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IBM's EnterpriseDB stake: not what you think

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Ever since Sun anteed up a billion in cold cash for MySQL a couple months back, we wondered when the next shoe would drop. Recently, EnterpriseDB announced that IBM was one of several venture backers to fund its third $10m round of financing.

At first glance, this appears to be IBM's response to Sun. But it isn't.

Let's drill down a bit. With the enterprise database market pretty mature, new opportunities have emerged with new workloads associated with web applications. MySQL has drawn the attention because most websites start pretty modestly and needed a low cost/no cost engine to get going. As we've stated, both our blog and main websites are powered by free open source versions of MySQL under the covers. We don't pay for support because our application - essentially an embedded database inside a blog and content management system for a relatively low-traffic website (OK, we're not that tiny, but we're not Amazon or Yahoo either) - is rather pint-sized and rudimentary.

Now the big guys also offer free databases. IBM, Microsoft, and Oracle offer freebie "express" editions, but these really don't compete with the open source folks for one reason: the commercial express offerings are targeted solely at development or piloting, as they are typically limited to a single CPU and maybe 2-4GB of cache. Whereas with open source database, you'll get the whole enchilada regardless of whether you subscribe to support or get it free. The open source folks claim their subscriptions are cheaper than the incumbents.

That fact is important because, while there are lots of modest websites (like ours), there is also an explosion of data among popular consumer websites. That explains growing demand for server, storage, and it also explains the explosive growth of VMware. You need serious databases for these apps. Increasingly, MySQL, joined by EnterpriseDB and a revived Ingres are muscling their way in. They're not displacing the Oracle or DB2 systems running back-end OLTP systems, but they are clawing their way in to these new workloads.

EnterpriseDB and Ingres claim to be different creatures from MySQL, though, in that they contend they're more scalable. Specifically, EnterpriseDB has pursued the Oracle market, adding Oracle compatibility (e.g., PL/SQL, stored procedures, etc.) to its Postgres engine (a 20-year old spinoff from the original Ingres) to sell to Oracle DBAs running new workloads. In its third year of business, it has tripled its customer base.

Ergo, this deal is IBM dipping its feet gingerly into a back door challenge to Oracle, not MySQL. Ever since IBM held back on its own SQL database invention, allowing Oracle to grab leadership of the market, it has always responded by making DB2 cheaper. But it still plays second banana. Investing a modest chunk in EnterpriseDB is a way of having somebody else test drive a new strategy for carving a wedge inside the Oracle market, something that IBM has hungered for going back at least 20 years.

This article originally appeared in onStrategies.

Copyright © 2008, onStrategies.com

Tony Baer is the principal with analyst onStrategies. With 15 years in enterprise systems and manufacturing, Tony specialises in application development, data warehousing and business applications, and is the author of several books on Java and .NET.

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