever hope to use, and it's $40,000.

  Gulp.

  When Zack told me this last week, I was shocked. I had to ask him for clarification. Several times. The price differential is so huge between Oracle/DB2/etc. and MySQL now that it's almost ridiculous.

  How can MySQL offer this low of a price? Well, for one thing, it's dealing with a mature product that costs little to nothing to support. Instead of taking (vendor) advantage of this moment to crank up the price and charge monopoly rents for the next several years (until it, too, is disrupted), MySQL is choosing to cede advantage to customers and grow its market by dramatically changing the economics of the database industry.

  Zack told me over email (in response to my question, "How can you possibly make money at that price?):

  The reason we can make money is because:
  -The software really works
  -And we don't have expensive Armani-wearing Ferrari-driving sales reps closing 40K deals.

  I powered down my Ferrari at that point, feeling a little chastened. :-)

  I know what he says is true, but there's something more to this. I want to say it's about disrupting Oracle. He disagrees. On his blog, Zack writes that this isn't about displacing Oracle. It's about disrupting an industry:

  We see the same thing happening with MySQL. It gets deployed on a lot of niche applications, like web sites, ecommerce, data warehousing, reporting, custom applications and telecommunications infrastructure. And those niches are growing faster than the rest of the database industry.

  Typically, MySQL does not replace the existing legacy databases in organizations. In fact, many of our customers are also users of Oracle, SQL Server and DB2. But they use them in different areas. As Charles Phillips from Oracle said a while back: Oracle and MySQL are both in the transportation business. But Oracle is a 747 and MySQL is a Toyota. Unless you're very rich, a 747 is not a great commuter vehicle. But admittedly, I would not want to drive cross-country for a meeting in New York. So in most companies, there is room for both solutions.

  True enough, but I suspect people will find ways to use the "Toyota" a lot more often - including for long-range travel (or else will find replacements for long-range travel, as it were) - and this will end up hurting Oracle in a big way.

  All that said, the company does have ways to get deals about $40K. The $40K number reflects its Gold support. I'm sure many big companies will want a higher SLA (Service-level Agreement) than the Unlimited package offers. And othes will want a more advanced offering like MySQL Cluster.

  But Zack told me not to look for ways they're trying to upsell customers from Unlimited, but rather to take it for what it is: a price at which it can make great profits and increase sales growth. And a price at which its competitors...can't.

  Ah, open source disruption. This is a beautiful move. I'm glad we're going to get to listen to Marten Mickos talk about this at the Open Source Business Conference (where he is keynoting). We'll also have Wal-Mart, Bank of America, Activision, H&R Block, Sony, and a range of other enterprises talking about the benefits they derive from open source.

  It's good to be king. (Note: You can spot the king by looking for the Toyota. :-)

  Posted by Matt Asay on January 30, 2007 05:32 AM

  
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  I have to admit that I find that $40k absolutely shocking. On the one hand it makes it nearly impossible for any other vendor to compete, but on the other I wonder if it diminishes the value of the MySQL product by being so cheap.

  Overall it's pretty amazing that MySQL figured they could sell the site license for so low a cost and still be profitable--an overwhelming testament to the power of open source.

  Posted by: Dave Rosenberg at January 30, 2007 12:28 PM

  As I understand it, this is not a site licence but a site support contract. You still need to buy the per CPU licence (roughly £2800) on top of this, or was the sales rep I saw yesterday chancing his arm? This also does not include Cluster which would be a further cost depending o how many nodes you want.

  Posted by: Ian Gilfillan at May 26, 2007 01:09 AM

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