Is it kill or cure for Oracle's database buy?

Oracle President Charles Phillips was calling to voice the company's "good intentions" in the purchase of the five-person outfit based in Helsinki.

But even with his reassurances, Mickos, like many others, is speculating about the tech giant's motives in buying a company that furnishes a key component in MySQL's database, an ever-more-popular rival to Oracle's software. Is Oracle seeking to disarm a potential competitor, or does it want to make open-source products a strategic part of its business?

"This is a relevant question. I would say the open-source community is waiting for an answer," Mickos said.

Financially, the deal barely makes a mark in the ledger at Oracle, which has been on a US$16 billion acquisition spree. But analysts and industry executives say it's important in that it makes one thing clear: Oracle sees the need to take into account the rising popularity of open-source databases.

Oracle said in a statement issued last week that with the move, it "intends to expand its commitment to open-source software." And in his call to Mickos, Phillips said that the company expects to renew the contract under which Innobase supplies a storage engine called InnoDB to MySQL, which ships it as standard in its database.

Beyond that, executives have been tight-lipped on further details of the company's plans, and an Oracle representative declined to comment for this story.

In the past, Oracle executives have been dismissive of MySQL as a competitor. CEO Phillips said in August that open-source databases are a "net positive" on Oracle's own business.

"We think open source has (played) an important part in introducing new customers, who we wouldn't have known about, to the idea of databases," Phillips said in an interview with ZDNet Australia sister site CNET News.com, noting that about 40 percent of new open-source database customers did not previously use such software. "When they want to do something more serious...they very quickly jump onto Oracle."

If Oracle thought it was threatened by MySQL, this was a very easy move.

Paola Lubet, vice president, marketing and business development, Solid Information Technology

It's that kind of market impact that has pushed Oracle into reacting to open-source rivals, analysts said.

"If Oracle thought it was threatened by MySQL, this was a very easy move, really for pocket change. They struck a very tricky punch to MySQL," said Paola Lubet, a vice president of marketing and business development at Solid Information Technology and a former Oracle database marketing executive.

InnoDB is not the only engine which will work with the MySQL database, but it is popular, particularly among people seeking high-end database features such as row-level locking and transactions. MySQL distributes the Innobase technology, which is licensed under the open-source General Public License (GPL), with its own product.

The MySQL database itself is available in two ways: freely under the GPL or via a commercial licence for business customers that want service and support.

MySQL is widely used by Web developers, who often combine the simple-to-use database with the so-called LAMP stack of open-source software, which also includes the Linux operating system, the Apache Web server and scripting languages such as PHP.

However, MySQL has greater ambitions for its product. The upcoming 5.0 update of its namesake database, which could be released as early as next week, contains some of the business-oriented features that typically attract customers to Oracle's line-up.

MySQL also has close ties to SAP, Oracle's rival in business software. MySQL acquired the rights to an SAP-developed open-source database called MaxDB. With access to the MaxDB code, MySQL has been able to replicate many add high-end features found in MaxDB, such as stored procedures, and add them to the MySQL database, according to company executives.

In a recent survey, Evans Data found that more than 70 percent of developers had installed and used an open-source database -- a rise of 7 percent in the past six months. Of the open-source databases, MySQL was by far the most popular among respondents. Forty-four percent used it, a 10 percent increase compared to six months ago, according to Evans Data's report.

That said, Oracle's multibillion-dollar database business is still growing. Like its primary competitors IBM and Microsoft, it has lowered prices and created low-end versions to appeal to developers and smaller organisations. Analyst and industry executives say those moves are partly in reaction to the low cost to businesses of acquiring open-source products.

"More and more, larger software vendors are beginning to realise that if they lose bottom of market, they may never get the top," said Winston Damarillo, the CEO of venture fund Simula Labs, which has launched Gluecode and other businesses built around open-source software. "MySQL is threatening Oracle not in absolute dollar terms, but in mind share."

More and more, larger software vendors are beginning to realize that if they lose bottom of market, they may never get the top.

Winston Damarillo, CEO, Simula Labs

IBM has been one of the most aggressive companies in embracing open source. It purchased Gluecode, a maker of open-source Java application server software, and intends to make Gluecode products available to smaller customers and offer them an upgrade to its WebSphere line.

In its middleware business, Oracle, too, has been steadily warming up to open-source products. The company said the next version of its Oracle Application Server suite will work with open-source development frameworks, such as Spring and Hibernate (as well as with IBM's own middleware).

Although it has been cagey about its plans, Oracle could use the Innobase acquisition to dip its toe into open-source database waters, Redmonk analyst Stephen O'Grady noted.

"They could attempt to monetise (open source) through MySQL by owning a component that MySQL depends on. Or they could use it from a competitive stand point to hurt them," O'Grady said.

O'Grady added that because of the acquisition, some developers may be drawn other open-source databases, such as PostgreSQL. But because the MySQL database is widely used, the company will likely rebound from any short-term competitive hit it may take, he said.

Meanwhile, the founder of Innobase, Heikki Tuuri, is carrying on. He's no stranger to Oracle, though, having first visited with company executives in 1999.

"It's business as usual," said Tuuri, whose new title is vice president of server technologies at Oracle. He will continue to work in Helsinki.

Customer cares
Oracle's acquisition of Innobase has raised concern among some MySQL customers.

"Oracle just bought themselves a whole lot of leverage with MySQL AB and a talented team of database engineers to boot," Jeremy Zawodny, an engineer who does MySQL support at Yahoo, wrote in a recent blog posting.

Zawodny suggested that Oracle could "put the squeeze" on MySQL corporate customers by reneging on or changing the terms of the contract between MySQL and Innobase. However, Phillips did tell Mickos he would renew, and Mickos said that MySQL has "broad rights" to continue serving its InnoDB customers. The deal between the two companies ends in about a year.

"The contract is such that even if you imagine the worst -- that it doesn't get renewed for whatever reason -- we have a long term until it terminates, so we'll able to continue for a long time. And we have a right to serve our customers perpetually," Mickos said.

In theory, MySQL could take the InnoDB code, which is available under the GPL, and continue development of the technology itself. It can also steer customers to other storage engines.

Overall, the Oracle buy serves as a cautionary tale for upstart companies that rely on important third-party products, whether they be open-source or not .

"There was a flaw in MySQL's business model," Lubet said.