Sun is taking the plunge into the database market with the purchase of open-source database developer MySQL for US$1 billion.
Sun said it will pay about US$800m in cash in exchange for all MySQL stock, and assume approximately US$200m in options.
With the move, announced on Wednesday, Sun takes a big leap into the US$15bn database market, which brings it into competition with companies such as Microsoft, IBM and Oracle.
Acquiring MySQL also gives Sun entry to customers that may be interested in buying more equipment and software; MySQL counts Facebook, Google, Nokia and Baidu as customers.
Sun can also distribute MySQL through its channel and OEM partnerships.
Sun chief executive Jonathan Schwartz said in his personal blog that the MySQL purchase puts his company at "the centre of the global web economy".
Schwartz also emphasised that MySQL already had the credentials for dealing with larger customers. "You'll recall I wrote about a customer event a few weeks ago, at which some of the world's most important web companies talked to us about their technology challenges," he wrote.
"Simultaneously, we gathered together some of the largest IT shops and their CIOs, and spent the same two days (in adjoining rooms) listening to their views and directions.
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"Both sets of customers confirmed what we've known for years -- that MySQL is by far the most popular platform on which modern developers are creating network services."
One big question is what Sun does next to build out its stack of open-source software and other applications covering middleware, storage and virtualisation. Sun's software lineup now includes Java, MySQL, OpenSolaris and GlassFish.
The company can now pair MySQL with Solaris and could fill out its roster with other targeted acquisitions. A large-scale merger with a company such as Red Hat is probably a non-starter though, given Sun's commitment to its own Solaris.
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Sun plans to integrate MySQL into its software, sales and service groups, and MySQL chief executive Marten Mickos will stay after the acquisition.
In a statement, Mickos said: "Sun's culture and business model complements MySQL's own by sharing the same ideals that we have had since our foundation -- software freedom, online innovation and community and partner participation."
The open-source applications vendor, SugarCRM believes the deal is a validation of the growing support for open-source applications software. "Sun's acquisition of MySQL is another validation of the commercial open source model," said John Roberts, chief executive of SugarCRM.
"Combining MySQL with Sun's open-source portfolio and enterprise reach will further accelerate the adoption of open-source software while hastening the decline of proprietary software sales," he said.
Separately, Sun said it expects to report fiscal second quarter revenue of $3.6bn and earnings of 28 cents to 32 cents a share. Wall Street is expecting earnings of 29 cents a share on sales of $3.58bn.
ZDNet.co.uk's Colin Barker and David Meyer contributed to this report.
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