M&A Day: Winners and Losers

Oracle finally nails BEA, SAP completes its deal to buy Business Objects: the day started out making a lot of sense. But when I heard that Sun had spent $1 billion to buy MySQL, I had to check the calendar. No, it wasn’t April Fools Day, just another day in the misbegotten life of Sun-the-software-company. Oh well, two out of three ain’t so bad.

Don’t get me wrong, I like MySQL, and I think there’s a lot of promise in being the industry-leading open source database. But you have to wonder what Sun was doing spending so much to buy so little, when they could have spent a little more (okay, another billion or so), to buy a database company that would make a lot more sense as a strategic asset. More on that company in a moment.

It’s also worth noting that yesterday was an important day for trying to get similar names very right. Over at Sun the guy in charge is named Jonathan Schwartz, while the new member of the SAP management board and head of its Business Objects unit is a very different man named John Schwarz. The fact that the latter was introduced at his own press conference with the name of the former shows how confusing this all is. Pity that hapless technology reporter at the New York Times, the one named John Schwartz. Makes me happy my only doppelganger is a former punk rocker turned television director (which explains all those young women trying to become my friend on Facebook.)

But back to Sun. Remember, this is the company that created the most successful software product to never earn its inventor a dime: Java. Okay, maybe a dime or two. But giving it away is so much the legacy of Sun’s software efforts that you have to wonder if they spent $1 billion just to keep the legacy alive.

Here’s my beef with MySQL as part of Sun. MySQL is the main commoditizer in a rapidly commoditizing market. It offers a lot of functionality for a relational database, but its main claim to fame is price, as in largely free. It does not represent the strategic, leading edge of its corner of the software industry, except when it comes to its development model, which is based on open source (i.e. free labor). This lack of strategic purpose is reflected in the fact that MySQL doesn’t run as part of any major enterprise applications suite, despite some attempts at making a go with SAP.

In other words, Sun, a company that I think desperately needs a competitive edge in the software world, has bought a non-competitive me-too RDBMS that looks best when viewed from the perspective of price. And Sun paid $1 billion for the privilege. Couldn’t they have done better?

Yes, though it would have cost them twice the price. Sybase in my opinion would have been a much more logical choice: a company with a long track record in Sun’s customer base, a decent revenue and maintenance stream, and a desperate need for a little renewal. If it was Sybase that Sun had bought, I wouldn’t have checked the calendar. But MySQL?

So back to the other two deals of the day: Oracle/BEA and SAP/Business Objects. You have to wonder how long Larry knew that he was going to actually get BEA board approval before he scheduled his press and analyst call on Wednesday, because it just couldn’t be a coincidence that the BEA deal got sewed up on the same morning as SAP’s relatively hastily-called Business Objects press conference. Having attended the latter, it was obvious that press attendance at SAP’s event suffered from the Oracle/BEA announcement. Larry never misses an opportunity to tweak his opponent.

Speaking of tweaking the competition, we heard some strong words, certainly relative to the SAP politeness-meter, about Oracle from John Schwarz (I think I spelled it right.) John’s mandate includes keeping Business Objects as an independent supplier of software to the non-SAP world, and he promised “to have a BI solution on top of Oracle that is better than what Oracle offers.” By SAP standards, them’s fightin’ words, and a welcome pot shot after the absolute dearth of comment about Oracle at last December’s analyst summit. From what some of John’s new employees tell me, there will be more of the same coming from the Business Objects side of SAP in coming months.

In sum, it was a busy day for M&A, a busy day for people named Schwartz or Schwarz, and helluva day for MySQL’s investors, BEA’s investors, and even Business Object’s investors. As for how the software industry and its customers will look back on this week, only time will tell. Doing the deal is always the easy part, making it stick is what’s hard.