Open Source as a Model for Business Is Elusive

In many ways, MySQL embodies the ideals of the populist software movement known as open source, in which a program’s creator releases it to the world free of charge, and legions of volunteers contribute improvements that are also freely shared.

The start-up company came out of nowhere, building a database application beloved by vibrant, young Internet companies. Logging in from homes scattered around the globe, its workers seemed more a part of a virtual commune than a corporate monolith, and they relished taking on proprietary software giants like Microsoft.

But like most open-source companies, MySQL’s sales, tied to support deals, never matched the astronomical number of downloads for its product, about 60,000 a day. In January 2008, the founders decided to sell the company for $1 billion to Sun Microsystems. And this year, Sun agreed to sell itself to Oracle, which makes database software aimed at larger companies and tougher jobs, for $7.4 billion.

Now, disagreement over the value of MySQL — both as a stand-alone entity and as part of a big company — lies at the heart of a bitter public battle between Oracle and the European Union over the Sun acquisition. The fight illuminates a larger truth about open-source companies: their societal and strategic importance far exceeds their financial value as operating businesses.

European regulators view MySQL as sort of a database of the people, a low-cost alternative to Oracle’s costly proprietary products. The regulators worry that Oracle may stop improving MySQL in favor of protecting its core traditional products, and customers will lose an important option in the database market.

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Tags: database market, internet companies, open source business model, open source companies, proprietary software, start up company, sun acquisition, sun microsystems

This entry was posted on Monday, November 30th, 2009 at 8:59 am and is filed under Computers & Humans, Consider This, Democracy, IP, Innovation, NY Times, Shape of Things to Come?, Startups, Worth Repeating, economics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.